Get Rid of the Penny

There has been debate for many years on whether or not Canada should get rid of the penny. According to an article from CBC news called “A ‘penniless’ Canada?“, “more than two in five consumers surveyed (42 per cent) were in favour of withdrawing the penny from circulation, while 33 per cent wanted to keep the copper, according to the survey. The rest were uncommitted.” Those that wanted to get rid of the coin stated reasonable reasons, that “they wouldn’t have to carry as much change if the penny disappeared. They complained that the penny is inconvenient, lacks value and is too expensive.” Those that wanted to keep the copper stated utterly ridiculous reasons: “Those who opposed the penny’s death felt prices would increase as businesses “rounded up.” Other penny supporters said it holds sentimental value or they just plain liked the coin.” Huh? Now you know why the recent MMP referendum did not pass in Ontario…

Australia has already gotten rid of their penny and two-cent penny in 1990 and their currency has been worth about the same as ours for as long as I can remember. In 1867 the lowest denomination coin was the penny and how much was it worth back then? According to the Bank of Canada, the value of $0.01 in 1867 had the purchasing power of $0.27 in today’s dollars. So back then, they were getting by with the lowest denomination of coin being worth $0.27. This kind of makes sense, I mean what can you buy nowadays for less than a quarter? The only thing I can think of is 1 small piece of candy. Or a shopping card at some grocery stores. The cheapest pop from a vending machine that have seen is $0.35 at Safeway for the Safeway brand pop, but last time I checked that was gone and they were selling Pepsi products.

A more interesting article came out in July, which I first heard about on CBC radio. It says that according to an economic model called “D-Metric”, Canada should have gotten rid of the penny in 2005, around the time that an average day’s net pay in Canada exceeded $100/day. Apparently, “today’s purchasing power of the five-cent coin is equivalent to the purchasing power of the penny in 1972.” According to the article “A decision to ditch the penny would be up to the Finance Minister. The Finance Department says it examines coinage issues on a regular basis in conjunction with the Royal Canadian Mint.” So ditch it already!

It’s not that I really care that much about the penny. I almost never lay eyes on them or touch them, using debit for almost all my purchases and tossing all my lose change (if I have any) in an automatic change sorter at home. It’s just a bit embarrassing that we are so far behind on these simple things like pennies and electoral systems, and makes me annoyed that our politicians don’t do anything about it.

Most of the comments on this CBC article Save the Penny or Leave the Penny are for getting rid of the penny. Some made me laugh:

I say SAVE THE PENNY or else the next thing you know there will no more NICKEL, DIME, or QUARTER.
Prices WILL RISE because we here in Canada never get savings passed on to us. Instead of prices being rounded down, they will be rounded up!

I’m pretty sure that was a joke because it was signed “William Hung.” If you want to know how it really works, check out Swedish rounding.

3 thoughts on “Get Rid of the Penny”

  1. Your comment on the MMP referendum implies that those who voted against it are sentimentalists caught up in nostalgia. That’s a bit of a broad brush to paint people with.

    I was happy to vote against the MMP solution offered for a couple of reasons:
    1 ) Accountability: In an MMP solution, the “reserved list” candidates are only held accountable to the party – they don’t even have to run for office. Sure, the “public” can hold the party accountable at the next election, but that can be 4 years away.
    2 ) Incomplete: There were many details of the MMP solution that were “to be determined later”.
    3 ) Minority governments: It would almost guarantee persistent minority governments with “regional” or “fringe” parties diluting the seats.
    4 ) Is it better?: The solution doesn’t really seem that much better than the current FPTP. Why change for the sake of change? (Uh oh, I’m a nostalgist after all!)

    From a broader perspective, there was no real campaign in Ontario one way or the other. Sure, we had the “Get out and Vote” and “Know the question” campaigns, but noone stood up to champion either solution.

    When there is such apathy about an issue, the incumbent usually wins (FPTP).

    Are we nostalgic? Sentimental?

    Nope, we just weren’t offered enough incentive to change.

    PS: What’s this got to do with getting rid of the penny? Nothing. I support the idea. I just took your comment personally.

  2. “Your comment on the MMP referendum implies that those who voted against it are sentimentalists caught up in nostalgia.”

    No, I was implying that those who voted against it were totally uninformed and perhaps voting for “no change” rather than voting for anything at all. A certain percentage of people look at two issues, weigh the facts and evidence for either choice and make a decision based on the real merits of both. Another percentage of people choose to not think about the real underlying merits of either choice and so are only left with the choice of going with something “new” or “old”.

    Clearly with MMP you thought about it before voting “no” but I think you should read the reports prepared by the Citizen’s Assembly on the MMP system proposed for Ontario.

    1) The list candidates are accountable to the voters who elected them. In Germany, for example, 90% of the list candidates ran locally. See page 13 of “Description of the Ontario Citizens’ Assembly’s MMP System” under “Dual Candidacy.”
    2) If you read those two documents you will not find any details that are “to be determined later.” If you do find something let them know. The whole point of the Citizens Assemblies in BC and Ontario were to come up with a system in its entirely, rather than having a referendum asking for FPTP or “something else TBD/TBA later”.
    3) See page 14 of “Description of the Ontario Citizens’ Assembly’s MMP System” under “Threshold.” In a perfectly “fair” system the threshold in Ontario would be 0.78% (the value of one seat), however, the made it even higher to prevent what you describe.
    4) The new system is apparently a hell of a lot better. The Citizen’s Assembly in BC voted 93% in favor of ditching the old system. The CA in Ontario voted 84% in favor of ditching the old system.

  3. Now, for more of my thoughts on pennies:

    I was just amazed that 33% of Canadians said they want to keep the penny. To me it is a complete no-brainer to get rid of it. It costs apparently $130 million dollars per year to keep them in circulation, the mint makes almost 1 billion new pennies per year at a cost of $0.008 per penny (several millions of dollars). As I said, the nickel nowadays is worth as much as the penny was in 1972. So keeping the penny nowadays is as stupid as introducing a 1/5th-of-a-cent coin in 1972. How many would people have wanted that?

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