[Lex Computer & Tech Group/LCTG] It doesn't make sense

[Michael Alexander]

This sounds like the author(s) must be people who haven’t studied whether low-income people use cash, much less pennies:  everyone they know uses plastic, so everyone must use only plastic.  Get rid of pennies; eliminate cash altogether.

     – Mike Alexander



On Sunday, September 8, 2024, 10:03 PM, Larry Wittig via LCTG <lctg at lists.toku.us> wrote:

This appeared on
Morning Brew <crew at morningbrew.com>

Is the penny obsolete?

The penny is like an ashtray in an airplane bathroom—a holdover that
no one has the energy to nix.

That’s the thesis of Caity Weaver’s 7,000-word manifesto published in
New York Times Magazine last weekend, in which she argues that the US
needs to consign the measly tokens to the dustbin of numismatic
history. She decided to offer her two cents on the matter after
learning that producing a single penny costs the US Treasury more than
three pennies.

The government lost over $94 million last year minting billions of the
pesky discs, which are used mostly as change for cash purchases ending
with .99 and…not much else.
The vast majority are destined to vanish into couch crevices and other
places of coin oblivion, abandoned by Americans who have no reason to
carry currency with a face value that amounts to a rounding error
after centuries of inflation.

Weaver is far from the first commentator to find the status quo
absurd: She joins a chorus of penny abolitionists that includes
prominent economists, US Mint officials, lawmakers, and at least one
POTUS (Obama). But despite years of grumbling about the
superfluousness of the near-worthless coins and several congressional
bills to ditch them, nothing has yet killed the penny once and for
all.

Who’s grasping at pennies?

“A penny saved is a penny earned” rings true for the Tennessee metal
manufacturer Artazn, the government’s sole supplier of the zinc blanks
used to make the 1-cent coins (a penny is made up of 98% zinc coated
with copper). The company, which was bought by private equity in 2019,
has raked in $1 billion in revenue since 2008 from selling zinc discs
to the US Mint.

Artazn’s lobbying on Capitol Hill is the main reason for the penny’s
endurance, according to retired US Mint Spokesperson Tom Jurkowsky and
other sources Weaver spoke to. Though the company spent a relatively
paltry $3 million on coin lobbying efforts, Artazn is the loudest
voice promoting pro-penny talking points, sponsoring the advocacy
group Americans For Common Cents, which argues:

The abolition of the penny would negatively impact low-income people
and the unbanked, who make up a disproportionate amount of cash users,
by causing stores to round up prices.
Charities like the Leukemia & Lymphoma Society rely on penny donations
for fundraising.
Polls show that the majority of Americans want to keep the penny.

But many penny opponents claim that these arguments don’t add up to
much, just like a bucket of pennies.

Down with the penny

Penny abolitionists point out that cash usage is declining and
highlight studies showing that even cash-loving consumers would not be
harmed if prices were rounded to the nearest nickel. Just like some
after-tax totals would be rounded up by one or two cents, others would
be rounded down (one study did predict a minuscule price increase in
aggregate).

Plus, the US wouldn’t be the first country to ditch the penny:

Canadian merchants say that consumers there have gotten used to the
rounding system the country implemented when it stopped minting its
one-cent coin in 2013.
The US itself previously parted ways with the half-cent coin at a time
when it was worth more than today’s penny.

Concerns for charities might also be misplaced. When Weaver reached
out to the Leukemia & Lymphoma Society, she was told that the
organization no longer relies on coin drives and has been more
successfully using credit card payment roundups to fundraise.

As for the penny’s supposed popularity, the majority of Americans
across party lines are on board with ceasing penny production once
they’re told how much it costs to make them, according to a 2022 poll
by progressive think tank Data for Progress.

There are some Abe Lincoln stans who worry that the demise of the
penny would diminish the legacy of the 16th president, whose profile
graces its obverse. Financial Times reporter Sam Learner proposes
erecting a copper-plated Lincoln monument made out of melted pennies
to appease them.

So, why are shiny new pennies still a thing? Weaver blames government
inertia. The Fed reflexively orders them from the Treasury, the
Treasury fulfills the order from the Mint, and Congress lacks the
political urgency to officially nix them. But she claims there’s one
person with the power to pull the penny kill switch: According to an
obscure law Weaver discovered during her research, the Treasury
Secretary can simply not order any coins she deems unnecessary.—SK

>From Larry W: I would also ditch $10 & $50 dollar bills, and dimes.
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