![]() It’s also tempting to reply that pennies and nickels are chump change, when there are far more important things at stake. Second, if we can explain away the persistence of the penny in terms of special interests - and we can - what makes us think we will be able to overcome concentrated benefits and dispersed costs when there is a lot more at stake? ![]() This seems like a case where special interests shouldn’t be too hard to buy off. I suspect there would be at least one lucrative government contract involved in reorganizing the mint to produce larger coins rather than pennies. Or maybe inflation has proceeded far enough that we can also replace fragile one-dollar bills with much more durable one-dollar coins. They’re worth about what a quarter was worth twenty years ago. Perhaps we should mint more fifty-cent pieces. To this I have two responses:įirst, it seems like it wouldn’t be too difficult to pacify the special interests by using those raw materials to mint a higher-value coin. There are unionized government employees at the US Mint with a stake in it. To stop minting small coins would, of course, hurt the people who mine, refine, and transport the raw materials that go into them. Why? It’s a straightforward story of concentrated benefits and dispersed costs that is pretty easy to understand. Pennies and nickels are politically resilient. If we can’t trust the government to do something as simple as stop producing something that consumes more resources than it is worth - to literally stop destroying wealth - then what hope do we have for our loftier visions for what we want governments to do? Getting rid of the penny is an absolute economic slam dunk, and if we can’t agree to get rid of something that unambiguously wastes resources, then we have much bigger problems. It is also a test case for effective governance. It might still be worth it for a nickel, but you have to be quick.ĭitching small coins is about more than narrow financial savings. Ask yourself: when you see a penny on the sidewalk, do you pick it up? Should you pick it up? If your time is worth $30 an hour, then unless you can do it in under eight-tenths of a second, it’s not worth it. They will still be legal tender, of course, but as inflation has proceeded apace, it has gotten to the point where merely handling small change almost isn’t worth the effort for the vast majority of people. If we stop using two cents worth of resources to create something worth one cent, and seven cents worth of resources to make something worth five cents, ditching these coins offers a pretty handsome return. It costs about 1.5-2 cents to make a penny and about 7-8 cents to make a nickel, subject to fluctuating copper, nickel, and zinc prices at a point in time. As more candidates throw their hats into the 2024 Presidential ring, I’d like to offer a proposal that should have immediate bipartisan support: stop minting pennies and nickels.
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