Penny for your thoughts: Philly’s bankrupt law
Pop Quiz:
You’re mayor of America’s fifth-largest city. Your municipality has the nation’s highest poverty rate, and ranks near the top in violence, murder, homelessness and high school dropouts. Oh, and the city pension is catastrophically underfunded.
Do you:
A) Enact concrete plans to deal with these issues, since they are exacerbating the flight of businesses and educated, wellearning individuals, or
B) Ignore those problems, and, instead, interfere in the free market by mandating that businesses accept cash – a move that will surely see some employers pull up stakes?
If you know anything about Mayor Jim Kenney, this is a no-brainer, since Philly’s top dog always passes the buck. Once again, Kenney didn’t disappoint. Give credit where it’s due: he never fails to drop the ball.
••• Thank God the Eagles won a Super Bowl, because, outside of that, every national story about Philadelphia seems to be another embarrassment. Whether it’s escalating violence, the mayor championing illegal immigrants by illegally declaring Philly a sanctuary city, advocating “safe-injection” sites where people would use illicit drugs without fear of police, or requiring businesses to take cash, Philadelphia’s reputation as a second-rate city becomes more deserved by the day.
The latest foray into Big Brother government occurred when Kenney signed a bill mandating that businesses accept cash – the first city in the nation to do so – with big fines for noncompliance. Just as the city’s notorious soda tax spectacularly failed to achieve its projected revenue, so too will this law have disastrous consequences.
Here’s why it will backfire:
1) Most obvious is the big question: Is this really the issue on which Philadelphia’s leaders should be concentrating? Given the huge problems Philadelphia faces, how is angering the business community – including Amazon, which likely won’t open their planned “Go” stores now – possibly a good thing? Here’s a news flash, Mr. Mayor: Murders are up a staggering 17 percent from last year – and 2018 was the bloodiest year, by far, in more than a decade.
How can someone who has risen to such an important post be so incredibly obtuse? Makes you pine for former Mayor Michael Nutter – and that’s saying something.
2) This comes down to simple math. “A” equals the finite number of police and code enforcement officers in the city; “B” is the huge number of businesses that must be checked for compliance; and “C” – the number of citizens victimized by crime. For every minute that “A” spends time trying to enforce the new law on “B,” that many more in “C” will be victimized without redress. Translation: There are only so many police and city officials to go around, and they are already maxed out dealing with the far-too-many regulations on the books. Adding another stupid law is a slap in the face to the people Kenney claims to represent. But, hey, this is the same mayor who threw his cops under the bus in the Starbucks fiasco.
3) The government has no right to mandate how a private-sector company should conduct its business. If a company wants to accept only cash, thus avoiding credit card fees, fine. If people don’t have cash, they’ll go elsewhere – or, by market demand, will pressure that business to expand its payment options.
Likewise, if a business chooses not to accept cash, that too should be respected. If consumers don’t have credit or debit cards, they will either bring one the next time – or take their business elsewhere. But let’s be very clear: No one has a “right” to be served by a particular business. If a patron doesn’t like a company’s payment policies, they can express their opinion to management and either begrudgingly accept the rule, or scram. It’s that simple. The beauty of the free market is that businesses choose their own destinies. Some adapt to changing market forces and thrive, while others don’t – and often go extinct. It’s survival of the fittest in its purest form, a lesson Gordon Gekko in “Wall Street” perfectly illustrated in his famous, but grossly misunderstood, “greed is good” speech. When government intervenes, it hurts everyone – business, consumer, rich and poor.
That’s Economics 101, but not surprisingly, it’s a concept lost on Jim Kenney, since, as a lifelong politician, he has virtually no privatesector experience.
4) Not that a company needs to explain its business decisions, but there are numerous reasons not to accept cash.
Most important for many is mitigating the risk of robbery. In case the mayor has forgotten, he should revisit the aforementioned crime stats. People are getting robbed left and right, so it makes sense for many businesses – such as take-out restaurants – to avoid keeping cash on hand. Not only would employees and customers be safer, but no-cash policies eliminate making dangerous bank deposits.
But since the mayor and District Attorney Larry Krasner seem more interested in political correctness and justifying criminals’ actions, rather than actually getting the bad guys, good people will continue to be victimized while the city sits idly by.
Since math is a fast-eroding skill with today’s youth, many businesses don’t want employees making change. Mistakes are so prevalent that paying in cash often creates unacceptable delays. And no-cash policies preclude cash-counting at closing, saving on both time and mistakes.
Finally, technology has made cash fall out of favor. Regardless of what Jim Kenney believes, the fact is that credit cards, phones and even watches are the dominant payment methods, especially among Millennials and younger generations. (Only 21 percent of 23- to
34-year-olds paid in cash in
2016, down from 39 percent five years earlier. As a whole, consumers paid in cash only
30 percent of the time last year, compared to 40 percent in 2012).
Completely lost on the mayor is that, when a disgruntled business leaves, the city loses significant business tax revenue (generated from a host of levies), property tax, and city wage tax from terminated employees – workers who do not just lose their disposable income, but are forced onto unemployment rolls.
Interestingly, as Philly’s higher-end tax base continues to flee (replaced by lower-earning, less-educated individuals), one would think the mayor would welcome cashless businesses, since they drastically reduce tax fraud and better fill the city’s coffers. Guess not.
Not surprisingly, those following Mayor Kenney’s lead are, like Philadelphia, stuck in the past and rapidly losing higher-earning populations: New Jersey, New York and Massachusetts. All play games with their “growing” population numbers, but the fact is that businesses and educated employees – who provide the biggest tax base and drive innovation and services – are fleeing to freer pastures. They are replaced most often by less educated, less affluent immigrants, thus resulting in dwindling tax revenues despite ever-increasing budgets.
Kicking the golden goose – while thinking it will always remain – is a game of chicken the city cannot win.
5) The decision to own a credit card or maintain a bank account rests entirely with the individual, not a business owner. So the entire justification for the cash mandate – that it is discriminatory and “disenfranchises” minorities and the poor – is massively flawed. Proponents claim that many poor people don’t have bank accounts, and therefore cannot get credit cards. Wrong. You can walk into any bank and buy a debit gift card. Problem solved. Of course, this fallacy is nothing new, as it’s the rallying cry against Voter I.D. (the “disenfranchised” cannot afford I.D.). Again – wrong. The state has a program where it provides an official (nondriver’s license) government I.D. free of charge.
What’s next? Will businesses requiring shirt and shoes be mandated to accept everyone “as is,” since not doing so could be considered “discriminatory?” Enough is enough.
Philadelphia is expending the last of its currency trying to convince businesses and residents that the city is economically viable. But with sky-high taxes, a crime epidemic, and intrusive laws like the cash mandate, it’s only a matter of time before the entire house of cards falls.
And you can take that to the bank.