Minister Flaherty or How I Learned to Stop Worrying and Love the Nickel

Back in March, Finance Minister Jim Flaherty announced with apparent enthusiasm the demise of Canada's penny. In May he stamped out the last one, symbolic of him grinding it under the heel of his shoe. By the fall, the last pennies you will ever have are the ones in your pocket.

A Senate Committee supposedly could not find a single person or group that wanted to keep the penny in a 2010 study. They apparently didn't look too hard. This guy wants to keep them. Many others do too. Many other are too stupid not to. Groups? Why would there be groups formed to protect the penny until someone really thought it was endangered? True, lots of people find the things annoying or useless. Their primary use seems to be flinging at people.

I'm not going to get into any cultural or social or sentimental reasons to keep the penny. Don't be ridiculous. But I'm also not an economist. So don't quote me on this. I'm also not a paranoid if you're thinking I'm buying into some conspiracy theory. This isn't a theory. It's just logic.

The idea is that businesses will simply round to the nearest nickel in their transactions. Ok. If this were true, I'd have little issue. But what business do you know is going to round down rather than up on its prices? Payouts, sure. But prices? Not a chance. And I don't blame them; that's just good business. This only applies to cash transactions if you don't have the pennies. So you can circumvent getting hosed by paying electronically. But WAIT! The plot thickens. If you're like me (you're not, but if you were), your bank charges you between $1 and $2 for every electronic payment. Pony up the pennies or be prepared to ride the express train to Poorue. The penny only ceases to exist as a physical entity; it remains as a theoretical construct. This means, as I said, that it doesn't affect electronic or cheque transactions. Businesses never do business with cash. Even if they did, their transactions are usually far fewer with their suppliers than they are with you, the consumer. This means that the cost to businesses - aside from the initial cost of reprogramming cash registers) is virtually nil. The cost to you is pennies.

"It's just pennies," you say. The buying power of a penny is almost nothing. Of course it is. Due to inflation, the value of a dollar is almost nothing. What can you really buy for a dollar anymore? A few ten cent candies? Do those still exist? Even at the dollar stores, after taxes you're paying more than a dollar ($1.13 in Ontario). Do we ditch the dollar too? Of course not. He who doesn't know the value of a penny doesn't know the value of anything. If you remove the oxygen molecule from water, does it maintain it's properties? No. So too, if you remove the cent, do you destroy the dollar.

"No one even bothers to pick up a penny anymore." Let's not base public policy on the acts of fools. There is enough of that going around already.

"It costs more to make a penny than a penny is worth. The government loses almost $11 million dollars a year from penny production." So? That's small change; the government loses billions every year on dumb policy decisions made by politicians and lawyers rather than informed professionals. According to this source, it costs even more to make nickels (which we'll need more of) than it does to make pennies (at least in the States). "A recent New Yorker article pointed out that pennies are so worthless now that it doesn't even pay the federal minimum wage to stoop to pick one up off the street unless you can do it in 6.15 seconds or less." (Same source as above). If you can't pick up a penny in 6.15 seconds, you're probably collecting disability or spending to much time and money at McDonald's.

"I waste hours a year handling or waiting handle pennies." Really? Lean over and whiff that rose while you wait. Whistle the Andy Griffith theme to yourself. Smile at the cashier. I guarantee you'll be happier even without your two hours a year. (You lose half of that in daylights savings time and I bet you can't even explain why we keep that around).

"I'll just donate them to charity anyway." Why are pennies worth any more to charities than they are to you?

"The rounding only affects the final purchase price, not the price of individual items. It's only going to cost me a few dollars a year at most." How many years do you plan to live? How much will inflation drive that up over your lifetime. Besides, who is going to profit from your hard earned dollars? You? Not likely. Especially when you start to give smart business people some credit. You know what I would do if I ran a business? I would round the price of every individual item up to the nearest nickel before you get to the cash register. Meaning you lose pennies per item. The whole 99 cent thing is a dubious practice as it is. And you know who does a lot more transactions per day than you do? The businesses you do business with. So they stand to make a lot more profit per transaction, per day, per year than you do. Then they're going to invest those cents to make even more money. The rich get richer while you don't.

Think your pay will change accordingly? [LAUGHS] I haven't seen a cash payment into my hands in years. Trickle down economics doesn't work. Money is a concept and concepts aren't subject to the laws of physics. Money trickles up and history proves it. The penny is a transcendental unit linking economics and physics to your hand. Take away the penny and it's out of your hands and out of your pockets.

A penny saved is a nickel earned. Don't be a debit card pincher. Pound wise and penny foolish. You'll be left without two pennies to rub together. A nickel for your thoughts?