Professor Majsak Final Exam: Should We Abolish The Penny?

Professor Majsak Final Exam: Should We Abolish the Penny? Write an essay in which you argue whether we should or should not abolish the penny. Use information from at least 4 of the sources and use proper MLA formatting.

Professor Majsak Final Exam: Should We Abolish the Penny? Write an essay in which you argue whether we should or should not abolish the penny. Use information from at least 4 of the sources and use proper MLA formatting. Be sure to include a counterargument.

Paper For Above instruction

Introduction

The debate over the abolition of the penny, the smallest denomination of the U.S. currency, has garnered attention from policymakers, economists, and the public alike. Advocates argue that eliminating the penny can lead to cost savings and operational efficiencies, whereas opponents suggest that the penny holds cultural significance and its removal could impact pricing practices. This essay examines both perspectives, emphasizing the economic costs associated with penny production, the inefficiencies in its circulation, and the cultural implications, while also considering counterarguments centered on tradition and consumer perceptions. Drawing from diverse sources, this analysis aims to determine whether the benefits of discontinuing the penny outweigh its cultural and practical drawbacks.

Economic Costs and Practical Inefficiencies

One of the primary arguments for abolishing the penny centers on its cost to the government and the economy. According to Jeanne Sahadi (2016), the U.S. Mint spends more on producing pennies than their face value, with each penny costing approximately 1.7 cents to produce. This discrepancy results in a significant loss of taxpayer money, as the Mint continually churns out billions of pennies that often do not circulate extensively (Sahadi). Similarly, Weller (2004) emphasizes that around two-thirds of pennies immediately exit circulation, often becoming pocket change or hidden in drawers, implying that their utility is minimal. The costs extend beyond production; time wasted during transactions adds to inefficiency. As Jeff Gore (2005) calculates, the handling and counting of pennies extend cash transaction times, leading to estimated annual losses of billions in productivity.

Additionally, the costs incurred by businesses are substantial. Jeanne Sahadi notes that coin-operated machines and cash registers must be specifically designed to handle pennies, requiring costly replacements and modifications if the coinage system evolves (Sahadi). The economic waste associated with penny production and circulation prompts many experts to advocate for its discontinuation. By transitioning to higher denominations and rounding mechanisms, the economy can save millions annually, prevent unnecessary expenditure, and enhance operational efficiency.

Cultural Significance and Practical Challenges

Despite the clear fiscal advantages, critics argue that the penny holds cultural and historical importance, especially in the United States where Abraham Lincoln’s visage has adorned the coin since 1909. Ric Kahn (2005) points out that many Americans have sentimental attachments to the penny, viewing it as a symbol of tradition and national heritage. Furthermore, these opponents contend that rounding prices could inconvenience consumers and small businesses, potentially leading to minor increases in prices—an effect that could diminish consumer trust and satisfaction (Smith, 2022). The concern is that eliminating the penny might alter long-standing pricing practices, impacting retail environments negatively.

Moreover, some argue that the penny’s cultural value justifies its continued production. The coin features national icons like Lincoln, which symbolizes integrity and American history. Eliminating the penny might be perceived as disregarding cultural pride and historical symbolism, especially in a nation that values its historical artifacts. Yet, practical challenges remain, including how to implement rounding schemes uniformly across different sectors and ensuring that consumer protections are in place.

Counterarguments and International Context

Proponents of keeping the penny counter with the argument that other developed nations have successfully eliminated low-denomination coins. Mark Weller (2004) states that countries such as the United Kingdom and Canada discontinued their small-value coins decades ago without adverse effects on their economies. These countries adopted rounding laws and experienced minimal impact on prices or consumer satisfaction. Additionally, proponents argue that the cost savings primarily benefit governments and large industries, while consumers may experience negligible differences in day-to-day transactions (Safire, 2004).

Supporters also assert that eliminating the penny could streamline cash transactions and reduce the number of coins in circulation, which often get lost or hoard in piggy banks, as Edmond Knowles (2005) has exemplified in his extensive collection of pennies. From an international perspective, the move away from low-value coins is a trend reflecting economic efficiency rather than cultural neglect.

Conclusion

Considering the economic costs, operational inefficiencies, and international precedents, the case for abolishing the penny is compelling. Although cultural and historical attachments exist, they do not outweigh the tangible financial benefits. Transitioning to rounding and higher denominations would modernize currency handling, reduce costs, and improve efficiency. Policymakers should consider implementing gradual reforms supported by public education campaigns to address consumer concerns and ensure a smooth transition. Ultimately, the removal of the penny aligns with contemporary economic demands and symbolizes a pragmatic step toward modernization of the nation’s monetary system.

References

• Gore, Jeff. “The Cost of Pennies.” MIT Group Discussion, 2005.
• Kahn, Ric. “Penny Debate: Cultural Significance vs. Cost Efficiency.” Citizens for Retiring the Penny, 2005.
• Sahadi, Jeanne. “Should the U.S. Abolish the Penny?” CNN Money, 11 Jan. 2016.
• Safire, William. “Abolish the Penny.” New York Times, 2 June 2004.
• Smith, Ned. “Retiring the Penny: Impact on Small Businesses.” Business News Daily, 17 Oct. 2022.
• Weller, Mark W. “The U.S. and the Trend of Discontinuing Low-Denomination Coins.” Americans for Common Cents, 2004.
• Weller, Mark. “Letter to the Editor.” New York Times, 7 Nov. 2006.
• Weller, Mark. "The Cost and Impact of Eliminating the Penny." Financial Transactions Journal, 2021.
• Weller, Mark. “International Trends in Small Coin Usage.” Global Currency Review, 2019.
• Weller, Mark. “Economic Efficiency and Currency Reforms.” Global Economics Quarterly, 2020.