|Source: The New Yorker|
Last month Dr. Garry Fleming wrote a piece for Roanomics discussing the future of the penny. The New Yorker published an interesting article on the issue in 2008. Below is an excerpt from Fleming's commentary:
Today, pennies are simultaneously ubiquitous and scarce, an interesting paradox. No one actually carries pennies around anymore, do they? In fact, most people view them as a nuisance. If change is to be given for a transactions that involves pennies, many sellers will round up to the nearest nickel, so buyers won’t have to deal with those pesky ‘copperheads’. Penny jars can be found at most checkout counters in nearly every retail establishment, so that change given in pennies can be either donated to a worthy charity or left for the next to customer ‘borrow’ so his change comes out even to five cents. The penny has been relegated to a status similar to that of a computer’s A-drive!
Recently, the US Mint has been toying with the idea of a stoppage of penny production and the eventual removal of the penny from circulation. One reason for this is a selfish one; it now costs the US Treasury 1.8 cents to manufacture one penny, so the government actually accrues a loss on its production. Recall that “seigniorage” is the revenue the government obtains when it issues money that has a face value greater than its production costs. Seigniorage has served as an important source of government revenue for a long time. Now it can be argued that the seigniorage of the penny is negative, thus making it unprofitable for the government to mint additional coins. There are other practical reasons for eliminating the penny, including the facts that they are not accepted in vending machines and a single penny will buy nothing at today’s prices.
We asked you what you thought (via our very unscientific online poll): "Should the penny be removed from circulation?"
What did you tell us? 60% of respondents said that the penny should be removed from circulation.
Now the follow-up question:
If the penny is removed from circulation, could we find other uses for our pennies?
Leave your ideas in the comment section of this post.