Doing away with the US penny

By CORDELIA HEBBLETHWAITE
CANADA has stopped producing the penny coin, deeming it a waste of money.
The move has re-ignited a long-running debate in the United States over the future of its single cent, and the question is sometimes raised in the United Kingdom too.
So, is it time to ditch the penny?
“No pennies here,” reads a large sign with a big red slash through the middle, at the entrance to Shell Lumber, a busy hardware store in Miami, Florida.
A few weeks ago, its owner Andy Haase decided he had had enough.
“Every second counts – we were just wasting money and losing time,” he says, referring to the time his staff spent counting pennies cashing up.
All cash purchases are now rounded down to the nearest nickel (5 cents) in favour of the customer. This eats into profits a little, but is more than offset by the time spent in labour counting them, Haase says.
It is the same story at the KOA campsite in Estes Park, Colorado, which has been operating a “penniless policy” since 2007.
“This is just a silly coin to have,” owner Jim Turner says.
“Customers think it is a great idea – no one has ever complained.”
It is a “total no-brainer”, Jeff Gore, a physics professor at Massachusetts Institute of Technology (MIT), says. Gore has spent 10 years lobbying for the US to get rid of the penny, and heads up the group Citizens for Retiring the Penny.
“At least something is happening somewhere,” he says, referring to the recent move by the Canadian government, “and that gives us hope”.
In May, Royal Canadian Mint struck its final one-penny piece, sending it off to a museum.
Explaining the move, Canadian Finance Minister Jim Flaherty said the one-cent coin had become “a currency without currency”, a coin which now has little value, and little use – and a majority of Canadians were behind him.
The financial equation did not add up either. Each penny was costing 1.6 Canadian cents to produce and distribute, meaning a net loss to the government of C$11 million per year.
The case for ditching the US cent appears, on the surface at least, to be even stronger.
A penny – as it is commonly known in the US – costs 2.4 cents to produce and distribute. And there were 4.3 billion minted lasted year.
“Every penny minted represents a loss for tax payers,” Francois Velde, an economist at the Federal Reserve Bank of Chicago and co-author of The Big Problem of Small Change, says.
There are many precedents.
The US has abolished a number of coins in the past, including the half cent in 1857. The UK’s halfpenny ($0.8 cents) was withdrawn in 1984.
New Zealand and Australia abandoned the one-cent and two-cent coin in the 1990s. (New Zealand later ditched the five-cent coin too.)
“The penny has become a meaningless token. It serves no purpose whatsoever,” Velde says.
“Pennies are like counters in a silly game, just to make up a certain number.” – BBC