Friday, June 13, 2008

A penny costs more than a penny to make

A penny costs one-and-a-half-cents to make. What a perfect example of government waste in spending. Why, we'll surely go broke just minting money, before we even have a chance to use it!

Well, it really doesn't matter if a penny costs 5 cents, 10 cents, or a dollar. A penny's job is to transmit value, and after repeated uses, you can see that it easily pays for itself.

Say you buy a car for $10,000. You drive it to work the next day. Congratulations! You just spent $10,000 to drive to work. What a waste of money.

But hold on. Tomorrow, you drive to work again in that same car. Now, you've spent $10,000 to drive to work twice, or $5,000 per trip. In fact, if you drive to work and back every day for a year in your new car, it will have cost you $20 per trip* for the car. Now that's starting to sound more reasonable, eh?

So imagine how many times a penny changes hands in its lifetime. If you have a two pennies in your pocket, chances are one of them is from the 80s or the 90s. You, like most people, do not hoard coins. That penny has probably changed hands thousands of times. If a penny has changed hands 28,743 times, it's done $287.43 worth of money transfers. If this little money transfer device cost even a dollar to make, I'd say it was a pretty good deal, wouldn't you?

* $10,000 / ( 2 trips per day * 50 work weeks * 5 work days in a week )

1 comment:

Moshe said...

Your math about driving is waaaaay off. Don't forget that you need to pay for gas regularly. Then there's insurance which is also not a one time payment. May need to pay for parking if your employer doesn't have free parking. Oil change, tuneup, repairs. And if you tend to get tickets, fahgetaboutit.