This interesting question is the subtext of University of Chicago economist Austan Goolsby’s interesting column in the New York Times. His basic point is that there is too much valuable metal in the Abe Lincoln penny; in fact, it’s worth much more than a penny so we need to revalue it as a nickel and phase out the old silvery coin stamped with the model of Chez Jefferson (otherwise known as Monticello) because we can’t have a one-cent and a five-cent coin both pretending to be a nickel.
Note for polticial mavens: Goolsbee argues that the U.S. should follow the rest of the developed world and admit that its currency is depreciating and try to adjust. He cites Canada, Britain and other European countries that have taken their lowest denomination coins out of circulation. But remember the fiasco here: they tried to take away the one-dollar bill because they wore out much more quickly than any other paper money and, well, it would have been better to use the Susan B. Anthony and then the Sacagawea coppery-looking dollar. I may be shopping in the wrong places, but the only place that ever has these oversized coins, or wants them, is the vending machine at the post office.
And so it will be with the demise of the dollar. Other, less democratic, governments can simply decree the demise of the most favored coinage but in the U.S. a move to get rid of the penny, no matter how uneconomic it is, will suffer the same fate as metric conversion. It will die because of popular resistance.
And, in Las Vegas, can we really do away with the penny? Long gone are the days when the only slots that were worth having were the ones that ate quarters and dollars. Now, there are the 127 lines on slot machines like the Millioniser that con people into thinking that a few pennies here and a few more there is not real gambling. The continued existence of our slots-based economy may depend on the survival of the one-cent coin!
Still the dreams of economists, not to mention their logical arguments, are doomed in the face of such popular prejudice.
