A few days ago President Obama requested permission from congress to change the mix of metals that go into producing pennies and nickels. Both are made from zinc and copper, but the cost to produce a single coin exceeds the value that they're worth. A penny costs 2.4 cents to produce where a nickel costs 11.2 cents, in 2011.
While the debate has been raised before, the administration claims that is has no desire to eliminate the penny. But if it did, based on cost considerations alone, it would be hard to argue the nickel doesn't deserve to get the axe as well. Plus, despite congressional attempts a few years ago to eliminate the penny, alone, and start rounding tabs to the nearest 5 cents, well, that just isn't a practical solution. This country will never round to the nearest 5 cents because that is confusing as hell. You either take out the penny with the nickel, or leave them both alone. This is a decimal system, not a bi-decimal system (or whatever confusing name you want to call it).
Personally, I prefer to see the penny stick around, or at least if it has to go that is fades away based on consumer and retailer preferences. Some stores and retailers already disregard it, generally rounding in favor of the consumer when making change. Then you have carnies that simply don't even put up with change, making all ring toss and fishing games cost whole dollars (or at least something divisible by a quarter). My fascination is not so much with the face value (obviously), but with the other perceived values. I will admit that I am one of those that, when I see a penny on the ground face up, I take it as a sign of good luck. Call it superstition, but who's to say it isn't? If it results in a positive feeling then perhaps there are some actual physical benefits worth more than 1 cent of any drug or taking 1 second to step into a place of worship.
There's also the nostalgic distraction of looking at a given penny's mint date. Remembering where you were when the coin was produced and how your paths have now randomly crossed. Sure, this feeling can reproduced with any American currency, but the penny is unique in that is the smallest, seemingly most inconsequential part of our value system. But in fact the opposite is true. Since it is the smallest, it is actually the foundation of our currency system. A symbol of indivisibility. Hence the reason it will be so difficult to eliminate it. If congress wants to take measures to eliminate any coin then they would likely have better results going after the nickel, alone. Then when consumers and retailers get tired of administrative hassle of dealing with the extra pennies, the system will start adopting the dime as the preferred denomination to round to.
In the meantime, I applaud the approach of mixing up the metallic components of the penny and nickel. However, I would like to put forth a few other honest alternatives aimed at keeping the existing change values unchanged:
1. Mint the coins in China. Seriously. The quoted cost of the raw metal that goes into the penny is actually only 0.6 cent. The rest of the cost comes from suppliers rolling the metal and then manufacturers stamping them out. If these manufacturing steps were opened to competition outside the U.S. then surely a better deal will be obtained.
2. Pay people 2 cents to turn in the pennies that they already have. Why not? This is surely cheaper than producing new pennies that cost 2.4 cents apiece. Plus, if people can get a 100% rate of return on their change then why wouldn't they adjust their coin saving habits, or lack thereof? Some people admit to just throwing coins away. This system would serve the purpose of preserving existing pennies but also reduce the need for manufacturing new ones.
3. Instead of copper-coated zinc, why not consider copper-coated plastic? Or some other material (other than metal) to use as a substrate? As long as the exterior is metal, the interior could possibly be something cheaper than zinc, and my guess would be that plastic fits that bill. Plus it could be cheaper to produce plastic coins. People already pay most of their bills with plastic anyway, so there is some precedent.
4. Partner with Canada to produce a single penny design accepted in both nations. Face it, if you live anywhere near the border you already get mixed pennies, and sometimes other coins, in your change anyway. But it isn't really a big deal since they are approximately the same size and value anyway, especially with the exchange rate hovering around 1. If more nations adopted the same penny then, in theory, a smaller unit cost to manufacture could be obtained at higher volumes. Not much discount when billions are already produced, but every fraction of a cent counts.
5. Hollow out the penny. For example, make it more like a washer. While Lincoln's face is great, his likeness and other sayings can still be scribed on a ring rather than a full circular face. Just look at how much can be squeezed onto a dime. The end result would be mostly a material savings, but again, every cent counts.
Only after we abandon some of our pre-conceived notions about currency will we be able to take the right steps to ensure that nothing actually changes.
