A cool idea, sure. But does that justify their existence? Just up Mass Ave from MIT, Jeff Gore has an ally in the penny wars. “The purpose of the monetary system is to facilitate exchange, but the penny no longer serves that purpose,” Harvard economics professor Gregory Mankiw, a former chairman of President Bush’s Council of Economic Advisers, told the American Spectator this June. “When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful.” (Mankiw was on his way out of town for a week and unable to comment for this article.)
Meanwhile, even in a world where Kolbe’s rounding schemes have yet to become the law of the land, some are taking it upon themselves to implement them. “My local Dunkin Donuts sets his prices so that after tax the sum rounds to the nearest nickel,” confesses a poster on Mankiw’s blog. “That way his cashiers seldom have to deal with pennies. I foul them up by asking for a senior discount.”
Who will get screwed?
Jeff Gore is right; the pro-penny lobby is indeed funded in large part by the zinc industry. Mark Weller, executive director of Americans for Common Cents — something about this issue seems to bring out the punster in everyone — has no trouble coming clean with this fact. ACC also gets support from numismatic and coin-collecting groups, he says.
Weller is sick of the glib, jokey way the penny-elimination campaign is treated in the media. “For years, we’ve had the TV news reporters who put the penny on the street [to see who’ll pick it up], or try to buy pizza with 400 pennies,” he says. “That gets a little bit tiresome. The interesting story here is that you’ve got a member of Congress who happens to be from a state with significant copper interests, who wants to do away with the penny and the dollar bill to benefit his home state. This isn’t just a guy who thinks this is a great thing for the country from a policy perspective. His motives are suspect.”
But might this be an instance of the penny calling the kettle copper, or something like that? Weller, asked to defend the penny, does readily admit his zinc-industry affiliations — but his arguments are couched in concern about consumers. “We’re agnostic on the whole question of what the penny should be made out of; whether it’s steel, aluminum, copper, zinc, or whatever,” he says. “But we feel that the consumers benefit if you have a low-denomination coin; they benefit from more accurate pricing, and the whole idea of rounding to the nickel is a real loser for consumers.”
And not just consumers: lower-income consumers. “You’re seeing more and more use of debit cards and things of that nature,” Weller says. “Who would have thought, five or ten years ago, that you’d go to a McDonalds or Taco Bell and use plastic for a five- or six-dollar transaction?” But many poorer people don’t use debit and credit cards and are dependent on cash transactions. The penniless marketplace Jim Kolbe proposes, Weller says, would amount to a “rounding tax on the consumer.”