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The E-Sylum:  Volume 9, Number 47, November 19, 2006, Article 36

WALL STREET JOURNAL EXCHANGE ON ABOLISHING THE U.S. CENT

Dick Johnson writes: "Wouldn’t you know the Wall Street Journal
would have an excellent article on the possible elimination of the
U.S. cent coin? It published an exchange between two economics
professors on Friday (November 17, 2006) entitled "Making Change:
Is The Penny Worth Keeping?"

The professors the Journal commissioned – Ray Lombra from Penn
State University and Robert Whaples of Wake Forest University –
retained an open mind and did their homework. The papers they turned
in were well stated and researched, some of which was from their
own studies.

They both agreed the U.S. Mint should explore issuing the cent coin
in a different composition (because of rising metal costs, notably
zinc); aluminum was mentioned. But this is not a viable option as
prices of whatever metal chosen will tend to rise and only postpones
the inevitable elimination to a later date.

[Postpone yes - but there can be multiple postponements in the march
of history and technology.  The U.S. large cent was introduced in 1793,
but the next production cost decision was postponed for 64 years to
1857 when the size and composition were changed.  That postponed the
next decision only til 1864 when the composition changed to bronze.
But that move postponed the next decision 118 years until 1982, when
the composition of the cent changed to copper-plated zinc.  -Editor]

Bob Whaples writes "I think eliminating the penny would be a good idea
even if the Mint could make pennies at ZERO COST. The main problem is
that pennies waste our valuable time." It takes more time to spend one
cent than it takes to earn it (considering average American wage is
$18 an hour and fishing for a cent coin adds several seconds for every
purchase at the cash register).

They quote extensively on the practice of rounding up or down at each
transaction if the cent were eliminated. Ray Lombra called the
inevitable rounding up – to the vender’s advantage – a "rounding tax"
for the consumer. However, more studies tend to show it would come out
about even or such a minor amount hardly worth speaking about.

I did learn one new term in this article – "rightmost digits" – for
the figures in the two positions east of the decimal point. And I
appreciated the seventeen references, all on the Internet, that
support their statements.

Plan to spend more than two cents worth of your time (four seconds!)
reading this article."

To read the complete article (subscription required), see:
Full Story

  Wayne Homren, Editor

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