Saving money — the new deadly sin
I expand on some of these ideas in my book, The Cryptocurrency Revolution, which is available here and from other booksellers, online and offline.
This week, Deutsche Bank raised some eyebrows (and upset quite a lot of people) by suggesting that employees who chose to work from home should pay an extra five per cent tax. In Britain, where working from home currently means you are liable for tax relief, this may sound counterintuitive. So, what was the idea?
During this year’s global pandemic, the plight of businesses that depend on the workers who normally pack out large office blocks in city centres has never been far from the headlines. The Deutsche Bank report suggested that because those who work from home are spending less on dry-cleaning, lunches in cafes or drinks after work, that a 5% tax should be taken from their salary to fund payments to those who cannot work from home.
Deutsche Bank strategist Luke Templeman went as far as to say: “For years we have needed a tax on remote workers. Covid has just made it obvious. Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society.”
While I’m aware that the ability to do one’s job from home can be a privilege if this is the choice of the worker, I feel that there is much in the idea that is problematic. To begin with, this ignores the fact that although city centre cafes and small shops have suffered, those in suburbs or small towns near people’s homes have benefited as people working from home choose to shop or buy coffee more locally.
But the aspect of the report that is most troubling for me is the suggestion that a private individual’s decision to spend or save their own hard-earned income in a particular way can be judged as antisocial or unpatriotic. The semantics of Britain’s Eat Out To Help Out campaign earlier in the summer underlined the message that it is everyone’s duty to go out and spend money in order to keep hospitality businesses going.
What if you feel your job is insecure and you want to put any cash left over from essentials into a savings account in case the worst happens? Or if you are approaching retirement and you would rather save extra money into your pension than buy lattes or sandwiches? What if you are cycling to work and bringing a packed lunch to the office? Or you would rather put the money you would spend on takeaway coffee towards charity donations? Should you then feel guilty for not propping up the economy by splashing your cash around?
Modern economies are built on debt. Consumers are indirectly encouraged to live on credit in order to boost GDP. Particularly in Anglophone countries, saving money is seen as something weird and now — if this report is anything to go by — something almost shameful. Kind-hearted, patriotic types go around spending money, perhaps on credit, while tight-fisted miseries lurk inside their houses, living on lentils and counting the funds in their savings account.
However, if governments wish to stop people saving and get them out spending, there will soon be be easier options than figuring out who is working from home and taxing them more. The coming wave of state-issued digital currencies will mean negative interest rates on savings accounts can be imposed at the stroke of a pen — and if digital cash that is programmable is introduced at some point, it will be possible for governments to specify exactly how and where patriotic citizens should be spending their own money in order to save the economy. Do we really want to live in a world where the prudent and frugal are demonized? Perhaps Deutsche Bank are best placed to answer that.
I have written more about government-issued digital currencies and their implications in my book, The Cryptocurrency Revolution, published last month by Kogan Page.