The Atlas of Ancient Rome, edited by Andrea Carandini, is a gorgeous, authoritative archeological survey of Rome from prehistory to the early medieval period. Transport yourself to antiquity with full-color maps, drawings, photos, and 3D reconstructions of the Eternal City, featuring descriptions of the fourteen regions of Rome and the urban history of each in unprecedented detail. Included are profiles and reconstructions of more than 500 major monuments and works of art, such as the Sanctuary of Vesta, the domus Augusti, and the Mausoleum of Augustus. This two-volume, slipcased edition examines the city’s topography and political-administrative divisions, trade and economic production, and social landscape and infrastructure using the most current archaeological findings and the latest mapping technologies. Take a look at a sampling of some of the detailed images from the book here, and be sure to mark your calendar for when this book becomes available in February 2017.
Recently, the Australian government stirred up a great deal of controversy by announcing the formation of task force to study the role of cash in the underground or “black” economy. There is no suggestion of an impetuous overnight change a la India, but rather a slow deliberative process. (For a recent review of The Curse of Cash with a special focus on the Indian context, see Businessline). Among other ideas, the task force is going to consider phasing out the Australian $100 bill (and presumably eventually the $50 in due time). It will also contemplate restrictions on the maximum size of cash purchases (as France, Italy, Spain, Greece and other European countries have done), and to wire cash registers to transmit sales information directly to the Treasury, as countries such as Sweden have done. According to the Minister for Revenue and Financial Services, Kelly O’Dwyer, the taskforce will have the full cooperation of the Federal police, immigration authorities, the Reserve Bank of Australia and financial regulators.
Of course, the issues with paper currency and how to mitigate them are the main topic of The Curse of Cash, which also provides historical context, data and institutional detail an an economic analysis of the issues. Australia is in many ways a very typical advanced economy when it comes to cash, with huge amounts of cash outstanding and unaccounted for, and mostly in the form of very large denomination notes. Roughly 93% of the Australian paper currency supply is in the form of $100 and $50 dollar bills (versus, say, 85% for the United States, and just over 90% for bills over 50 euro in the Euro area).
(Updated from The Curse of Cash, which goes through end 2015, when large notes constituted 92% of the money supply; all the data and figures for the book are posted here).
With 328 million $100s in circulation and 643 million $50s, there are roughly 14 $100 dollar bills for every man, woman and child in Australia, and roughly 27 $50s. As elsewhere, only a small fraction of these are accounted for.
Overall, the value of cash in circulation (70 billion Australian dollars) is a little over 4% of GDP, which puts Australia in the mainstream of advanced economies, about on par with the UK and Canada, and similar to the United States if USD held abroad are excluded. (See Figure 3.4 in The Curse of Cash).
As in the US, cash is widely used for small transactions in Australia, accounting for 70% of transactions under $20 according to an April 2016 report by the Australian National Audit office in April 2016. But as in the United States, the importance of cash drops sharply for larger transactions – and that is even considering money washing back from the black economy into retail transactions. (See Figure 4.2 in The Curse of Cash).
Predictably, the Australian government announcement met with the usual tirades that equate getting rid of the large denomination notes with going cashless. This is polemic nonsense, readers of my book will know; I have also discussed the fundamental distinction in my blogs. Any legal fully tax-compliant transaction that ordinary citizens want to engage in can be executed easily enough with $20 bills (or even $10 bills), up to very large amounts. And smaller bills are also more than sufficient to satisfy ordinary people’s needs for privacy, the loss of big bills is a far greater detriment to those engaged in tax evasion and crime. Another strand of nonsense is that there must be better ways to increase tax compliance, such as lowering tax rates. (We can recall this from James Grant’s broadside rant in the Wall Street Journal.) Of course it would be good to improve the tax system, but tax evasion is always going to be an issue, and so will enforcement. And to the extent the government can collect a larger share of what it is owed from people who now avoid taxes by clever use of cash, then rates can be lowered for everyone else.
It is also nonsense to say that criminals and tax evaders will not feel the bite of a less cash society, and that they will effortlessly turn to other vehicles such as Bitcoin. There are good reasons why cash is king and why international law enforcement authorities find that cash is used somewhere along the line in almost every major criminal enterprise. Other vehicles simply cannot replicate its universality, convenience and liquidity. (Again, all this is discussed at length in the The Curse of Cash).
Not surprisingly, there has been pushback from the Reserve Bank of Australia, which argues that 5% of the cash banked by retailers is in 100s. This, of course, hardly matches up to the 45% of the cash supply that is 100s and more importantly, does not take into account that money from the black economy is routinely spent at retail stores. Many central banks are understandably reticent that a fall in the demand for cash will hurt their “seigniorage profits” from printing cash. The book discusses different conceptual approaches to measuring seigniorage. Perhaps the simplest measure is simply net new currency printed each year as a share of GDP). By this metric the Reserve Bank of Australia earned an average of .25% of GDP annually on average from 2006-2015, a very significant sum of money (see chapter 6.) But, as the book argues, the consolidated government (including the central bank) are likely losing even more through cash-facilitated tax evasion, and that does not even count the costs to the public of cash-facilitated crime.
The Australian authorities have noted that under-reporting of cash income has also distorted the welfare system (The Curse of Cash discusses this issue including evidence on Canada). Indeed, former senior Australian Reserve Bank official Peter Maier has argued that large denomination notes are widely hoarded by pensioners who aim to evade Australia’s mean-tested pension system. There are some tricky issues here having to do with privacy and tax fairness, but all in all, getting rid of big bills mainly hits those engaged in wholesale tax evasion and crime, not the poor. The Curse of Cash suggests low-cost approaches to financial inclusion to ensure that low-income families benefit beyond just reduction in crime.
Australia’s gradual and careful approach to dealing with cash is nothing like India’s radical policy, which aims at the same problems, but has created massive collateral damage. For a discussion of India, see here, here and here. The Australian cash commission’s report is due in October 2017; it is a welcome step. Given that Australia has been a huge innovator in currency (the Reserve Bank of Australia commission the first modern polymer notes that the UK and Canada have now adopted), it is encouraging that Australia is still willing to take the lead in the move to a less cash society.
Kenneth S. Rogoff, the Thomas D. Cabot Professor of Public Policy at Harvard University and former chief economist of the International Monetary Fund, is the coauthor of the New York Times bestseller This Time Is Different: Eight Centuries of Financial Folly (Princeton). He appears frequently in the national media and writes a monthly newspaper column that is syndicated in more than fifty countries. He lives in Cambridge, Massachusetts.
Find Kenneth Rogoff on Twitter: @krogoff
Our Economics & Finance 2017 catalog features new books from some of the most distinguished names in the field, including Kenneth S. Rogoff (co-author of This Time is Different) and Nobel Prize-winner Jean Tirole.
Browse the catalog below, or visit our stand at ASSA this weekend (1/6–1/8) in Chicago and pick up a copy in person: we’ll be at booths 107 and 109 with a full range of our books across the social sciences, we hope to see you there!
In The Curse of Cash, Kenneth S. Rogoff presents the startling argument that our economies are awash with too much cash. For most of us electronic transactions are increasingly supplanting cash, yet more cash is in circulation than ever before, much of it in large denomination bills that are rarely used in routine transactions. Instead, Rogoff argues, these large bills sustain a wide range of illegal activities ranging from tax evasion to terrorism, and we would be better off without them. Is it time to abolish the $100 bill?
Following his receipt of the Nobel Prize in 2014, Jean Tirole found himself cast into the role of public intellectual, regularly asked to comment on the issues of the day. In Economics for the Common Good Tirole takes to the role with gusto, issuing a clarion call to his fellow economists to join him in engaging in public debate, and applying his formidable knowledge to major issues ranging from unemployment to climate change and the digital revolution.
Economic inequality is an increasingly central and divisive issue in public life, but how can it be tackled? A sweeping survey covering human civilization since the Stone Age, Walter Scheidel’s The Great Leveler demonstrates that increased economic equality has typically followed in the wake of violent catastrophe: wars, revolutions, the collapse of states, and virulent plagues. Are peace and stability inexorably linked with economic inequality?
Find out about these titles and many more in our Economics & Finance 2017 catalog.
“Trump will quickly and irretrievably lose control of his threats and commitments, and he will find himself pressured to pursue unwanted wars to preserve the very image of toughness that will get him into trouble in the first place. His belligerent deterrence will induce global war-fighting, as happened repeatedly during the Cold War. This time, the damage will be much greater and perhaps existential. We are witnessing the rapid demise of the American-led world order that for 70 years averted war among the largest states. The next few years, perhaps just the first year of the Trump presidency, will bring us to a dangerous new precipice in multiple parts of the globe. America doesn’t face the risk of war in just one theater of conflict. Under President Trump, the United States faces that risk in at least four separate theaters.”
Suri goes on to outline what he perceives as risks in several complicated strategic spaces: The Middle East, Europe, North Korea, and the South China Sea. Suri sets his warning in historical context, asking whether past precedent can offer a warning to current policy-makers. Read the full piece here.
Explore our America in the World series here.
In The New Ecology, Oswald Schmitz provides a concise guide to ecological thinking for an era in which the activity of one species—humans—has become the dominant influence on the environment, the Anthropocene. Much traditional ecological thinking has attempted to analyze the natural world in isolation from the social world of human life, regarding the human world as an external disturbance to the state of nature. The New Ecology seeks to bridge this nature/human divide and understand human life as an integral part of local and global ecosystems. In turn, it seeks also to recognize the scale of human influence on the environment and to promote an ethic of environmental stewardship, of responsible use and husbandry of the resources embodied in the ecosystem.
Two fields that might seem paradoxical areas of study for ecologists are industry and the city. One might think that the factory and the concrete jungle are as far removed from ecological concerns as one can get. However Schmitz points out that neither can be considered in isolation from either the natural world or the global economy, and that both can benefit from ecological thinking. Much modern industry is dependent on raw materials extracted through mining, raw materials which are necessarily finite in supply, meaning that in the long term these industries cannot be sustainable. Schmitz suggests that these industries could be reconfigured to mirror the cycles of food chains in which different organisms act to produce, to consume, and to decompose food to once again become raw material for the producers. To some extent, the practice of recycling follows this cycle, but we are a long way from recycling enough to supply all the raw materials needed for production. Massive quantities of these raw materials are being lost to landfill. One step in the right direction would be to design products with their ultimate decomposition in mind, to make it as easy as possible to break down and recycle the constituent materials. Taking things further, we can think of industries as making up complementary clusters in which, as in ecosystem food chains, the waste products from one industry become inputs for another. Schmitz notes the example of a development in Denmark in which “an electric power company, a pharmaceutical plant, a wall-board manufacturer, and an oil refinery exchange and use each other’s steam, gas, cooling water and gypsum residues.” (p.174) Another potential resource is the enormous quantities of raw materials embodied in our cities—could cities become the mines of the future?
Cities also need to be considered as their own distinct type of ecosystem. The urbanization of the global population continues; it is estimated that as much as 90% of the the world’s population will live in cities by the year 2100 (p.180). The sustainability of these cities will depend in part on the extent to which they can produce the materials needed for operation and minimize dependence on external resources. Thanks to ecological study we are increasingly aware of the vital role played by urban trees and greenspaces in filtering pollutants from the air, cooling the urban environment (in turn reducing energy use for cooling buildings), and controlling rainwater run-off. These unpaid services can be valued at hundred of thousands of dollars (p.184). But cities themselves form parts of larger systems, drawing on and affecting vast hinterlands, and often affecting distant parts of the globe in their demand for resources. Only through deepening our understanding of these complex interactions, including industrial and urban ecology, can we hope for long-term sustainability.
In a video interview now featured on the London Review of Books homepage, David Runciman, author of The Confidence Trap, talks about Trump, Brexit and threats to democracy. Threats to democracy are nothing new; the US has survived threats ranging from the Great Depression to the Cuban missile crisis. Runciman shows that in fact, democracies are very good at recovering from emergencies, leading to the false belief that they are indestructible. In The Confidence Trap, Runciman argues that such complacency may lead to a crisis that is just too big to escape.
Read Runciman’s articles for the LRB from the past year:
Be among the first to browse our Mathematics 2017 Catalog:
If you are heading to the 2017 Joint Mathematics Meetings in Atlanta, Georgia from January 4 to January 7, come visit us at booth #143 to enter daily book raffles, challenge the SET grand master in a SET match, and receive a free copy of The Joy of SET if you win! Please visit our booth for the schedule.
Also, follow #JMM17 and @PrincetonUnivPress on Twitter for updates and information on our new and forthcoming titles throughout the meeting.
Fibonacci helped to revive the West as the cradle of science, technology, and commerce, yet he vanished from the pages of history. Finding Fibonacci is Keith Devlin’s compelling firsthand account of his ten-year quest to tell Fibonacci’s story.
This annual anthology brings together the year’s finest mathematics writing from around the world. Featuring promising new voices alongside some of the foremost names in the field, The Best Writing on Mathematics 2016 makes available to a wide audience many articles not easily found anywhere else—and you don’t need to be a mathematician to enjoy them.
In The Calculus of Happiness, Oscar Fernandez shows us that math yields powerful insights into health, wealth, and love. Using only high-school-level math, he guides us through several of the surprising results, including an easy rule of thumb for choosing foods that lower our risk for developing diabetes, simple “all-weather” investment portfolios with great returns, and math-backed strategies for achieving financial independence and searching for our soul mate.
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From page 161 of Bird Brain:
Bird Brain by Nathan Emery makes the case that birds are not as devoid of intelligence as has previously been thought. In fact, some can even be considered as smart as apes and dolphins. This concludes our Bird Fact Friday feature. Stay tuned for Horse Fact Friday starting in the new year!
Birds have not been known for their high IQs, which is why a person of questionable intelligence is sometimes called a “birdbrain.” Yet in the past two decades, the study of avian intelligence has witnessed dramatic advances. From a time when birds were seen as simple instinct machines responding only to stimuli in their external worlds, we now know that some birds have complex internal worlds as well. This beautifully illustrated book provides an engaging exploration of the avian mind, revealing how science is exploding one of the most widespread myths about our feathered friends—and changing the way we think about intelligence in other animals as well.
Bird Brain looks at the structures and functions of the avian brain, and describes the extraordinary behaviors that different types of avian intelligence give rise to. It offers insights into crows, jays, magpies, and other corvids—the “masterminds” of the avian world—as well as parrots and some less-studied species from around the world. This lively and accessible book shows how birds have sophisticated brains with abilities previously thought to be uniquely human, such as mental time travel, self-recognition, empathy, problem solving, imagination, and insight.
Written by a leading expert and featuring a foreword by Frans de Waal, renowned for his work on animal intelligence, Bird Brain shines critical new light on the mental lives of birds.