President Obama has been talking about scrapping the penny for some time now. Strangely, given the cooperative and bipartisan mood of politics these days (cough), Congress has yet to be sold on the idea.
But it might be time.
It now costs 1.6 cents to make every single 1-cent coin, at least according to Quartz. The main reason is a surprisingly sharp rise in the cost of zinc.
As the Wall Street Daily has noted, the soaring cost of zinc is likely to continue in coming years as demand goes up. Chinese demand is increasing due to growing automotive and building markets where zinc is used for making steel. In the meantime, several large zinc mines are closing down, either due to depletion in the case of the Century zinc mine in Australia, or environmental concerns in the case of several mines in China.
Speaking of environmental concerns, mining of any metal is always likely to have an impact on nature. Chinese zinc mining, in particular, has been implicated by researchers in several worrying trends including:
Soil and water contamination
An increase in lead, zinc and cadmium in crops
High lead levels in children
Excessive cadmium in urine
Canada already banned the penny. At the time, some experts suggested that the savings to financial institutions alone could add up to $20 million. And guess what? The Canadian economy keeps on rolling. With more of our commerce shifting toward electronic payments anyway, penny coins in particular — and physical cash in general — is beginning to feel decidedly 20th century.
Perhaps there’s finally something that true fiscal conservatives and environmentalists can agree on.
But it may be a while before the penny goes away. According to Americans for Common Cents, nearly two-thirds of Americans want to keep the penny. One of their main worries is that without the penny, retailers will round up prices. There's even a proposed Price Rounding Act that would spell out when retailers have to round down and when they can round up. But 77 percent of Americans think that if an official rounding law is in place, retailers will just raise their prices to make up for it.
So, maybe it's not as simple as it seems. A penny for your thoughts?
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