The Special Interests Strike Again
The Atlanta Journal-Constitution carried an opinion piece in its November 30 edition, authored by Richard Miniter of the Hudson Institute. Headlined “No dollar bill? Coin lobbyists will cost us all,” it accuses the vending industry, metal producers and the National Automatic Merchandising Association of lobbying Congress to eliminate the $1 bill, a move the author does not believe would benefit taxpayer/consumers. He charges that “their case blatantly misrepresents the facts” concerning the potential savings to be attained by halting production of short-lived $1 banknotes and replacing them with durable $1 coins.
It’s online at the paper’s website at ajc.com/search/content/opinion/stories/2008/11/30/minitered_1130.html.
Miniter is not uninformed. He pointed out that “today, more Americans are using credit cards than ever before,” and suggests that NAMA would do better to “encourage its members to invest in technology to allow credit card purchases.”
The National Automatic Merchandising Association is preparing a detailed response to this essay. In the meanwhile, after we get done saying things like “just when you thought it was safe to go back in the water,” we think there are a number of points that are worth making with regard to the whole issue.
First of all, the Hudson Institute has conducted several studies for NAMA, so Miniter presumably has no animus against vending, and had access to people who know something about it. The point he makes is worth pondering, but we think it overlooks some very substantial facts.
For one thing, if there were a real disadvantage to citizens, in their roles as consumers and taxpayers or both, from the elimination of the lowest-denomination banknote and its replacement with a coin, it seems very unlikely that every other industrialized nation would have done it. It is possible that the American public, with its alleged preference for the $1 bill, knows something not known by the Canadians and Czechs, British and Australians, and all the members of the European Community who have adopted the Euro currency. But we don’t think it likely.
In fact, the Canadians looked carefully at the U.S. attempt to introduce a circulating $1 coin in 1978, and learned from it that such a coin cannot succeed if the existing equivalent banknote remains in circulation. Thus, when Canada modernized its currency three years later, it did away with the $1 bill – and went on to eliminate the $2 note as well. We have not heard that this was done at the behest of a cabal of special interests; it was done to reduce government expenses. It has done this, and everyone seems well content with it.
Miniter’s attack on the argument that ceasing to circulate a $1 note will save money is based on two points: that the average bill now lasts 22 months, not 18 as NAMA has contended, and that it costs much more to produce a coin than a bill. Frankly, we find the first point trivial and the second irrelevant. The average coin lasts a quarter of a century or longer.
He charges further that coins drop out of circulation while notes do not, and so many more coins are needed. The problem here, of course, is that the coins that accumulate in jelly-jars do so because they cannot conveniently be spent. Pennies are particularly vulnerable to this. The reason $1 coins don’t circulate is that people have $1 bills to spend, so the occasional coin that comes into the consumer’s possession gets handed out to a grandchild on the next special occasion. This would not happen nearly as frequently if there were no familiar banknote monopolizing cash register drawers.
Finally, Miniter does not appear to recognize that the most formidable opposition in Congress to eliminating the $1 bill is orchestrated by companies that furnish the paper on which they’re printed. Or, perhaps, he does not regard these people as special interests – but if he doesn’t, we cannot imagine why not.
We certainly agree that the use of currency of all kinds is declining, as cashless payments become feasible for smaller and smaller purchases. We don’t think NAMA needs to do more than it already is doing to “encourage” operators to add cashless capability. We do think it’s time to move away from the puerile old allegation that any change desired by an industry is a plot against the citizenry. We all have “special interests,” even researchers.