Your Government Inaction: Pennies

 

A couple of weeks ago, I was visiting my daughter in Boston.  While we were walking along the waterfront, she looked down, then picked up and gave me this magnificent numismatic specimen:

This little incident may seem minor and unremarkable, but it is actually a perfect illustration in microcosm of government waste, ineptitude, inertia and corruption.

The one-cent coin was originally a copper disc based on the English penny and larger than a quarter.  In the 1850’s, the size of the coin was reduced to the current dimensions and was made of a solid copper alloy until 1982.  In that year, to reduce costs, the US Mint started making pennies out of zinc with a thin copper coating.  In the last 160 years, pennies have lost some of their “purchase” power.  Due to inflation, they are worth about 1/28th of their value in the mid 18th century; In other words, a penny back then could buy more than what a quarter can today.

Quick quiz:  Name something that costs 25 cents.

Pennies are worthless.  And they have been for a long time.  When I was a kid, Goofy sang a song to teach children how to count change.  The verse about pennies went like this:

A penny, a penny, a little copper penny.

It can’t buy anything,

It makes your pockets green. . .*

Therefore, our highly efficient US MintIGA makes over 8 million of them a year.**  Each penny costs the government about 1.6 cents for metal, production, and distribution.***

Where do all these coins go?  A lot end up being thrown away.  In Rubbish, the seminal work on the archeology of garbage,**** William Rathje and Cullen Murphy report that about $3000 in change ends up in a single landfill in Massachusetts every day.  When I was a cop, I used to do business checks on fast food restaurants and pick up the change under the drive-up windows.  There was always change under the drive-up windows.  Once I met a vending machine repairman***** who told me he found about $100 in change a month under the machines he picked up to be fixed.

Think what happens when you get a penny in change.  Actually, unless you’re a weirdo like me, you probably don’t think about it.  You leave it on the counter, in the “take a penny, leave a penny” tray, in a donation bucket, on the floor.   It may land in the parking lot after coming out of your pocket with your keys.  Or end up in the cup holder of your car, or under the seat where it stays until you vacuum it up.  Or until the car is junked and crushed.  It may end up in a jar on your dresser, where it sits for weeks or months with other coins until you go through the hassle of dumping them in a coin machine at the grocery store.

And the landfill is actually the best-case scenario.  A couple of days after my daughter gave me the penny she found, I picked up another one:

Notice the difference?  My penny is one of the old pure copper pennies.  It is battered but recognizable while the one my daughter found looks like it has leprosy.  The white coating on that one is zinc that has leaked out of the core.  Now, technically,  zinc is not soluble in water at a neutral PH.   Unfortunately, if there is anything in the water that makes it acidic, the zinc dissolves.  I’m sure that all that zinc has absolutely no effect on the environment.  Heck, if aquariums thought the metal was hazardous to sea life, they’d post signs telling you not to throw coins in the water.

Okay, we’ve established that pennies are a useless nuisance and hassle.  Why are they still being produced?  It’s a classic case of diffused costs vs. concentrated benefits.  While the government wastes over $100 million every year making these worthless things, that comes out to less than 40 cents per American.  You can make up for that just by paying attention when you walk around or checking under drive-up windows and vending machines.******

Meanwhile, a big part of that $100 million goes to the people who sell zinc to the mint.  Guess who spends a large amount of money every year lobbying Congress to keep the penny?  There are also well-paid unionized workers at the mint who love the penny, purely for historical and numismatic reasons, I’m sure.  Add in the charities who have the buckets on checkout counters and the people who run the coin machines in the grocery stores and you have a large constituency with an interest in keeping the penny.

In the grand scheme of things, this is all pretty minor.  I’m sure nothing like this will happen if the government takes over health care.

*  That’s right folks, Goofy has a better grasp of basic economics than our government.

**  Oopsy, that should be 8 billion.  With a ‘b.’  Oh, well, I was only off by a factor of a thousand.  Close enough for government work.

***  Only the government can manage to lose money by making money.

****  Yes, that is a thing, and yes, I’m fascinated by it.

*****  He denied being high on intellectualism.

******  Be sure to lift with your knees.

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  1. Arahant Member
    Arahant
    @Arahant

    Time to revalue the dollar. Or to re-align our coinage so that it is worthwhile:

    New Quarters = Old One Cent coins
    New Dollar Coin = Old nickel
    New Two Dollar Coin = Old Dime
    New Five Dollar Coin = Old Quarter
    New Ten Dollar Coin = Old Half Dollar
    New Twenty Dollar Coin = Old Dollar

    Remember that we used to have coins up to the Double Eagle, which was $20. Given that 28:1 ratio due to inflation, that means we used to have a coin worth $560 today. (Except it was nearly one ounce of gold, which is now at $1,522. So, even larger in reality)

    • #1
  2. Judge Mental Member
    Judge Mental
    @JudgeMental

    Arahant (View Comment):

    Time to revalue the dollar. Or to re-align our coinage so that it is worthwhile:

    New Quarters = Old One Cent coins
    New Dollar Coin = Old nickel
    New Two Dollar Coin = Old Dime
    New Five Dollar Coin = Old Quarter
    New Ten Dollar Coin = Old Half Dollar
    New Twenty Dollar Coin = Old Dollar

    Remember that we used to have coins up to the Double Eagle, which was $20. Given that 28:1 ratio due to inflation, that means we used to have a coin worth $560 today. (Except it was nearly one ounce of gold, which is now at $1,522. So, even larger in reality)

    I was going to suggest the same thing, but at a 100:1 ration, so that the penny becomes the dollar.  Then it would make sense to make them out of copper again,and for that matter, the others could be made of silver again.

    • #2
  3. Arahant Member
    Arahant
    @Arahant

    Judge Mental (View Comment):
    I was going to suggest the same thing, but at a 100:1 ration, so that the penny becomes the dollar. Then it would make sense to make them out of copper again,and for that matter, the others could be made of silver again.

    That would work for me. And then we could have farthings. 😜

    • #3
  4. Judge Mental Member
    Judge Mental
    @JudgeMental

    Arahant (View Comment):

    Judge Mental (View Comment):
    I was going to suggest the same thing, but at a 100:1 ration, so that the penny becomes the dollar. Then it would make sense to make them out of copper again,and for that matter, the others could be made of silver again.

    That would work for me. And then we could have farthings. 😜

    Only if we can use Necco wafers for farthings.

    • #4
  5. Jimmy Carter Member
    Jimmy Carter
    @JimmyCarter

    I’m all for keeping the penny.

    If not, then the price of everything would be rounded up, including taxes.

    Eventually, Yer grandkids will write a post called “Yer Government Inaction: Nickels.”

    Then dimes…

    Then quarters…

    • #5
  6. Arahant Member
    Arahant
    @Arahant

    Jimmy Carter (View Comment):
    If not, then the price of everything would be rounded up, including taxes.

    They already are.

    • #6
  7. Judge Mental Member
    Judge Mental
    @JudgeMental

    Arahant (View Comment):

    Jimmy Carter (View Comment):
    If not, then the price of everything would be rounded up, including taxes.

    They already are.

    Rounded down, actually.  You drop the cents.

    • #7
  8. Arahant Member
    Arahant
    @Arahant

    Judge Mental (View Comment):
    You drop the cents.

    We dropped the sense long ago.

    • #8
  9. KentForrester Moderator
    KentForrester
    @KentForrester

    Nice post, Jose.  About two years  ago, I began to just walk on after dropping a penny in the street.  It just didn’t seem to be worth the trouble to chase it down and pick it up.  About a year ago, I began to throw away pennies that I received in change. What’s next?  Nickels?

    The government ought to just stop making pennies. 

    • #9
  10. Gary McVey Contributor
    Gary McVey
    @GaryMcVey

    In Europe menus are usually based an a whole number: “Wiener Schnitzel 9”. I liked that; it’s less of an insult to your intelligence than our “$8.99”. Russia carries it even farther; generally, menus spell out how much you get: “100 grams salmon”; or a drink of “1oo m/l vodka”. 

    • #10
  11. E. Kent Golding Member
    E. Kent Golding
    @EKentGolding

    Judge Mental (View Comment):

    Arahant (View Comment):

    Judge Mental (View Comment):
    I was going to suggest the same thing, but at a 100:1 ration, so that the penny becomes the dollar. Then it would make sense to make them out of copper again,and for that matter, the others could be made of silver again.

    That would work for me. And then we could have farthings. 😜

    Only if we can use Necco wafers for farthings.

    I think the Necco wafer company went bankrupt.   Not sure if someone is still making them post bankruptcy.

    • #11
  12. Doctor Robert Member
    Doctor Robert
    @DoctorRobert

    In 1974, taking a Greyhound bus from Chicago to Cleveland, I had to do some transaction in Toledo.  The cashier there did not deal in pennies.  There was a sign on  the cash register.  Prices were rounded one way or the other, but no pennies were used.

    That’s the solution, y’know.  Refuse to treat pennies as legal, and they will cease to annoy you.

    • #12
  13. E. Kent Golding Member
    E. Kent Golding
    @EKentGolding

    I would like less of my government in action and more government inaction.   I think ‘do-nothing’ congress and ‘do-nothing’ president are truly high compliments.

    • #13
  14. Belt Inactive
    Belt
    @Belt

    I’ve been saying for a while that we need to stop minting pennies and nickles (and fifty cent pieces).  If you want to keep them around, then only mint them in limited batches for collectors.  When you pay cash, you round to the nearest dime and call it good.  Another point is that one dollar bill may be more trouble than it’s worth as well.  So: Dimes, quarters, one dollar coins, and then five, ten, twenty, and one hundred dollar bills.  Possibly five hundred and thousand dollar bills as well.

    • #14
  15. The Great Adventure! Inactive
    The Great Adventure!
    @TheGreatAdventure

    The Canadians are actually ahead of us on this:

    Abolition[edit]

    There had been repeated debate about ceasing production of the penny because of the cost of producing it and a perceived lack of usefulness. In mid-2010 the Standing Senate Committee on National Finance began a study on the future of the one-cent coin.[15] On December 14, 2010, the Senate finance committee recommended[16] the penny be removed from circulation, arguing that a century of inflation had eroded the value and usefulness of the one-cent piece. A 2007 survey indicated that 37 percent of Canadians used pennies, but the government continued to produce about 816 million pennies per year, equal to 24 pennies per Canadian.[17] The Royal Canadian Mint had been forced to produce large numbers of pennies because they disappeared from circulation, as people hoarded these coins or simply avoided using them. In 2011 the Royal Canadian Mint had minted 1.1 billion pennies, more than doubling the 2010 production number of 486.2 million pennies.[18] In late 2010, finance committee members of the Canadian Senate estimated that the average Canadian had as many as 600 pennies hoarded away, taken out of circulation.[16]

    On March 29, 2012, the federal government announced in its budget[19] that it would withdraw the penny from circulation in the fall of 2012. The budget announcement eliminating the penny cited the cost of producing it at 1.6 cents.[19] The final penny was minted at the RCM’s WinnipegManitoba plant on the morning of May 4, 2012.[20] Existing pennies will remain legal tender indefinitely;[21] however, pennies were withdrawn from circulation on February 4, 2013.[22] Only pennies produced in 1982 or later are still legally “Circulation Coins”.[23] The Currency Act says that “A payment in coins […] is a legal tender for no more than […] twenty-five cents if the denomination is one cent.”[24]

    On February 4, 2013, Google celebrated the beginning of the end for the Canadian penny with a Google Doodle.[25] On the same day the Canadian Mint began melting down the estimated 35 billion pennies that are in circulation.[26]

    Cash transactions are now rounded to the nearest 5¢.

    • #15
  16. Paul Erickson Inactive
    Paul Erickson
    @PaulErickson

    Doctor Robert (View Comment):

    In 1974, taking a Greyhound bus from Chicago to Cleveland, I had to do some transaction in Toledo. The cashier there did not deal in pennies. There was a sign on the cash register. Prices were rounded one way or the other, but no pennies were used.

    That’s the solution, y’know. Refuse to treat pennies as legal, and they will cease to annoy you.

    May have the opposite effect.  Once you make something illegal, the black market gooses its value.  (Or maybe in this case it would be a “green” market?)

    • #16
  17. Stad Coolidge
    Stad
    @Stad

    KentForrester (View Comment):
    The government ought to just stop making pennies. 

    Somehow, “A nickel for your thoughts” just doesn’t sound right.  Hehe . . .

    • #17
  18. Judge Mental Member
    Judge Mental
    @JudgeMental

    Paul Erickson (View Comment):

    Doctor Robert (View Comment):

    In 1974, taking a Greyhound bus from Chicago to Cleveland, I had to do some transaction in Toledo. The cashier there did not deal in pennies. There was a sign on the cash register. Prices were rounded one way or the other, but no pennies were used.

    That’s the solution, y’know. Refuse to treat pennies as legal, and they will cease to annoy you.

    May have the opposite effect. Once you make something illegal, the black market gooses its value. (Or maybe in this case it would be a “green” market?)

    Let people sell them as scrap copper and they’ll be gone in no time.

    • #18
  19. Front Seat Cat Member
    Front Seat Cat
    @FrontSeatCat

    I love picking up pennies and still consider them good luck.  I found a double-headed nickel once. You always need pennies if you pay cash because most places don’t round up, and they still have the little cups near registers to take or leave one.  You can always put them in a little piggy bank and fill it all year, then give them to a grandchild. I loved the copper Lincoln one you displayed – that says In God We Trust and Liberty on it – that’s worth keeping in your pocket.

    • #19
  20. cdor Member
    cdor
    @cdor

    I don’t like change in coin form. Most of the time I pay with credit card so I don’t have to receive coins for change. I feel a little guilty when the purchase is under $3, so at times I get a little soft and pay with cash. Invariably the coin change from that purchase ends up rattling around in the bottom of my washing machine. From there it goes into a very large cigar ashtray on top of my dresser. And there it stays.

    • #20
  21. Mark Camp Member
    Mark Camp
    @MarkCamp

    cdor (View Comment):

    I don’t like change in coin form. Most of the time I pay with credit card so I don’t have to receive coins for change. I feel a little guilty when the purchase is under $3, so at times I get a little soft and pay with cash. Invariably the coin change from that purchase ends up rattling around in the bottom of my washing machine. From there it goes into a very large cigar ashtray on top of my dresser. And there it stays.

    I’d like coins if the coinage system (coins plus tooling, including personal coin carrier/dispenser and merchant coin-handling devices) were better designed: take up less space, less weight, and less time.  Paying with coins and getting change would be ten times faster than paying by card, and twenty times faster than paying with today’s poorly designed coin system.

    Coins are inherently much preferable to paper money from a user experience and cost point of view.  We are blinded from seeing this because of our lack of practical thinking ability.

    A consequence of our statist popular thinking is that we get a government which not only tries to engineer us personally, which it is forbidden by our constitution to do and cannot possibly do well, but fails at engineering of the systems which are its legitimate and necessary functions, like the coining of money.

    We need to train engineers better, and get better engineers in government.  I mean people who have learned to think like engineers.  An engineer is purpose-driven, and views everything through the eyes of his imagination, rather than seeing the systems which were engineered yesterday, and are consuming depreciation today, as systems which are an immutable reality.

    • #21
  22. Bob Thompson Member
    Bob Thompson
    @BobThompson

    Gary McVey (View Comment):

    In Europe menus are usually based an a whole number: “Wiener Schnitzel 9”. I liked that; it’s less of an insult to your intelligence than our “$8.99”. Russia carries it even farther; generally, menus spell out how much you get: “100 grams salmon”; or a drink of “1oo m/l vodka”.

    In retailing there is the idea that the digits before the decimal point capture the potential buyer’s attention, so sale items end in .99, .98, or .95. But one early purpose was to insure sales clerks used a cash register for each transaction so they wouldn’t just pocket the cash from an even dollar purchase. That way the customer expected change to be delivered. Looks like with the predominant use of credit and debit cards this is less of an issue.

    • #22
  23. The Great Adventure! Inactive
    The Great Adventure!
    @TheGreatAdventure

    Bob Thompson (View Comment):

    Gary McVey (View Comment):

    In Europe menus are usually based an a whole number: “Wiener Schnitzel 9”. I liked that; it’s less of an insult to your intelligence than our “$8.99”. Russia carries it even farther; generally, menus spell out how much you get: “100 grams salmon”; or a drink of “1oo m/l vodka”.

    In retailing there is the idea that the digits before the decimal point capture the potential buyer’s attention, so sale items end in .99, .98, or .95. But one early purpose was to insure sales clerks used a cash register for each transaction so they wouldn’t just pocket the cash from an even dollar purchase. That way the customer expected change to be delivered. Looks like with the predominant use of credit and debit cards this is less of an issue.

    Ah but there is at least one small piece of information that a consumer can glean from those “cents” extensions!  If you’re shopping at Costco and see a price ending in 7 (..57, .97, .07, etc.) you know that the item is going to be discontinued – if you really like it, you’d better stock up!

    • #23
  24. Bob Thompson Member
    Bob Thompson
    @BobThompson

    The Great Adventure! (View Comment):

    Bob Thompson (View Comment):

    Gary McVey (View Comment):

    In Europe menus are usually based an a whole number: “Wiener Schnitzel 9”. I liked that; it’s less of an insult to your intelligence than our “$8.99”. Russia carries it even farther; generally, menus spell out how much you get: “100 grams salmon”; or a drink of “1oo m/l vodka”.

    In retailing there is the idea that the digits before the decimal point capture the potential buyer’s attention, so sale items end in .99, .98, or .95. But one early purpose was to insure sales clerks used a cash register for each transaction so they wouldn’t just pocket the cash from an even dollar purchase. That way the customer expected change to be delivered. Looks like with the predominant use of credit and debit cards this is less of an issue.

    Ah but there is at least one small piece of information that a consumer can glean from those “cents” extensions! If you’re shopping at Costco and see a price ending in 7 (..57, .97, .07, etc.) you know that the item is going to be discontinued – if you really like it, you’d better stock up!

    I didn’t know that. I might be discontinued before I can take advantage of that though.

    • #24
  25. Al French, sad sack Moderator
    Al French, sad sack
    @AlFrench

    Arahant (View Comment):

    Judge Mental (View Comment):
    I was going to suggest the same thing, but at a 100:1 ration, so that the penny becomes the dollar. Then it would make sense to make them out of copper again,and for that matter, the others could be made of silver again.

    That would work for me. And then we could have farthings. 😜

    That would probably make  @She  happy.

    • #25
  26. EJHill Podcaster
    EJHill
    @EJHill

    The value of the one cent piece is in direct correlation to how poor you’ve been at any moment of your life. In the years after my father’s passing I was dirt poor and to this day all my change goes into a bottle, pennies included, and it gets rolled for deposit. 

    • #26
  27. namlliT noD Member
    namlliT noD
    @DonTillman

    Just to throw a little light from a different angle…

    I’d like to point out that due to technological advances and manufacturing efficiencies, the prices of individual electronic components such as resistors, capacitors, diodes, and such, are mostly around a penny.

    (Not that anyone purchases them singly, or with coins, or anything.)

    • #27
  28. namlliT noD Member
    namlliT noD
    @DonTillman

    In my book, the worst “99” offender is any gas station.

    • #28
  29. The Great Adventure! Inactive
    The Great Adventure!
    @TheGreatAdventure

    namlliT noD (View Comment):

    In my book, the worst “99” offender is any gas station.

    Yeah – sounds like a Seinfeld monologue – “What is with the 9/10th of a cent?”

    • #29
  30. RushBabe49 Thatcher
    RushBabe49
    @RushBabe49

    In my world (I am a buyer for an aerospace company), resistors still cost $0.005 each.  They come on reels of 5,000, however, which comes out an even dollar amount per reel. My state has varying sales taxes, so pennies are still useful.

    • #30

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