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. Skyler Coolidge

    SkipSul (View Comment):

    Skyler (View Comment):

    Chris (View Comment):

    Miffed White Male (View Comment):

    Skyler (View Comment):

    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.


    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.

    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.

    I keep wheat pennies.  That’s all. 

    • #61
  2. Mark Camp Member
    Mark Camp

    namlliT noD (View Comment):

    Mark Camp (View Comment):

    namlliT noD (View Comment):

    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.

    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.

    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.

    It’s true that not all devices are transistors, and that capacitors and resistors are many times more expensive.

    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.

    Thanks, Don.  I understand now.

    • #62
  3. Stad Coolidge

    I say we bring back the mill!

    • #63
  4. Arahant Member

    Stad (View Comment):

    I say we bring back the mill!

    We would have to revalue the currency for it to be worth anything.

    • #64
  5. TBA Coolidge

    Stad (View Comment):

    I say we bring back the mill!

    And a good 5¢ cigar! 

    • #65
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