Pinching the penny
Penny pinching has taken on an added meaning today in Barbados and several other countries than it did a half a century ago.
For time was when Bajans used the term to describe a cheapskate. But today it can also mean eliminating the penny altogether.
And the change has given rise to an interesting question: walking along a street in Ellerton in St George, Hastings in Christ Church or Baxters Road in Bridgetown, indeed in any part of the Caribbean country, would you stop and pick up the one-cent coin and put it in your pocket, a move that can take as much as five seconds of your valuable time?
Many experts believe it would be a waste of time and effort to even think twice about stopping. Why? The professionals who advise governmental agencies, private corporations and not-for-profit institution about the most productive use of people’s time would assert that a cost benefit analysis would support the decision to continue walking.
The argument is that Barbadians make much more than one cent in the time it takes to stop and pick up the coin and put it into your pocket that it simply isn’t worth the effort.
The question about stopping comes in the wake of the Barbados Central Bank’s decision to take the one-cent piece out of circulation come May 7. Yes, it will remain legal tender and therefore would
be accepted for cash transactions. But no, the cost of making and distribution it is much too high to continue its distribution. After all, it hasn’t been profitable for years to do so. Secondly, its handling costs are climbing. Just as important, phasing it out shouldn’t adversely affect the price of consumer goods.
The argument makes sense. For one thing, the one-cent piece doesn’t have the purchasing power it once enjoyed. In other words, it’s virtually worthless. Secondly, it costs more to mint the cent than its face value brings. Three years ago the United States put its production cost at US2.4 cents to mint a cent.
Across the border in Canada, the high production cost, the declining face value, and the sharp drop in its use, led the government in Ottawa to end its distribution in February last year, particularly after it was found that far too many people were simply tossing the coin in the garbage or through the car window at a time when billions of them remain in circulation. It would take a decade before the coin disappears altogether.
What Canada and now Barbados have done is to follow Australia, New Zealand, Hungary, New Guinea, Malaysia, Israel Mexico, Norway, Sweden Finland, the Netherlands, Britain and Denmark in ending the circulation of some of their lowest valued coins.
“Consumers are no longer collecting pennies in all sorts of containers, at home and elsewhere” in Canada, said economists at Desjardin Securities, which believes Canada should go a step further and drop the nickel as well. “Consumers, retailers and financial institutions no longer need to handle billions of the one-cent coin every year.
Figures support the coin’s eventual elimination. It costs Canadians about Cdn $150 million or Bds$270 million a year for Canada’s Royal Mint to produce the coin. Considering it is almost useless as a medium of commercial exchange, it stands to reason that it should go the way of the dinosaur, the horse and buggy, Model T Ford and in recent times the typewriter. By the way, Royal Mint produces coins for Barbados, its Eastern Caribbean neighbours and a host of other Commonwealth countries.
“If Canadians had dropped the penny (one-cent coin) nearly 25 years ago when it was first mooted, there wouldn’t have been a need to make 25 billion of them,” said an analyst.
In the US where unsuccessful attempts were made on Capitol Hill in Washington to end the production of the coin, President Barack Obama described it as “obsolete” but acknowledged that it had such a magnetic hold on the thinking of Americans – 71 per cent urged the government to keep it – that it’s unlikely to abolish it.
Like Canadians, Barbadians don’t have that emotional attachment to the coin and that’s probably why the Central Bank acted to end its continued circulation without much fuss.