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Pennies make no sense



Published: Fri, April 13, 2012 @ 12:00 a.m.

By Daniel Akst

Newsday

“O Canada,” how did such a great big loonie zone ever get so sensible?

The loonie, of course, is the nickname of the Canadian dollar — which is pretty strong, by the by. Just like the Canadian banking system, unlike some others I prefer not to name.

It turns out that bilingualism is a pretty good thing as well, making people smarter and more resistant to dementia. Many Canadians speak both English and French, admittedly with weird accents, and perhaps this is one source of the mysterious northern advantage. Don’t even get me started on the Canadian health system, which is better and cheaper than ours. (Then again, so is nearly everyone else’s.)

The latest crushing advance for the juggernaut of rationality next door is the abolition of pennies. That’s right, Canada is simply doing away with them this fall, saving the government 11 million loonies — that’s about 11 million smackers, American — each year.

Nobody’s measured the mental health benefit to average Canadians, but I’ll wager it’s big. Pennies, like most coins, are a pain in the neck, only more so because they’re worthless. Canada thus joins a growing list of no-nonsense nations that have abolished the one-cent coin, including Australia, Britain, New Zealand and Norway.

PENNY IS COSTLY

The Canadians noticed that their penny — made largely of steel — was costing them 1.6 cents to produce, which of course was ridiculous. Not to mention that it’s only worth 5 percent of its value in 1858, when it was introduced. In other words, it won’t buy a darned thing, so why bother?

Here in the United States, the penny also costs more than a penny to produce, but we do everything in a big way. Coinupdate.com, a website for collectors, figures it costs us 2.4 cents to make each one. (Maybe we can save a few bucks by getting the Canadians to make them for us.)

Countries are supposed to enjoy a little windfall from issuing currency; the difference between the cost of producing a coin or bill and the face value is known as “seignorage.” But in this case, Uncle Sam gets negative seignorage. In economics, the term for this is “insane.”

THE ALL-AMERICAN COIN

But eliminating the penny just isn’t the American way. For any Canadians who might be reading this and somehow haven’t had their fill of schadenfreude in connection with us, American pennies are made largely of zinc. And in this country we have the zinc lobby.

But in fairness, getting rid of the penny might make us more dependent on the nickel (mostly copper), which could be disastrous. Producing a nickel costs the government (are you ready for this?) more than 11 cents. And we wonder why Washington can’t cut spending.

If you’re worried you’ll somehow get gouged absent America’s most insignificant coin, direct your eyes once again northward. The Canadians are about to solve all this neatly.

Cash transactions will be rounded to the nearest 5 cents, but everything else (credit card purchases etc.) will be calculated down to the cent, just as it always was.

And so this is what we’ve come to: the richest country in the world, eying a penniless neighbor with envy.

Daniel Akst is a member of the Newsday editorial board. Distributed by MCT Information Services.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Comments

1Mikey(11 comments)posted 2 years, 2 months ago

A while back, I went to Lowe's to get a package of washers, you know the kind, made of gray metal, about as big as a penny with a quarter inch hole drilled through the center. A small package cost a dollar something or about 7 cents per washer. My ensuing daydream consisted of purchasing a few million pennies, flattening them out, punching holes in them and then sell them for a nickel each. I would soon become rich. Eventually, I concluded that the scheme was likely illegal so I gave up on the idea. So, I continue to amass pennies by the thousands until I get sick of them and bundle them in their little red paper sleeves and take them to a bank. The hours spent doing so are very undproductive in that the money gleaned from the labor is well below minimum wage. Banks don't want them either. It's time to do away with pennies. Follow the Canadian example with one and two dollar coins, nickels, dimes and quarters. No more pennies, please.

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