Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Thursday, January 27, 2005

Let's Get Rid of Pennies and Nickels

Over fifteen years ago, I wrote a little piece called "Ban the Penny" in a newsletter called The Econoclast that we put out for working journalists. The piece was picked up by several branches of the MSM, and since then I've become a not-very-regular on talk shows, etc., discussing and sometimes debating this topic. On Wednesday, Jan. 25th, Roy MacGregor published a column in The Globe & Mail ($ubscription required) about his trip to the Royal Canadian Mint and his subsequent interview with me. Here are parts of his column:

"I'd get rid of the penny and the nickel," says John Palmer.

Palmer is the University of Western Ontario economist ... who began lobbying for an end to the penny when its cost was out of all proportion to its value. Now that those costs have been brought back into line, he still considers it worthless to the point where "it seems like a waste of someone's time to roll them."

Palmer wants Canada to follow the lead of Australia and New Zealand and simply dump the smallest coins. He would go that one step further and also eliminate the five-cent piece.

When Roy told me the mint had conducted focus groups on getting rid of the penny, and that many people, especially nostalgic seniors, favoured keeping it, I wrote back to him:

Focus-groups, schmocus groups -- it's time for courageous leadership. Furthermore, I don't believe the results -- Canuck seniors aren't all THAT different from Aussie or Kiwi seniors.

... I want the gubmnt to show real courage and get rid of the nickel, too. Let's round everything off to the nearest single decimal point. The simple fact is that prices and incomes are somewhere between 20 and 100 times what they were a century ago, and there is no reason to keep those meaningless little coins around -- they won't buy much, if anything, anyway.

A former director of the Mint once told me that they keep minting pennies because the banks keep ordering them. I understand his position; it isn't up to the mint to make this decision --- it's up to Parliament, and we won't likely see a decision on this topic so long as we have a minority gubmnt. How unfortunate.
Here is a link to one of the pieces I wrote on banning the penny.

Let me re-emphasize that even though this all started with a campaign to "ban the penny", the campaign should be expanded to get rid of the nickel, too. To quote MacGregor one more time:
"Moving down to one decimal point, the dime, seems to make sense everywhere but at the gas pump," Palmer says.
Who Links Here