Tuesday, April 8, 2008

Should we get rid of the penny?
This is inspired by a post at Gather little by little.

According to 60 minutes,

· "It now costs the U.S. Mint almost two cents to make a penny and almost a dime to make a nickel.
· Coins last about 30 years in circulation before they wear out. "
I have heard of this debate a few times recently. Should we get rid of the penny? Or for that matter, the nickel? People are seriously torn. Some says yes absolutely, some say no way it is a part of our heritage. I think that it is important for money to evolve as society does. We don’t use half-pennies anymore, or 50 cent pieces. Most people don’t use pennies. You can’t put them in vending machines. There are no penny candy machines anymore. Frankly, the penny just doesn’t mean much anymore. I say get rid of them, but then there are all kinds of other arguments.
1) What about pricing? Most items are priced at $X.99. First of all, I think this is ridiculous. I always round up in my head anyway. I am not fooled. Buying soda at $.99 a bottle instead of $1, doesn’t fool me into thinking it is cheap. Why are manufacturers afraid of whole numbers? I think of the infomercials on TV and how the item is always 5 “easy” payments of $49.99 or sometimes even better at $49.95. It’s still $50. Just call it like it is. Apparently Australia phased out their 1 cent pieces a while back, and people just round when paying cash- the pricing of the item didn’t (necessarily) change, but if the total transaction was $12.22, they would pay $12.20 cash, or the whole price in plastic. Another reason to always have cash maybe? I say just get rid of all of that and reprice the item. If the item is priced at 4.84, round up. 4.87, round down. Easy.
2) Of course, what I would prefer even above that is having tax added into the price ahead of time. I LOVED this feature in France. If the price on the shelf was 6 francs (or euros now), that is what you paid. When it rang up, it would ring whatever the price really was, but once taxes were added, like magic, it was what the tag said it would be. This was true everywhere- grocery stores, little sandwich carts, gift shops. It was awesome. Why can’t we do that here?
3) Nostalgia- the “part of our heritage” argument. I honestly think we could get rid of pennies and nickels and make the dime our smallest unit of currency and be just fine. Who really delights in getting a nickel back or finding a penny on the sidewalk? Little children yeah, but even they seem to start wanting quarters instead. And yes, the people who save their change and swear that they save a lot of money that way, they would probably miss it. Alann has a good chuck on change sitting in his jar, but it is years worth of saving. I personally prefer to keep the change in my wallet and use it to say, buy myself a soda, or pay for something so that I don’t have to break a bigger bill and end up with more change anyway. That’s just me. We use cash for groceries and gas, neither of which results in more than a few cents change. As for it being part of our heritage, I guess I am just not that fond of the smell of nasty coins on my hands.

Now the dollar coin, I could get behind. I know they keep trying to make them more appealing to consumers, but I say, just quit printing dollar bills and people will have to adjust. Phase them out, retrofit vending machines to accept the coins, and people will deal. Yeah, carrying 5 dollar coins is heavier than carrying 5 dollar bills, but how many people actually carry cash these days? Do you?

Want more info? "Common Cents" by Time Magazine has it. They lay it out pretty evenly I think.
My favorite quote from the article: “The penny killers would seem to have momentum on their side, since inflation makes the penny more worthless by the day. But the pro-penny lobby has a different kind of certainty. Millions of Americans may hate the penny, but they hate change even more.”


Shannon said...

Interesting debate. I think I'm ready to say goodbye to the penny but I still think nickles are a good size denomination. We'll see what the politicians decide. :)

Sonic Death Monkey!!! said...

I hate change. I end up just collecting it and eventually turning it in, and blowing it on stuff I don't need. I actually don't like cash anymore. I pretty much use the debit for everything... which is probably why I'm so broke.