Friday, May 14, 2010

A Penny for your thoughts...unless that Penny costs 1.62 cents to make...

Nice example of interest group politics getting in the way of "good" economics...I support the President on this one....
""Those pennies and nickels in your pocket cost more to manufacture than they are worth. That's why the Obama administration wants to use cheaper materials -- possibly an aluminum alloy -- to make the coins.
"Making coins from more cost-effective materials could save more than $100 million a year, which isn't just pocket change," said Dan Tangherlini, the Treasury Department's chief financial officer.
But some businesses, particularly vending machine owners and laundromat owners, are preparing to fight the administration plan to downgrade nickels. They're worried that any change in weight and metal content would require expensive overhauling or even replacement of their machines, The Los Angeles Times reported.
"We're all taxpayers, and we're all in favor of being able to mint coins at a more reasonable cost," Brian Wallace, president of the Coin Laundry Association, told the Times. "But we want to make sure there aren't unintended consequences that could deeply impact the small business owner during a recession."
Last year a penny cost 1.62 cents to manufacture. The nickel (which contains more copper than actual nickel) costs 5.79 cents.""
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