That Pennies Should Be Abolished

The big problemI live in New Zealand. We abolished the one cent coin ages ago. In fact, we've abolished everything beneath the ten cent. That means you can lose up to five cents on each purchase, assuming that shops do round fairly (they never do - it's usually more like 9 cents per purchase) by not using physical money. That might only add up to twenty cents a day (assuming maybe ten purchases), but that's $67 a year. In the US, currency is somewhat more valuable than in New Zealand, but still $67 is quite a considerable sum of money. The international banking system is based around the cent. When you transfer money, whether locally, at POS, or internationally, a fixed number with exactly two decimals is used to describe how much is being transferred. Even if pro abolishes physical pennies, the value of currency that pennies represent will continue to exist. The net effect is that card payers pay the exact price, and penny payers pay two cents too many or too few each time. And here's the problem - remember how we said right at the start that money needs to have an "agreed upon value"? And how pro was claiming that anything that prevents money from having an agreed upon value will be failing to fulfil the purpose of currency? Well here his own model clearly gives each good not one "agreed upon value", but two - one value for those who pay with one form of cash transfer, and another for those who choose to use a different mode of cash transfer. The harm here is that without an agreed upon value, you can't have a standard of value and thus no stable economy (. http://www.investopedia.com...). Not that the US economy is currently a bastion of stability, but this can only compound that issue. If pennies were really that useless, consumers wouldn't accept themHow many times have you gone to a shop and seen somebody refuse to take their change because they claimed it wasn't worth their while to pick it up? Consumers are not dumb. They support pennies (. http://www.pennies.org...), by and large, because they want to have pennies. They provide some value, otherwise they have no obligation to accept them. But they do. There is demand for the penny. Like pro doesn't see the point in pennies, I don't see the point in bottled water. If you have a safe water source conveniently already in your kitchen, why not use it? But that's no reason to abolish it, because other people clearly do see the value, and it's not doing me any harm for them to drink it. In the same way, it's no reason to abolish pennies, other people clearly like them, and there is no harm to pro if other people accept them. The model is pretty hastily thought throughYou know what will cost more than all the pennies are worth? Collecting them all up. It's a huge deadweight loss since it doesn't actually provide any real economic benefit. And then what? So the treasury has this big pile of coins, are they going to sell them to Walt Disney for a new Scrooge McDuck set? Just dumping that much metal is not exactly a great idea for the environment or anybody. And all the cost that the US has paid in making the coins will have gone to waste forever. They Cost More Than They Are WorthIf you read pro's own source #1, you'll note that Obama changed the Fed's secret recipe for minting coins so that the numbers pro cites are now all wrong. This problem has already been solved and it didn't require the abolition of the penny. The "Coin Modernization, Oversight & Continuity Act" provides that the treasury has to keep looking for new ways to drive down this cost still further. On the other hand, changing the factors of production in favor of other coins actually works out to be more expensive for the country as a whole (. http://www.pennies.org...). Sure those coins are worth more, but it also means you have to pay more - and with US money becoming relatively less scarce as more is made, you lose out in the end. Opportunity CostOpportunity costs of earning are not realised in spending. Sure, it might take twice as long to earn a penny at the checkout than at your job, just like you can probably buy a TV much faster than you can earn the money to buy one (unless you work for, say, Panasonic). That's normal, and it's OK, because to be an opportunity cost they would actually need to compete for the same time. News flash, those two seconds are probably not going to get you to work any faster, and if you arrived to your work two seconds early your greedy boss is too lazy to fill out all the accounting to give you two seconds of overtime. The marginal two seconds spent at the checkout are therefore not time lost that you could be earning something at your job. Moreover, it's not the same penny - one is change, the other income. Inefficiency in one aspect of a product, in this case the handling, does not really justify the abolition of this product, but even if it did pro has failed to show any kind of real opportunity cost. UselessThis was my opponent conjecturing that the opportunity cost was so big, nobody could be bothered emptying their piggy banks any more. I'm not sure how wealthy my opponent is, but as I understand it, jobs in the US remain scarce, poverty remains a problem, and piggy banks are so dry of funds that I wouldn't be surprised if the national meteorological service declares a nationwide drought tomorrow. Absolutely people are digging into their piggy banks. That's probably because you guys have just come out of a depression. In time, businesses will naturally begin rounding their prices due to inflationary pressures making pennies less cost-effective for them to calculate. At the point where pennies can no longer be spent, then perhaps there might be a case for them being useless. Since pennies can still be spent, however, they have a use, and are therefore useful. The motion fails.