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Why do we still make the penny?

By: barrypopik (Diary)  |  September 14th, 2012 at 08:21 PM  | 

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Why do we still lose money to make the penny? Why isn’t there a resolution to end the penny right now?

With the Fed’s “quantitative easing” policy of printing billions of dollars out of thin air every month, the penny is worthless. We’re losing money to coin it, so why are we still doing it?

The arguments against the penny have been made for years. This is from the New York Times of earlier this year:

Please, Finally, End the Penny
David Owen, a staff writer for The New Yorker, is the author of “Green Metropolis” and “The Conundrum.”
APRIL 4, 2012
Canada is eliminating pennies, and good riddance. The United States should do the same.

Pennies have virtually no buying power, yet they cost a lot to make, distribute and use, and many consumers simply throw them away. (Picking up a penny from a sidewalk and putting it in your pocket pays less than the Federal minimum wage, if you take more than 4.9 seconds to do it.) The U.S. Army stopped using pennies on its bases in Europe in 1980, to spare itself the cost of shipping them overseas. In 1996, the Government Accounting Office determined that most of the millions of shiny new pennies that leave the U. S. Mint each year simply disappear. What’s the point?

There is a Wikipedia page, Penny debate in the United States. See this:

Production at a loss — As of February 2011, it costs about 2.4 cents to mint a penny. In 2007, even the price of the raw materials it is made of exceeded the face value, so there was a risk that coins were illegally melted down for raw materials.

So if we keep making worthless pennies, maybe we should expect (even though it’s illegal) that people will buy them up and melt them down and make easy money? What country spends 2.4 cents to make a penny?

This is also symbolic. Maybe when the penny is gone forever, people will finally realize how worthless our currency has become and is soon to become.

Is there even a single good argument in defense to keep the penny and lose money making it?

Eliminating the penny will help business. See Penny Free Biz:

News Flash.. Canada to follow Australia, New Zealand, Norway, Switzerland and the United Kingdom. They are discontinuing the use of their penny… The United States has to be next. (MORE 1, 2) March 2012

Spend four minutes and watch the YouTube video Death to Pennies. It states the argument very well.

All that’s left is to name the bill. The “Obama and Bernanke killed our Lincoln penny” bill needs a better name, but that’s why legislators have staff.

A penny for your thoughts, RedState readers.

COMMENTS

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  • barleycorn

    Thanks Neil. I’m not sure what you meant by that but it gave me my morning laugh.

  • proudmarinemom

    With copper wire thieves breaking into construction sites and the price of copper pipes through the roof, perhaps we all should be hoarding pennies to be melted down after WWIII breaks out. A large jar by the front door makes a handy door stop, too.

    • http://www.hakubi.us/ Neil Stevens

      Pennies haven’t been made from copper in a long time.

      • http://lvjohnston.blogspot.com/ lvjohnston

        But, but… those of us who have collected them since early childhood will have much more time on our hands and that may *not* be a good thing.

        The penny should have been done away with many
        years ago but finding a shiny new Abe Lincoln in my change gives me a
        smile just like it did years ago. Nonetheless, the penny should go the way of the half cent and the large cent both of which were last minted in 1857.

        Coins change (pardon the pun) continuously through the ages. In our great-grand children’s time, the nickle and dime may be the subject of a similar debate.

        • http://www.hakubi.us/ Neil Stevens

          See above. Getting rid of the penny socks it to the poor and/or small business by accumulated rounding errors.

          • http://lvjohnston.blogspot.com/ lvjohnston

            I was being a bit sarcastic there. The rounding ‘to deceive the poor’ already takes place. Gas prices at every gas station in the US show the price to 1/10th of a cent – $3.849 is on the gas station sign right across the street. This is to keep the psychological impact of a ‘penny less’ in place – simple marketing. Similar to the $0.84 pricing (and*not* $0.99) used by WalMart.

            More so, this is a *real* concrete way to reduce government spending. That fact we pay more to mint them than they are worth in buying power can be used to show how out of control Federal spending has become. The effect of *crap* monetary policies has caused rapid inflation and price roller-coasters and will normally and eventually lead to a shift in the *usefulness* of small decimal currency and the associated real buying power. My small business (and most I would think) would round based on standard rounding procedures – <.05, down to 0.0 and above, up the the next tenth of a cent. Merchants will not suffer. The sharp ones will avoid the rounding 'errors' you cite.

          • http://lvjohnston.blogspot.com/ lvjohnston

            Copper content has been reduced through the years to try to keep the value close to cost of minting. The last *real* copper pennies were issued in 1982. When minted, the penny weighs 2.5 grams per specification but the pre-1982 penny weighed in at 3.5 grams.

            My final thoughts on this… take a look at the *quality* of the current penny. The ever-so-slight electroplating used to make them ‘look* like a penny easily flakes off leaving the underlying zinc/copper alloy to corrode. So fast in fact that after just a few years in circulation they can be a weigh .03 grams less than spec. On some, the plating holds but the inside is gone!

          • http://www.hakubi.us/ Neil Stevens

            It’s not government spending. The Treasury runs a profit on the currency it makes, thanks to the huge profits on paper money.

    • Freiheit

      A pre-1982 penny is 95% copper and worth 2.5 cents if you were to melt it down. While it is illegal to melt a penny, it’s also illegal to talk on a cellphone whilst you are driving. And being a numismatist who know a lot of collectors … well …

  • http://www.hakubi.us/ Neil Stevens

    a) The shop owner is a private business choosing to *lose* up to 4 cents per transaction because he’s rounding *down* every time. Get rid of the penny in general and you’re going to be *forcing* rounding on others.

    b) The military base in Europe can set pricing accordingly, because it’s a small, self-contained environment.

    c) As long as as many states *mandate* sales tax collection as do, the penny is essential.

  • Freiheit

    Not so, Laura. The value of $0.01 is worthless and not worth your time. Let’s do a math example to demonstrate this. Assume that you make 2 transactions per day and receive 2c per transaction for a total of 4 pennies.

    My change jar can fit about 25 rolls of pennies, or $12.50 worth of pennies, which is 1,250 coins or 312.5 days worth of saving pennies. My bank, however, is 7 miles (20 minutes) away by car. That means I’ll be burning about $2 worth of gas, and waste at least 50 minutes of my time going to deposit these things. I do enjoy having some free time and would put a value of at least $6/hr value on that free time. For me, $12.50 – $2 – $6 = $4.50 savings per every 10.5 months, or about a loaf of bread and a half gallon of milk (which in my household will go sour).

    Simply put, it’s more cost effective for me (and you) to simply place a penny into a trash receptacle every time you receive one. It’s not worth your time. Not only that, it’s not worth small business’ or large business’ time either. The penny is a flat out waste; and as such, we need to have gotten rid of the penny 20 years ago already.

    The trap that you (and many others fall into) is believing that a 5c increase in postage stamps and gasoline is “worth” something. It isn’t. Marketing companies and the ads you see on TV, newspaper, billboards, etc. know that the value of a penny is worthless, so they offer a 20 cent reduction on a jar of jelly! It doesn’t cost them anything hardly at all for that cost reduction, but they do their very best to try to convince consumers that it does to create a win-win situation. The ill-side effect is that consumers become so focused on that 20 cent off on a jar of jelly that the IMPORTANT budgeting decisions don’t get addressed and that never-used $500 gym membership fee doesn’t get canceled.

    A 5c increase in a nation of 312 million people can have an effect. But to you who sends 50 letters and drives 20k miles per year? Not at all.