The National Bank has pleased us with bill N10656 “On Amendments to Certain Legislative Acts of Ukraine (on the Functioning of Payment Systems and Development of Cashless Settlements)”, which has already been adopted in the first reading. Generally speaking, this law allows the NBU to completely take control of payment systems and payments through them, since it concerns “regulation of such issues as keeping by the National Bank of a register of payment systems and settlement systems in Ukraine, their participants and operators of payment infrastructure services, as well as granting them the right to operate in Ukraine only after registration with the NBU, granting the NBU the right to establish the procedure for conducting routing, clearing, and settlements between participants of payment systems in Ukraine for operations carried out in Ukraine using payment cards issued by resident banks, and ensuring the formation and placement of guarantee deposits of members of payment systems for operations carried out within Ukraine using payment cards in the national currency of Ukraine in accounts with the NBU or in banks of Ukraine”.
However, it contains another innovation, presented as a fight against corruption and generally a positive thing: a restriction on cash payments up to 20,000 hryvnias. This is what forced the media to pay attention to the bill and bother with comments.
I, however, am writing about this bill because it very clearly demonstrates the essence of legislative activity as such, regardless of its content. Using our example, several characteristic properties inherent in practically any law can be identified.
They know better than you how you should live. The authors of practically all laws know better than you how (and often why) you should live. For example, you are required to pay in cash only for amounts under 20,000 hryvnias. Why? These are your money, which you received by bringing benefit to other people. Why should you suffer because of someone’s invented problems with corruption or support the work of the banking system? If you believe that restrictions on the circulation of cash promote these goals, restrict your own cash voluntarily—you can even call on others to do so. But don’t order. In general, we see that practically any law creates difficulties for people who have done nothing bad to other people.
They work with consequences, not causes. It goes without saying that the cause of corruption is state activity, primarily regulatory activity. Corruption arises where it is necessary to circumvent countless rules and restrictions. Cash does not create corruption. It is simply a medium of exchange, including, naturally, in corrupt deals.
They are needed only for reporting purposes. The main goal of any state action is to announce that “the problem is being solved.” In our case, “the problem is being solved”—namely, bringing electronic payments and corruption under control.
They do not achieve the stated goals. It is clear that corruption will not suffer in any way from cash restrictions.
Real consequences interest no one. The real consequences of legislation are new difficulties in citizens’ lives, new obstacles for voluntary cooperation, and, accordingly, new ground for corruption.
Long-term consequences interest no one. It is not difficult to predict that if the law is followed, it will deal a blow to online commerce and generally to the development of civil society, since it will severely complicate settlements between citizens, including (and above all) through the internet. Moreover, most likely, some types of corruption will become more expensive. However, besides these obvious consequences, there may be others that no one knows about and that no one in principle can predict, since they will arise as a result of society’s adaptation to new difficulties created by the state. The long-term consequences of legislation are in principle unpredictable.
They introduce rules without caring about duration and cancellation mechanisms. Obviously, the introduction of certain rules, especially of such a local nature as in our example, requires the existence of clear and understandable mechanisms for their cancellation. Suppose all corruption in Ukraine has suddenly disappeared, but we, like fools, continue to pay in cash only up to 20,000 hryvnias, because the idiotic norms simply have no one to cancel. Legislation does not contain a built-in negative feedback mechanism. To cancel some law, it is necessary that it be advantageous for politicians, that is, that it could be used to demonstrate reporting, care for people, and other eternal “enticements” for voters. If these goals cannot be achieved, the law is doomed to “work” for centuries.
Always expands the state. Legislation always expands the state, that is, increases the capabilities of some people (constituting the state) with respect to other people (everyone else). In our example, this is completely obvious. The people constituting the state increase their power over other people, receiving new areas in which they can tell us exactly how to live, how to behave with other people, and also how to dispose of our property. Opportunities also increase for appropriation of our property (in the form of punishments or in the form of corruption), as well as for restriction of our freedom.
Reproduces the system. Experts, journalists, and politicians form a kind of mutual protection arrangement. State activity is the main source of material for journalists and experts (as this very column demonstrates). Therefore, experts and journalists rarely speak substantively on the issue if they criticize certain state initiatives. They also support them in a specific way. Here, “Liga” presents the opinions of two experts regarding the future law. One of them expressed himself in the spirit that all over the world the guillotine is used as a means of treating headaches and therefore we should too. The second one also did not miss. I quote: “This bill has several goals. First of all, it is the banal necessity to control citizens’ funds. After all, even according to the most modest estimates, Ukrainians store 120 billion hryvnias and about $70 billion in their stockings. And this money could work for the country’s economy”. First, the esteemed expert also knows better than you how you should dispose of your property (and this is what unites him with the state), second, he does not know that money always exists in the form of cash balances or account balances, that is, they are always “working,” whether they lie in a bank or under a pillow. As we can see, this knowledge of the basics of economics is unnecessary for the expert. In his understanding, “to work” means to transfer your money to the management of third parties, that is, banks. Perhaps this will benefit banks, but as for the “country’s economy,” it definitely has nothing to do with it.
As a result, in the information space, the matter looks as follows: “there are bad laws, and there are good laws. Bad laws are overcome by adopting good laws. Bad consequences of good laws are overcome by adopting new good laws.” And so on to infinity. In general, the people constituting the state have forever provided themselves with work. They can be congratulated, they live in a world where there is always a holiday. At someone else’s expense, of course.