That Pennies Should Be Abolished
Debate Rounds (5)
The purpose of currency is to facilitate the exchange of goods and services by providing a good with an agreed upon value that can be traded for a multitude of other goods. As Pro in this debate I will argue that pennies are failing to fulfil this purpose.
The context of this debate is present day United States. For this debate "penny" refers to the one-cent-coin.
The model I am proposing is that the US mint simply stops producing any more pennies. All pennies currently in circulation are to remain as legal tender. However, after their expenditure shops are to send their pennies back to the US mint where they will be melted down. This means that the supply of pennies will gradually decrease. Price transactions are to be rounded to the nearest five cents.
The opening round is for acceptance only. I will give the Pro case in the second round.
Standard debating rules apply, they are as follows:
1. All arguments must be made in the debate. Evidence may be cited or linked from the debate, but only in support of arguments made in the debate. Arguments made in Comments are to be ignored.
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3. Any term not specifically defined before use is to be taken with the ordinary dictionary definition of the term that best fits the context of the debate.
4. No new arguments shall be made in Round 5. Pro may rebut previous arguments using new evidence solely for that purpose, but no new arguments are allowed. Con may not present any new evidence in R5.
5. DDO site rules always apply. Neither side may add or modify rules for the debate once the challenge is accepted.
I wish my opponent good luck and look forward to an interesting debate.
Sorry for the delay. I accept.
They Cost More Than They Are Worth
In 2006 the cost to produce a penny rose above one cent. This is because the raw minerals of the penny exceeded the one cent which the penny itself is worth. This problem has only been worsened, and in 2011 it cost the US Mint 2.4 cents to produce a one-cent-penny. This means that every year, with the US Mint producing 4.3 billion pennies, the United States is spending $100 million on $43 million worth of pennies, effectively donating $57 to no one every year. With the penny costing us more than it is worth, then we should not produce it anymore.
We've all heard that age old saying "Time is money", well it turns out that this old saying in fact has a fancy term in economics: opportunity cost. As defined by the New Oxford American Dictionary: "(Opportunity cost is) the loss of other alternatives when one alternative is chosen.". As I will demonstrate, the handling of a penny is a form of opportunity cost Before I make my argument I must make this point clear: it doesn't matter what people handling pennies would have done otherwise, only that they spend it doing something not worth their time in the first place, because in economics, time really is money, and their time is worth more than that
The median wage in the United States is $17 per hour. This means that it takes the average person two seconds to earn one cent, and as such it is not worth one's time. Even if it takes only four seconds to handle a penny, that means that two seconds are wasted in terms of productivity in terms of the handling of pennies. This is equivalent to losing $1 billion each year in productivity. Another economist, Robert Whalpes, has estimated the opportunity cost of penny production at $300 million. Regardless of which of these figures is correct, the underlying problem remains, which is that the very existence of pennies, costs the US people money, and lots of it. Abolishing the penny would solve this problem.
Pennies Are Useless
The purpose of money is to facilitate the exchange of goods and services. Pennies do not serve this purpose.
Pennies are not usually accepted in bulk, only being used to give people exact change, and as demonstrated, this exact change is not even worth its opportunity cost. If one wished to avoid these problems of opportunity cost to other people waiting in line to pay for their goods and services, then they would have to use a machine: none of which, except Coinstar, accept them. As a result of this, most pennies just end up in glass jars out of circulation. To quote Greg Mankiw, a Professor of Macroeconomics at Harvard University: "The purpose of the monetary system is to facilitate exchange, but... the penny no longer serves that purpose". When a coin fails to fulfil its purpose, it is time to get rid of it.
I have provided three arguments: the penny costs more than it is worth, it provides a significant opportunity cost, and it fails to fulfil its purpose as money. All of these arguments stand. As such, the resolution is affirmed.
I'd like to thank my opponent for opening this debate.
The big problem
I live in New Zealand. We abolished the one cent coin ages ago. In fact, we've abolished everything beneath the ten cent. That means you can lose up to five cents on each purchase, assuming that shops do round fairly (they never do - it's usually more like 9 cents per purchase) by not using physical money. That might only add up to twenty cents a day (assuming maybe ten purchases), but that's $67 a year. In the US, currency is somewhat more valuable than in New Zealand, but still $67 is quite a considerable sum of money.
The international banking system is based around the cent. When you transfer money, whether locally, at POS, or internationally, a fixed number with exactly two decimals is used to describe how much is being transferred. Even if pro abolishes physical pennies, the value of currency that pennies represent will continue to exist.
The net effect is that card payers pay the exact price, and penny payers pay two cents too many or too few each time. And here's the problem - remember how we said right at the start that money needs to have an "agreed upon value"? And how pro was claiming that anything that prevents money from having an agreed upon value will be failing to fulfil the purpose of currency? Well here his own model clearly gives each good not one "agreed upon value", but two - one value for those who pay with one form of cash transfer, and another for those who choose to use a different mode of cash transfer.
The harm here is that without an agreed upon value, you can't have a standard of value and thus no stable economy (http://www.investopedia.com...). Not that the US economy is currently a bastion of stability, but this can only compound that issue.
If pennies were really that useless, consumers wouldn't accept them
How many times have you gone to a shop and seen somebody refuse to take their change because they claimed it wasn't worth their while to pick it up?
Consumers are not dumb. They support pennies (http://www.pennies.org...), by and large, because they want to have pennies. They provide some value, otherwise they have no obligation to accept them. But they do. There is demand for the penny.
Like pro doesn't see the point in pennies, I don't see the point in bottled water. If you have a safe water source conveniently already in your kitchen, why not use it? But that's no reason to abolish it, because other people clearly do see the value, and it's not doing me any harm for them to drink it. In the same way, it's no reason to abolish pennies, other people clearly like them, and there is no harm to pro if other people accept them.
The model is pretty hastily thought through
You know what will cost more than all the pennies are worth? Collecting them all up. It's a huge deadweight loss since it doesn't actually provide any real economic benefit. And then what? So the treasury has this big pile of coins, are they going to sell them to Walt Disney for a new Scrooge McDuck set? Just dumping that much metal is not exactly a great idea for the environment or anybody. And all the cost that the US has paid in making the coins will have gone to waste forever.
They Cost More Than They Are Worth
If you read pro's own source #1, you'll note that Obama changed the Fed's secret recipe for minting coins so that the numbers pro cites are now all wrong. This problem has already been solved and it didn't require the abolition of the penny. The "Coin Modernization, Oversight & Continuity Act" provides that the treasury has to keep looking for new ways to drive down this cost still further.
On the other hand, changing the factors of production in favor of other coins actually works out to be more expensive for the country as a whole (http://www.pennies.org...). Sure those coins are worth more, but it also means you have to pay more - and with US money becoming relatively less scarce as more is made, you lose out in the end.
Opportunity costs of earning are not realised in spending. Sure, it might take twice as long to earn a penny at the checkout than at your job, just like you can probably buy a TV much faster than you can earn the money to buy one (unless you work for, say, Panasonic). That's normal, and it's OK, because to be an opportunity cost they would actually need to compete for the same time. News flash, those two seconds are probably not going to get you to work any faster, and if you arrived to your work two seconds early your greedy boss is too lazy to fill out all the accounting to give you two seconds of overtime. The marginal two seconds spent at the checkout are therefore not time lost that you could be earning something at your job. Moreover, it's not the same penny - one is change, the other income. Inefficiency in one aspect of a product, in this case the handling, does not really justify the abolition of this product, but even if it did pro has failed to show any kind of real opportunity cost.
This was my opponent conjecturing that the opportunity cost was so big, nobody could be bothered emptying their piggy banks any more. I'm not sure how wealthy my opponent is, but as I understand it, jobs in the US remain scarce, poverty remains a problem, and piggy banks are so dry of funds that I wouldn't be surprised if the national meteorological service declares a nationwide drought tomorrow. Absolutely people are digging into their piggy banks. That's probably because you guys have just come out of a depression.
In time, businesses will naturally begin rounding their prices due to inflationary pressures making pennies less cost-effective for them to calculate. At the point where pennies can no longer be spent, then perhaps there might be a case for them being useless. Since pennies can still be spent, however, they have a use, and are therefore useful.
The motion fails.
jghughes forfeited this round.
Pro seems to have forfeited this debate. That's unfortunate, and I hope that he's able to come back soon.
jghughes forfeited this round.
Um ... go pennies, I guess.
jghughes forfeited this round.
1 votes has been placed for this debate.
Vote Placed by LaL36 3 years ago
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Reasons for voting decision: It's a shame pro forfeited he had pretty good arguments. I think he could have one if the resolution was "pennies should not have been made" or pennies serve no purpose. But arguments and conduct for forfeit.
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