Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
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.Published in Humor
I was in Australia years ago and they had eliminated the penny. They also had $1 and $2 dollar coins. All coins were different in size and/or thickness and weight, and could thus be identified by feel eliminating the need to look to see what coins you had. The “paper” currency was actually made of plastic of some sort. Each denomination was of a different size (in increasing from $5) and color, so they were easily identified without have to read the denomination. I found it easy to adjust to and far easier to use than our currency. As to prices, cash sales were rounded up/down to the nearest 5 cents, but credit card sales were in the exact amount.
They are actually fractions of a cent. 0603 resistors right now are hovering between $0.002 and $0.0025 apiece.
Capacitors tend to be a bit more, depending on the dielectric material.
Diodes are all over the map. Small zeners are pretty cheap, but Schottkeys and rectifiers can range anywhere from 2 cents on up to several dollars, depending on their current ratings.
Just proof that @skipsul and I operate in the same world!
Just think how cheap it is to have all our children’s undivided attention held by screens for how long: all the time, most of the time, except when sleeping. No wonder we are turning stupid and don’t know some of the simplest things about life.
What about flux capacitors?
Oh, man, this is one of my biggest pet peeves…
(EDITED: I mean ‘9/10ths of a cent on every gallon of gas,’ not ‘Seinfeld monologues.’)
I’ve been throwing pennies away for two decades, at least. I used to toss all my coins in a jar. All coins are mostly useless nowadays, but if you jar the quarters then once a year or two you can roll them up without a lot of work and get about $100 or $200, and you get a little less for dimes and quarters.
Pennies, however, are not worth the time it takes to roll them. I can roll all my pennies, but it will take quite a lot of time and I’ll only get a few dollars out of the effort. It’s just not worth it. All pennies I get go immediately into the trash.
Variable, but can be guessed with the right hand rule.
Copper coated zinc coins. They self-destruct in water.
The decline of the Roman Empire can be traced by the debasement of their coins — almost pure silver denarii at first, then gradually less silver with time until it was less than 5% by 300 AD.
Which is at least enough for a McDonalds value meal.
I don’t have any strong feelings about the penny. If it saves money to quit having them, that’s probably good.
One thing that continues to surprise me is how much I like using the pound coin when I am in the UK. Don’t know why, but I just like the size, the heft, and the design. I was on a project in Montreal one time and felt almost the same way about their dollar coins (Loonies and Toonies).
If we had them, I guess I would get tired of the weight in my purse.
And the hour or two spent rolling those pennies could have been spent earning $7.25 an hour at McDonalds. I couldn’t even pay someone enough to roll them.
I began the traveling phase of my career 25 years ago. At that point, one part of my weekly packing/preparing routine was making sure I had at least $40 cash in my wallet. I used credit cards for all of the major expenses – airfare, hotel, rental car, dinners – but would often pay cash for breakfast and lunch. Oh, and I also usually leave $3-5 per night tip for Housekeeping at the hotel.
For the past several years, however, I have to consciously remind myself to have $10 in the wallet to leave for the hotel tip before I leave. Otherwise I have zero use for cash. Don’t even think about folding money. And change? My thought is usually “What am I supposed to do with this crap?”
Those are expensive, and the expenses continue after the wedding.
When I started traveling for work, the first pair that I worked with, I asked them at dinner, “What level of tip do you leave for housekeeping at the hotel?” The first guy looked bewildered. He had never heard of such a thing and had no idea one was supposed to. The team lead confessed, “I don’t leave anything, which is really bad, because I used to clean hotel rooms in Miami as a kid, and I always got angry at people who left no tips.” I doubt he was shamed into changing his ways, though.
You’re welcome! Turns out, since my early work experience was in commercial bank operations, I learned all there was to know about checks and cash. Then, suddenly I was a systems analyst and programmer and was positioned to spend the rest of my working life figuring out how to rid us of that crap. You only get a taste. Be thankful you don’t have to stand in a bank lobby line to deposit or cash your paycheck on payday.
Rolling? That’s so quaint. Doesn’t your bank have a coin counter? I keep a little dish on my dresser that I toss my change into, every several months I take it to my Credit Union, dump the contents into the coin counter, and usually get about $30 bucks* from the teller.
*For some weird reason, when I do this, the total beyond the whole dollars always seem to end up at 97 or 98 cents, so I get a bunch of coins back right away to start refilling the dish again.
No! No Gee Dee coins. What are we Medieval Pesants? Coin money is for Renfair goers. Heck cash money is quickly becoming a nuisance in its own right, that only drug dealers and strippers should have to deal with. Beautiful electronic payments. That is the future. So long as we have coins still the high way departments will insist on having coin operated tolls. Wasting precious space on people to stupid to get an I-Pass or its equivalent.
I hoard my coins. Annoying to carry around, but they’ve gotten us through some times when we needed quick money. We have a giant jar we keep coins in.
I am a bit skeptical. Where did you get this cost figure?
The average price of transistor in a current CPU chip like the Intel i3 (around $300, with 1.3 billion transistors) is roughly 1/100,000 of the price you give.
It’s true that not all devices are transistors, and that capacitors and resistors are many times more expensive.
But back in my day in the 1980s, as I recall engineers had virtually eliminated these non-transistor circuit elements because of the enormous cost, compared to transistors. I assume that they are even more cost-prohibitive and rarer today.
If my facts are right, then the price of a transistor given above is basically the price of a component.
Why would you be skeptical? I’m an engineer and I’ve been purchasing electronic components for 40-something years. I’ve shipped a lot of products in my career.
I wasn’t talking about transistors on a chip. I was talking about individual discrete components.
When engineering an integrated circuit, then yes, resistor and capacitors are more expensive that transistors. But for discrete components, it’s the other way around.
Don’s addressed this in part, but I think it’s worth amplifying (I own an electronics manufacturing company).
Crack open your phone or computer and while yes, you will see a number of monolithic integrated circuits (ICs) that are the brains and guts of the phones, they still need to talk to each other, and to interface to the outside world through ports, buttons, antennae, transducers, microphones, speakers, and so forth. Then you have your batteries too. You cannot just run traces from the I/O ports on the monoliths to each other, sometimes you need to have filters, buffers, or blocking diodes to deal with noise, lag, etc. While yes you can take power and ground busses from the batteries you definitely do not want your costly monoliths hanging on those busses unprotected – one monolith powering up or down can create a surge elsewhere and you need to buffer for that, or a faulty charging circuit could introduce issues of its own. Since your phone is only useful if it can send and receive radio waves in certain frequency bands, and you need to ignore the others, and still more even when the right signals are getting through they can vary greatly in amplitude and condition, you have to filter and condition the signals for the I/O of the monoliths to even make sense of it (and did I mention that with the high clock speeds and low voltages of some of these, the PCB traces themselves can act like antennae, or even interfere with each other by way of induction?).
So no, caps, resistors, and diodes are not rarer than before, they’re ever more prolific to the point where once-common packages and ratings – stuff you could buy anytime – now has to be ordered at least 26 weeks out. The “popcorn parts” as we call them were all at capacity just a few months ago, and only the economy getting jittery has eased demand somewhat. My little company is placing somewhere in the neighborhood of 3 million parts per year – and most of those are resistors, caps, and diodes.
Agreed! I feel like a man of means when I’ve five pound coins in my pocket. Hunger or thirst can be met if need be. The American dollar coin isn’t the same – too light, and oddly false.
I’m old enough to have a sentimental attachment to the quarter – it would do laundry, pay for pinball, plug a meter. Three of them bought a pack of smokes with a dime left over. I keep a few on hand in case the app I use to pay for the parking meters malfunction, which of course never happens. But it could.
My wife has had it happen.
Getting the local currency is one of my favorite parts of planning for a foreign excursion. And then I end up waving my watch or card at a tiny device, and taking the currency back to the bank to take a bath on the exchange.
Go to a small town around here and the parking meters require coins.
A few years back the rapacious green machines at the box stores and super markets, which at one time charged an outrageous percentage to give you cash, worked out a deal with vendors for gift cards.
Now, every cent you put into the machine can be added to a gift card of your choosing – you just indicate which one before adding the money or counting (can’t remember which). The cost of the service is borne by Starbucks, Netflix, Dunkin’, and the like while you convert coins to easily usable credit of your choice.
Eh, it’s still not worth hauling a jar of pennies to the bank or a machine for just a few dollars. Other coins? Sure. Pennies, never.
It still might be worth your time to save pennies, if nothing else to sort out the 1982 and older ones for their copper content. No metal scrapper can legally take them now, but a lot of people are (as it were) banking on the penny’s demise as a great chance to turn that copper into useful cash. The copper pennies’ copper content is worth a lot more than their face value.