12 April 2012

A penny and a half for your thoughts

So Canada has decided to stop minting pennies. It's a boldly unilateral move; for a country that complains about being seen as an appendage of the United States, they sure do love copying our coins—not only in denomination but in the same exact size, thus ruining countless laundry days for American apartment dwellers in what can only be seen as a vast passive-agressive conspiracy.

But my point is not numismatic plagiarism; my point is that in explaining why Canada will no longer be striking Elizabeth II's profile in copper, the Canadian Finance Minister, Jim Flaherty, gave the reason "It costs taxpayers a penny-and-a-half every time we make one," which is a textbook stupid argument that sounds smart. There are many reasons one could give to stop minting pennies—they represent a unit of value that is too small to be useful; they cost too much when compared with their utility; they all end up in a big heap on your dresser and when you try your best to quietly remove them from your pocket at night you end up spilling them everywhere and waking your long-suffering wife—but to complain that the cost of producing a coin is more than its face value is to misunderstand how money works in a spectacular way and makes me wonder if Mr. Flaherty also thinks that banks are huge money bins in which millionaires swim through gold coins.

If you sift through your own personal pile of pennies on your dresser, you are almost certain to find pennies from the 70's and 80's. You are not that unlikely to find ones from the 50's and 60's, and still-circulating coins from the 40's and earlier are out there. In a year's time a penny may be used in dozens of transactions; by the time it rolls behind the couch of history, a coin may well have been used in thousands. This is because money is not used up when it is used.

So I'm belaboring this point, or as my friends to the North would say, "belabouring." (Did you know those extra U's cost millions of dollars a year? But they're Canadian dollars, so it's not such a big deal.) But the Finance Minister's glib remark touches a nerve with me. Not for any love of pennies—they should all be melted for circuit boards—but because it perfectly encapsulates how a clever turn of phrase will always beat out a well-reasoned argument, particularly in the face of complexity. "It costs a penny and a half." "Corporations are people." "Nine, nine, nine." Sometimes you have to sweat the details. Otherwise, you're both penny and pound foolish.