The debate over whether to keep the penny or discontinue it has intensified since the penny crossed the line of one-cent production cost per penny. Those who support getting rid of the penny argue that it is useless, inconvenient and takes up space that could be given to other denominations of currency.
Common Cents, an organization devoted to keeping the penny, runs an annual Penny Harvest and supports the penny largely because of its importance to charities.
In fact there is only one machine that takes pennies: Coinstar – a leach on the economy that eats 10% of your money while providing nothing in return except the ability to spend cash that was already yours.
The difficulty of spending pennies is why they end up in jars, dead to the economy after a short, useless life where they failed at their only job, to facilitate exchange and instead did the exact opposite by being a literal dead weight on every cash transaction. But, you might think, won’t prices rise and charities lose money without the penny? New Zealand got rid of their 1 cent coin, as did Oz.
One of the functions of prices is to provide participants in the economy with information about the scarcity, supply and demand for a particular good.
Removing the penny removes grades of information that could be available to investors, consumers and manufacturers.
So you have to get rid of them by using exact change.
But, because the United States doesn’t include sales tax in prices – unlike more civilized countries – and you can’t multiply by 8.875% in your head, you can’t get your change ready before you reach the register like a good Samaritan would.
But, even if pennies were minted from something more representative of their true value – like plastic or lint – it wouldn’t fix the fundamental problem that pennies are bad for people and the economy.
Here’s why: The purpose of physical, cash money is to make it easy to transact the everyday business of buying stuff. Rather than bartering like savages for it, you use cash as a medium of exchange.