Caminante – Greenbacks vs Red-, Blue-, Yellow-backs

Australia, shares a lot in common with the US (language, cultural linkages to England, similar law systems, a continental landmass, and pioneering history to name a few). However, the similarities can sometimes help to highlight the differences.

Maybe because I’m an economist one of the first things I’ve noticed is the currency. Again, there are a lot of similarities, starting with the name. Both the US and Australia call their currency the dollar, a name that derives from the Thaler, a common medieval European trade currency from Bohemia.

Thaler coin [picture from Wikipedia]

Both currencies are important international reserve currencies. The U.S. dollar is the world’s premier reserve currency and the most traded in the world. The Australian Dollar, however, is no slouch ranking as the 5th most traded currency.

Still there are some noticeable differences between the Australian Dollar and US dollar. First, US currency is exceptionally bland compared to almost all other countries, who use a much broader spectrum of colors to denominate their paper bills. Australian paper tender is quite lovely, ranging from yellow-green-turquoise, sunset orange, reds, blues, and purples for their 100s, 50s, 20s, 10s, and 5s respectively.

In addition to the obvious color differences, each of the bills is a slightly different length (high value bills are longer than lower value bills). The difference in sizes is primarily for the purpose of preventing a type of currency forgery where bills of lower denomination are washed and made to look like higher denominations, a problem that has been a problem in the past with the US dollar (e.g. Peruvian Counterfeiting Operation, Counterfeiting in Richmond VA, Woman turns $1 into $100s, etc. ). Varying the size of the bills additionally has the advantage that it makes it easier to distinguish dollar denominations by touch. Another difference between the Australian and US dollar is tactile. The US dollar is printed on a unique blend of plant fibers, which is roughly ¾ cotton and ¼ linen, giving the bills a crisp feel when brand new, and softening over time. The Australian dollar on the other hand is printed on plastic polymer fibers, which makes the bills feel a bit like wax paper. The plastic holds up to wear better than the cotton-linen blend and permits the inclusion of many new security measures to prevent currency forgery.

Another interesting difference is that Australian currency is gender neutral. I don’t know if this can be attributed to the fact that Australia is a commonwealth country, and technically speaking Queen Elizabeth is the head of state, but I find it very interesting given the recent discussion of putting a single female on the $10 or $20 bill. A discussion which in 2016 looked like was going to get Harriet Tubman on the $20, but now it looks like the whole thing might be shelved until a less misogynistic administration occupies the White House. In Australia, the current printing series has a woman on 1 side and a man on the other side of each bill, all the coins have Queen Elizabeth on them, making for a solid win for gender parity, at least from the perspective of printed/minted money.

So, about those coins. I don’t know if I am typical of US consumers, but I absolutely loath coins. They’re relatively worthless, I mean pennies and nickels actually costs more to make then they are worth. They weigh down your pockets, and they always seem to find a way to get lost in the sofa. They are a major inconvenience. You never have enough of them on you ever to buy something useful. I basically just end up stocking them in a jar, and once a year taking them to the bank to deposit or exchange into something more useful. I may be an outlier with my distaste of coins, but I suspect I’m not too much of an outlier given that there are machines that people pay to use to convert coins into “real money”.

Coinstar machine, will happily take your money to convert coins into bills

Australian coins are a bit more useful than US coins, having coins worth $2, $1, and 50₵, 20₵, 10₵, and 5₵ that can be part of smaller transactions. Australians sensibly got rid of the 1₵ and 2₵ coins in the 1990s, when it became evident they cost more to mint than they were worth. While Australian coins are nominally more useful, they collectively weigh a lot more than coins in the US. And interestingly enough the size of the coin varies parabolically with value with the $2 coin smaller than the $1 coin, which itself is smaller than the massive 50₵ coin, which is the largest coin, with the 20₵, 10₵, and 5₵ coins getting progressively smaller. The dollar coins are a golden color whereas the cent coins are silver. Another oddity is that all the coins are circular except for the 50₵, which in addition to being massive is a dodecagon (12-sided polygon).

In the end, I don’t think the slight increase in usefulness of the coins will change my opinion about coins. I think I will still prefer occasionally paying a 10₵ surcharge to pay for things electronically, but who knows maybe I’ll end up investing in a coin purse like when I was living in Bolivia and Europe.

The American Airlines-US Airways Merger in an Evolving Airline Industry

The American Airlines-US Airways Merger in an Evolving Airline Industry

A Brookings blog post looking at the competitive effects of the consolidation of the US Airline industry. It is an interesting look at explaining why despite decreasing number of competitors in the US air travel market that prices haven’t increased as much as some worried. I don’t disagree with the overall point that Winston makes. However, I think he may have under estimated the increase of airfares by not taking into account the new pricing schemes that most airlines are using, where they charge additional fees for services that were once included in the ticket price (checked bags, food and beverage, etc.). There is also no mention about the increase in fuel costs, which is one of the major drivers of airline cost. So, while I think that it is true that airline mergers have led to operating efficiencies of which some of the cost savings have been passed along to consumers, without an analysis on a changing pricing mechanism, changing definition of services provided, and a look at fuel costs it is difficult to untangle what the real change in airfare is and how much of it may be attributable to the airline industry’s consolidation.