The Penny’s Recent Press Coverage
[Continuation of the discussion from the it's time to get rid of the penny article]
Fueled, perhaps, by recent reports that the penny (and nickel) now cost more to produce than they are worth, the press has been giving a lot of coverage to an otherwise neglected part of life: the penny. Just this past week, Time magazine ran an article describing the efforts by two rival organizations Citizens For Retiring the Penny (Jeff Weller - a Berkely PhD in biophysics), and Americans For Common Cents, (Mark Weller - a pro-penny lobbying group funding by the zinc industry and penny distributors) in their respective efforts to get rid of, or keep, the penny. Just today, the WallStreet Journal ran an editorial on the subject as well.
The main arguments for getting rid of the penny are that it costs more to produce than it is worth (“Thanks to spiking metal prices caused by demand from China and India and a couple of smelting-factory shutdowns in Mexico you may not have heard about, the zinc inside a penny now costs .83 of a cent. (The U.S. got rid of almost all the expensive copper in 1982.) Add distribution and production costs, and you’re up to 1.3 cents to make a penny”), its hassle adds additional transaction costs (“Based on a Walgreen’s study that says pennies waste two or more seconds on every cash transaction, Gore estimates that we each lose several hours a year, at a cost of $10 billion in productivity.”), and it’s not even accepted as legal tender at many vendors (“Kolbe, who advocates rounding to the nearest nickel, argues that parking meters, Laundromats, transit systems and vending machines don’t accept pennies. Merchants hate them and won’t let you pay for things with a stack of them. They pile up or get thrown away to such an extent that the Mint made 8 billion new ones last year”), and that inflation has eaten away at most of the value of the penny anyway (“A penny now has one-eighth the purchasing power it did in 1950 — and then the coin was 95% copper, versus 3% today. The penny’s devaluation may explain why the slogan on the face of the penny reads “In God We Trust,” not “In Government We Trust.”").
The main arguments for keeping the penny are that it has historical value (“The penny was first authorized to be minted by the government in 1787, with Benjamin Franklin suggesting its original design.”), rounding to the nearest nickel could be disadvantageous for consumers (“Rounding to the nickel, Weller insists, would be manipulated by merchants to screw the consumer.”), pennies represent a profitable fund-raising tool for charities (“It turns out that one social value of pennies is that they help charities collect millions of dollars in donations each year — yes, one red cent at a time.”), and that the penny is a psychological hedge against inflation (“Taking coins out of circulation is an act that one associates with nations like Argentina, Bolivia and Mexico that periodically degrade their peso currencies and create hyperinflation.”).
Arizona Congressman Jim Kolbe continues to lead the legislative fight trying to get rid of the penny, with his Legal Tender Modernization Act which would, among other things, cease production of the penny and call for all transactions to be rounded to the nearest nickel. Kolbe may be making one final push for its passage before his retirement at the end of his current term.
So what do you think? Should the penny go? Or should it stay?
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