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. |
If they're old enough, yes. Solid copper pennies -- those minted prior to some time around 1983 -- are worth more than 1¢ per as raw copper. I believe it's technically illegal to melt down US coins, but once they're melted and cast as ingots, who's to know?
That's why the Mint started making pennies out of copper-plated zinc in the early '80s. That led to my favorite high school chemistry class trick. Nitric acid dissolves copper but not zinc, and hydrochloric acid dissolves zinc but not copper (I think -- I might have it backward. It's been a long time).
Trick part 1: burn off the copper, and you have a silver-colored penny that is pretty much indistinguishable from an intact penny other than by color. You might be able to pass those off as rare WWII steel pennies, but I wasn't conspiring to commit fraud. I just thought it was neat.
Trick part 2: with a handy pocket knife, nail file, X-Acto, or the edge of a desk, make a notch in the edge of the penny so you can see the zinc. Dissolve the zinc, and you have a hollow copper shell barely thicker than crepe paper. Then you can hold it between your thumb and forefinger, showing your audience what appears to be a solid penny, and then crush it with nothing but finger pressure.
Took me a while to get tired of that one. Even though it only worked on freshmen and sophomores who hadn't taken chemistry yet.
I had a lot of fun in the chem lab. My lab partner (and best friend) and I usually finished our projects early, so in our spare time we each lined up eight test tubes in a rack and filled them with varying levels of water so, eventually, after a lot of tweaking and tuning, they formed a C Major scale when lightly tapped with a glass stirring rod. When we finished the project, we held a little recital for our classmates.
If Mrs. Strong, my chem teacher, didn't have a sense of humor, I probably wouldn't have graduated high school.
But I digress.
Yeah, because then they wouldn't merely be close to worthless, but they'd also wear out.
And the US is one of the few countries that's never done it. Once upon a time, a dollar would buy you a week's lodging at an inn, with meals. Recently enough that my dad can remember it, five bucks would feed a family of four at MacDonald's. Recently enough that I can remember it, a dollar would buy about 1.3 gallons of gas.
Inflation is a fact of life, and even if it's running at a fraction of a percent, that adds up over time, It's not an accident that the US dollar and the UK pound are the closest thing we've ever had to a global currency. Or that the dollar and the pound are the most counterfeited. They're trusted. They won't go away tomorrow. They're a piece of the rock. And while they might be worth less in the future, they'll never be worth nothing.
I don't think any sane person has ever said, "it's okay -- I've got a suitcase full of lira."
How finely do you want that mill to grind? For a large chunk of US history, the smallest unit of coin didn't have a terminal 1. It was a half-penny, with a terminal .5. Should we resume minting half-pennies? Mils? Nanocents? Where does the madness stop?
The copper-clad zinc pennies burn with a charming blue and green light wehn tossed onto the fireplace embers.
The copper-clad zinc pennies burn with a charming blue and green light wehn tossed onto the fireplace embers.
In essence, welfare is 500% inefficient.
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Sorry, some of us have trouble with the new insane math expressions, could you please use an expression that makes sense?
So there a penny cost 2 cents to make. If the penny was the only currency that would be a problem, but it isn’t. If you are going to use that logic then what about the dollar bill, who much does it cost procduce a “dollar”. For the sake of argument, let us say it is 5 cents, which means there is a “profit” of 95 cents per dollar bill. But wait, there is more. What abou the 5 dollar bill. It would cost the same as a one dollar bill, so the profit is now $4.95. Step it up to the ten, twenty and fifty and the profits become obscene. So they lose 1 cent for every penny but they make it up on the bills.
Of course they would say there is no “profit” but then who gets the value of the “money” when new money is created? I am sure we have more “money” in circulaton today then we had say ten years ago. So since they are not just replacing worn bills, but creating new bills, who gets the “money”?
Raise the value of the penny to a dollar, give everyone a wheel barrow and let’s go shopping for sauerkraut and weinerschnitzel.
Touche'. I wrongly was expressing that it cost 83 cents to deliver 17 cents to a welfare recipient which is worse than using 2 cents to make a penny.
That is why I went to law school. There was no math on the entrance exam.
That is why I went to law school. There was no math on the entrance exam.
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I am sure you are good at math, it is just that you seem to have fallen into the same habit as others who use meaningless expressions like “5000 times smaller”, “300 percent less”, etc. For some reason this sort of thing drives me into a fit of despair. My high school math teachers would have recommended me to a good insane asylum if I had used such terms that are so common today.
— the same denominations as today, but worth ten times as much. That would make the cent worth what it was 60 years ago.
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In reality, I would say MAYBE forty years ago, certainly not sixty.
The Lincoln tophats floating across the bubbling surface might tip off the feds. :-)
Issuing new dollars, with a nominal value 10 times greater than today’s nominal values wouldn’t be devaluation. Devaluation usually refers to the deliberate lowering of the value of your country’s currency relative to another’s. Consider the recent changes in the relative value of the U.S. dollar against the Canadian dollar, or the Euro. Those changes are real, not just nominal.
I recognize that issuing “newbukz” wouldn’t be easy — that’s why I said that it wouldn’t occur any time soon. However, all that it would be doing is recognizing the effects of decades of inflation, and depreciation of the value of the dollar.
In Canada, we converted the dollar bill to a coin about 20 years ago, and more recently the two-dollar coin was issued. (BTW, a two dollar bill was a lot more convenient than you might imagine — in my lifetime it was worth what a twenty is today.) Now, there’s serious talk of a 5 dollar coin. In my father’s youth, 5 dollars was a good day’s pay — now, it’s about to be reduced to pocket change.
I love Office Space. It's a very real scheme that even has a name: "salami slicing". The idea is you just cut off a very thin "slice" of money repeatedly and it adds up.
That’s interesting about $5 per day being a good days pay at one time. It reminds me of the “Stick up for breakfast” campaign by some cereal company in the ‘70s. The grand prize was a $5 per week allowance for a whole year. As a kid I was like wow! $5 per week! It seemed HUGE.
Could make them out of lead, except the price of lead is climbing too, to the point where raw wheelweights are being sold to bullet casters on Fleabay.
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LOL!
Wholeheartedly agree!
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