There used to be a time in our history where a single penny could purchase a variety of different items. Obviously this was along time ago, as inflation inevitable took its toll on our copper friend. Even still, for awhile you could purchase consumer goods with a dime and maybe a few pennies. Today this is no longer the case, and the penny is now seen by most to be a useless coin. People only really use pennies to make odd change or maybe collect them, otherwise pennies seem to lack a purpose. This is why for many years people have called to end the penny. Last year, the United States Mint produced over 8.1 billion pennies in total. And that was just in one year alone, excluding all the pennies that are currently in circulation. So despite many calling for the end of the penny as it would seem that if production were to be halted, the United States Federal Government would save hundreds of millions of dollars, the penny lives on. So why is this “useless” coin still in production? Short answer: lobbyists, money, and a massive multi-million dollar industry.
A few years ago the Canadians halted production of their one-cent coin, and many wondered if the United States was going to follow suit. For awhile there were many studies and polls that indicated Americans were in favor of keeping the penny, but upon further inspection, these polls were ancient and outdated. To understand why the penny is still in production, we have to examine one particular group in particular: the Americans for Common Cents.
The Americans for Common Cents, or the ACC, is a massive conglomerate/organization of some 50 independent groups that have been working together to fight for the penny. At the surface, it seems fairly admirable I suppose. But once you dig deeper into the root of their cause, it becomes apparent that they have ulterior, profit-driven motives.
The ACC is governed by a group of individuals, many of which are actually full-time lobbyists. These lobbyists work primarily for the entirety of the United States, and even foreign, zinc industry. The companies that they represent make up almost all of the organizations that are responsible for providing the metals that are used to produce pennies. Now things are starting to clear up. The main reason that the penny may never go away in the United States, is due to money. These metal companies essentially have banded together to protect their common interests, ensuring that the United States Federal Government continues to purchase the metal used to produce the penny. They use lobbyists to pay and influence members of the government to vote in favor of keeping the penny afloat. So why is that bad? Everyone protects their interests right? Well, their interests are actually fiscally harmful.
Now this starts to get really troubling when you look at how much it costs to produce the pennies. According to a report last year from the United States Mint, it apparently costs about 1.7 cents to produce a single penny. While that number seems small, it is still much larger than the penny is actually worth. So circling back to how many pennies were produced last year, and given the cost of producing just one penny, the United States Federal Government spent over $13.7 billion dollars to make just over 8.1 billion pennies. You don’t need to be an economist to see how that is completely flawed.
You can argue all day whether or not the penny has a purpose in todays society, however based on a strictly economic standpoint, you cannot logically argue that production of the penny should continue. You just have to look at the numbers to see that the government spends a disproportionate amount of money to produce the penny. If you were running a business that sold a product at $10 dollars, but that same product costed $17 dollars to produce, your business would eventually fail.
All of this goes back to the ACC, the big zinc industry, and their lobbyists. Back in 2011 one of the leading metal companies, Jarden Zinc spent around $140,000 or so on lobbyists. It turned out well for them as they eventually landed a $48 million dollar contract from the Federal Government. We certainly have a budget problem within our country, and when you have a situation like this, it’s amazing that people wonder where the money goes. We need to stop producing the penny, and arguably get rid of these lobbyists. These big companies are responsible for keeping the penny in production, even when it is fiscally unsound for the Mint to continue to produce them.
Photo Illustration by Tim Boyle/Getty Images
