Posted on 11/16/2007 9:04:06 PM PST by neverdem
How much do you suppose it costs the U.S. Mint to produce a penny? Let me tell you--with a deeply self-satisfied howl of execration--almost 2 cents. This little brown item of pocket clutter costs twice as much to make as it's worth, and it isn't worth anything. A penny will not buy a penny postcard or a penny whistle or a single piece of penny candy. It will not even, if you're managing the U.S. Mint, buy a penny.
The problem is the cost of zinc, which is what a "copper" is actually made of. For the past 25 years a penny-weight of copper has been worth considerably more than a penny. And we wouldn't want our money to have any actual monetary value, would we? That would violate all of the economic thinking that has been done since the days of John Maynard Keynes. And it would give the Federal Reserve Bank governors nothing to do except sit around saying "oops" and "whoopee" every time the economy went down or up. Therefore the U.S. Mint began making pennies out of less expensive zinc with a thin plating of copper for the sake of tradition and to keep Lincoln from looking like he'd been stamped out of a galvanized hog trough. But then a rising commodities market drove up zinc prices. (Maybe China needs a lot of zinc for, oh, I don't know, stabilizing the lead paint of Barbie dolls so that our girls don't start beating their girls on math tests, or something.)
The above may be old news to the more assiduous readers of the nation's minor newspapers. The penny's cost overrun was the subject of one of those little six- or seven-column-inch filler items that are now the mainstay of the once-mighty wire services. This particular squib was in the August 16 edition of the Boston Globe, but I didn't come across it until the day before yesterday. I only buy the Globe for the comics, the Sudoku, and to train the puppy. I was arranging sheets of newsprint on the kitchen floor, being careful to keep the editorial pages face down. (The puppy is a Boston Terrier. Our other dogs are a black Lab and a Brittany spaniel with French antecedents. Understandably I try to shield them from the extremes of liberalism.) Anyway, there was the penny article, and I haven't been as pleased and enthusiastic about anything reported in a newspaper since Ken Starr folded up shop.
I suppose, as a fiscal conservative, a concerned citizen, and--at least until the cocktail hour--a decent human being, I should have been indignant. But to tell the truth, I was hopping about in glee. (Something that, by the way, is not advisable in the kitchen's puppy-training area.) You see, there are times when even those of us with the staunchest libertarian principles lose our faith. Or, rather, in the matter of government, we lose our faith in our loss of faith. We catch ourselves thinking things like, "Whoa, what about those sub-prime mortgages? The sub part is sounding like moldy hoagies. Maybe there should be a little more government oversight." Or, "If that rap singer on the radio said what I think he just said, how come a SWAT team didn't teargas his recording studio?" Or, "Where'd my hedge fund go? And where's Eliot Spitzer now that we need him?"
Libertarians are only human. When we're tired and stressed, we occasionally experience delusional hallucinations involving government--the kind Hillary Clinton should be medicated for at all times. But then comes the story about the penny costing two pennies, and we experience a sudden miraculous Hayekian, Misesean, Rose and Milton Friedmaniacal psychiatric cure. All my sane disgust at and mentally balanced distrust of the political process returned like--need I say it?--the proverbial bad penny.
What a moment of redemption and salvation it was! Yes, in for a penny, in for $40,000,000 in government waste on the eight-billion pennies put into circulation each year. Take care of the pennies, and the pounds (of flesh extracted from us by the IRS) will take care of themselves. A penny for your thoughts, and I'm not just picking your brain: I'm offering you a 100 percent return on investment.
Perhaps you yourself, even if you're not a libertarian, have been thinking that there's something chowderheaded about our government. Maybe you were put in mind of this by the postwar Iraq occupation planning that was done at 1 A.M. on a cocktail napkin in an Irish bar across from the Pentagon during open mike night. Or maybe you've been listening to the Democratic and Republican presidential candidate debates and wondering why none of them are taking their medication.
Well, congratulations on your insight. The twice-priced penny proves your wisdom about Washington being a wacky-packed urbanus ignarus brimful of prize saperoos, mutton-tops, woozy yaps, rattle hats, all day suckers, and asses wagging their ears.
Not only are you smart, the other good news is that you have a lot more money than you thought you did. We all do. A quick survey of my home indicates that the average American household contains something on the order of 900,000 to 1,000,000 pennies stashed in coffee cans, cigar boxes, quart jars, kitchen junk drawers, childrens' piggy banks, under car seats, between couch cushions, and so forth. So it's enormous flat-screen high definition TVs all around, as soon as we get done building our backyard zinc smelters.
And yet, I'm leaving out the best part of the story. Various powerful political interests have been trying to get rid of the penny for years: the Treasury Department, retailers of all types and sizes, vending machine companies, and every industry that has to buy pricey zinc, from the manufactures of barnyard feed buckets to the purveyors of sunblock for lifeguard schnozzolas. But nothing doing. The nation's only supplier of the zinc "blanks" from which pennies are struck, Jarden Zinc Products, managed to block legislation banishing the penny. It did so mainly by paying the political consulting firm of Baker & Daniels LLP $180,000 to lobby against legislation concerning--excuse me, I can't resist--"common cents."
There's no doubt that paying double is a very high price when it comes to obtaining a penny. But $180,000 is a piddling sum when it comes to obtaining effective influence in Congress. Ah, the miracle of democracy--always letting us get our 2 cents in.
P.J. O'Rourke is a contributing editor to THE WEEKLY STANDARD.
| © Copyright 2007, News Corporation, Weekly Standard, All Rights Reserved. |
Eliminate the penny, and you can bet that every purchase that used to end with a .X3 will be rounded up to a .X5. Which means that the average penny will pay for itself the first time a taxpayer uses it. Every other useage over its lifetime circulation will be gravy.
I read once that for every tax dollar taken by our income redistibuting welfare system, only 17 cents actually lands in the hands of a recipient. In essence, welfare is 500% inefficient. Reducing it to 100% would save countless billions and balance the budget in a couple years.
Prior to 1982 a penny weighed 3.1 grams, or about 146 to the pound.
Todays copper quote is about $3.15 per pound.
Net gain on just the value of the metal is $1.69 per pound, each cent is worth .0216 cents.
“This little brown item of pocket clutter”
“I suppose, as a fiscal conservative, a concerned citizen, and—at least until the cocktail hour—a decent human being, I should have been indignant.”
Sigh! Always loved P.J.’s writing.
I remember hearing about welfare too, but I thought it was 28 cents efficient per dollar spent. Ain’t government great?
To quote Will Rogers, "Thank goodness we don't get all the government we pay for".
I lived without pennies for many years when I was stationed in Japan. The military stopped using them in the commissary and exchange systems because of the cost involved in shipping the pennies across the ocean. All prices stayed the same. The totals were rounded up or down to the nearest nickel. Did we come out ahead or behind? I don’t know. I do know I sure as hell didn’t miss pennies and I was annoyed when I came back to the States and had to deal with them again.
bump for later
I would rather that new currency were issued — the same denominations as today, but worth ten times as much. That would make the cent worth what it was 60 years ago. (This won’t happen any time soon.)
Imagine if the smallest denomination coin was a dime — that’s what a cent was worth 60 years ago. People seemed to get along just fine without a smaller unit of value.
“How much do you suppose it costs the U.S. Mint to produce a penny?
Let me tell you—with a deeply self-satisfied howl of execration—
almost 2 cents.”
IIRC, it took the Mint something like $44 MILLION to design,
stamp and launch the Sacajawea dollar coin.
And I saw a news report in which the Sacajawea dollars were being
handed out FREE to (dare I say it) waiting riders at one public
transportation hub in some major “inner city”.
And all the time I was in Los Angeles, would the vending machines
at UCLA or around Santa Monica take them?
NO!!!
The only place I found that actually used a Sacajawea dollar coin
was the ticket machines at the main station in downtown LA.
And even then one time the machine ate the Sacajaweas I fed it.
(The tickets machines are the “armless” bandits run by the city
of Los Angeles!)
http://en.wikipedia.org/wiki/Sacagawea_dollar
Reverse split the dollar. $1 becomes 10¢ buys the same thing. Copper becomes 32¢ a lb.
Just kidding!
Yeah, it is not generally looked upon as a good idea to devalue your currency.
Since any system that uses digits needs a minimum unit containing a terminal 1, in order to remain accurate, the penny serves a vital purpose. It allows fine adjustment of value that counting by 5s doesn’t.
Consider this. Every sale of gas that is pumped in the US shorts the customer 1 to 5/10th of a penny, half the time and gives 1 to 4/10th back half the time. Every 10 sales, they make an extra cent. Now multiply that by the number of gas sales per year. Now imagine if you rounded every purchase price in America to the nearest nickle, biasing up. Or every sales tax percent that rounds up. It may not seem much, but across the whole population and economy, those mils and two cents add up.
One of the most effective embezzlement schemes I ever heard of was a guy who programmed computer accounting software for a bank. He set it up so that any time a transaction or interest payment was rounded unevenly, it put the spare 1/2 cent in a dummy account at the end of the list. He was only caught when some guy named something like Zzyxz opened an account and reported its unexplained growth.
It was time to abolish the penny long ago. They’re clutter. They can’t buy anything. I have enough of them that I think they’re a threat to the structural integrity of my house.
Will prices be rounded? Sure. They are now. Unless your produce weighs precisely one pound or your gas is precisely one gallon, the price is being rounded to the nearest cent. Actually, scratch the latter case — gasoline is already priced at, say, $3.109 a gallon. That weaselly little nine-tenths of a cent is at every gas station I’ve seen in the last 20 years. Oh, and when you add sales tax, that 5, 6, 7 10 or whatever % rarely adds up to an exact number of cents. You’re being rounded, dude.
And while we’re at it, why not get rid of the $1 bill? Dollar coins last longer and cost less to keep in circulation. But we Americans form irrational attachments to our coins and currency.
So can I take my old pennies off to be recycled someplace for more than one cent each?
obviously, the government needs to start printing paper pennies.
That was a plot device in at least two movies: The excellent Office Space and the execrable Superman III. I don't know if those screenwriters were inspired by a real scheme, or they were just that creative.
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