Friday, March 30, 2012

Pennies be gone

I have been ranting to people for years about how we need to get rid of the penny.  It is expensive to make (1.5 cents per penny!) and valueless.  It isn't even worth the time to lean over and pick one up off the ground since a normal person makes half a penny a second while working.  Why would we have a common piece of currency that is so worthless that it not be used to buy anything, nor even a significant fraction of anything?

Apparently the Canadian government has come around to agreeing with me and made the decision to get rid of the penny.  They actually did it in a way that is extremely sensible I think because they mostly just going to stop minting pennies and slowly let them trickle out of circulation.  There is a theory that removing the lowest denomination of coin from a currency causes inflation.  Since the penny was the lowest denomination of coin for a very long time I don't particularly buy this argument.  Pennies in 1915 were worth about 21 cents in today's dollars so unless there was a massive, constant inflation problem due to not having a small enough currency unit back then I can't see any significant inflation coming from trashing the penny.

Over time people will have less and less pennies to use and eventually businesses will start charging amounts divisible by 5 cents after tax to avoid needing pennies at all.  Either that or businesses will start rounding off everything to 5 cent increments, either way is fine by me.  One thing that does concern me a little is that the government is apparently relying on businesses to figure this out on their own instead of supplying a guideline for making change.  If the government stipulated that businesses must always round up, round down, or round normally for change then everything would be fine but leaving it wide open means there will be some unnecessary confusion.

The thing that is unfortunate to my mind is that the government hasn't simply gone whole hog and trashed the nickel too.  Getting rid of the 1 cent and 5 cent coins all in one go would still leave us with a smaller unit of currency than was available for much of Canada's history and would reduce further the amount of weighty, nearly worthless metal we all end up carrying around.


  1. I think it makes sense to not tell business what to do. Do you want there to be a government agency that has to handle complaints that the 7/11 'stole' 2 cents per transaction from some bored person?

  2. Such an agency exists right now. It takes all the complaints about how the 7/11 'stole' .5 cents from someone by rounding the taxes in the way the government tells them to. I have no idea what agency that is, mind, but rounding final transaction prices occurs right now on nearly every purchase. The rounding rules will be slightly different of course but absolutely nothing needs to change aside from the government posting a new set of regulations and everybody following them, just the way they do now.

  3. My vote is to get rid of the nickel too! Useless heavy piece of change.

  4. So there are actually enough crazies out there complaining about losing half a cent?

  5. No, which is exactly my point. People could easily complain about losing miniscule and irrelevant amounts of money by rounding now, but they don't. Obviously they could call up some government office and bitch about it, but who is going to pay attention to that? Nothing will change when this goes through - we will round to the nearest cent and then round 1 and 2 cents down to 0 and 3 and 4 cents up to 5. No significant amount of people are going to complain about the rounding then or now.

  6. I think you have too much faith in humanity. No one complains about losing .5 cents right now because the people likely to make such complaints don't even know it's happening. And they don't have anything they could have received instead of the .5 cent since the halfpenny looks to have gone away in 1864.

    As it currently stands there are a lot of people used to getting back, for made up example, 17 cents when they buy a coffee and hand over a toonie. When they start getting back 15 cents instead they're going to be made aware of the fact they lost 2 cents. They'll know they could have gotten 2 pennies back instead. And they might be bitter about it. And as it stands, the government can rightly not pay attention to it.

    But if the government came right out and said they need to be getting 20 cents back and instead they only get 15? Then they'd have a right to complain. Then the government would have to find somebody to listen to those complaints and act upon them.

    That was my point. They said to let businesses and consumers work it out themselves to wash their hands of it entirely. They don't care, and they don't have to care. If they spelled out exactly how it worked then they would have to care when people complain about it not working that way.