Thanks in large measure to my efforts*, Canada is now in the process of eliminating the penny. It's an odd feeling when a store rounds the cash price up or down, but eventually we will all get used to it.
Now there are increasing questions about whether the US will also eliminate the penny. They should:
- it's a nuisance
- it won't buy anything
- it costs more to make than it's worth
- add in the distribution costs, and it involves massive negative seignorage
- eliminating it would likely apply only for cash transactions, not credit or debit card transactions
- it would apply only to the total bill, after taxes, and not to individual prices
- with rounding both ways, it would not cause prices to rise
- competition keeps merchants from only rounding up
- it has been an unmitigated success in both Australia and New Zealand
This article in The Economist has the right idea, but it looks as if the lobbyists there will fight penny elimination successfully a bit longer.
Penny lovers and zinc-industry lobbyists counter that the coin’s demise would cost consumers, as merchants would round their prices up to the nearest nickel. But some economists disagree, suggesting that shop keepers might well round down in order to avoid moving from a price of, say, $9.99 to $10. Americans anyway seem willing to accept a fee for penny removal, as evidenced by the self-imposed cost of leaving them idle and the success of coin-counting machines, which take a cut when turning them into bills.
Other countries have eliminated low-value coins with less-than-dire results, and indeed, so has America. In 1857 it ditched the half-cent, which was then worth nearly as much in real terms as today’s dime. This has led some to suggest killing the nickel, which costs about ten cents to make, as well as the penny.
*Well, maybe not "in large measure". Actually my writings were both advocacy and predictive. I was, indeed, advocating the elimination of the penny, but at the same time I was arguing/predicting that we (in Canada) would eventually get rid of it regardless of whether my arguments carried any weight.
The same thing holds true for the US. It will happen. It's only a matter of time, depending in part on the strength of the lobbyists opposing the move and depending in part on the clarity of the arguments favouring the move.