Comment by toffer | Hacker News Reader

Comment by toffer | Hacker News Reader

I've been in Buenos Aires for about 2 months now, and it's still hard for me to believe how ridiculous this situation is. Two examples from my daily life:

1) I take the bus every day, which only accepts coins. So, everyday I have to figure out how to get more coins. One strategy I tried was to forgo the convenient subway card and actually stand on line to pay for a single fare card every time I happened to take the subway. A huge pain, but in exchange for a 2 peso bill, I would get a subway ticket and a precious $1.10 in coins.

Only the ticket clerk at the subway stop I most often frequent stopped selling me single tickets. I would show my 2 peso bill and ask for 1 ticket, and he would say "No monedas" and wave me through the gate for free. Every day, the same thing would happen. Same clerk. Same 2 peso bill. No coins, and he would wave me through for free. This went on for 2 weeks.

You would think that I'd be pretty happy about this, but actually, it infuriated me. I really want the coins instead! Sure, I get a free ride, but now I've got to go buy a bottle of water and tangle with a kiosk owner to try and get change.

2) Paying cash at the supermarket can be glacial. They keep very few coins in the cash registers, so every time they run out of coins, the checkout clerk has to call for a manager, who has to go to the safe to get more coins, who then exchanges 2 pesos worth of coins for a 2 peso bill. Yes, that's right...they restock the coins in the register the equivalent of 60 US cents at a time!

What's really interesting about these coin shortages is that they are exactly what we should expect as governments have created monopolies over the manufacture of coinage. Central planning always leads to the systematic misallocation of resources, causing these nasty supply surprises which the government then proceeds to blame on other actors.

An unappreciated miracle of our world is how rare shortages are among truly free-market goods.

For a deeper background, read:

Get Government Out of Coin Manufacture

http://news.ycombinator.com/item?id=386392

Private Coinage

http://news.ycombinator.com/item?id=386409

Here's a book I tried to read once: The Big Problem of Small Change.

From http://press.princeton.edu/titles/7306.html :

"The Big Problem of Small Change" offers the first credible and analytically sound explanation of how a problem that dogged monetary authorities for hundreds of years was finally solved. Two leading economists, Thomas Sargent and François Velde, examine the evolution of Western European economies through the lens of one of the classic problems of monetary history--the recurring scarcity and depreciation of small change. Through penetrating and clearly worded analysis, they tell the story of how monetary technologies, doctrines, and practices evolved from 1300 to 1850; of how the "standard formula" was devised to address an age-old dilemma without causing inflation.

One big problem had long plagued commodity money (that is, money literally worth its weight in gold): governments were hard-pressed to provide a steady supply of small change because of its high costs of production. The ensuing shortages hampered trade and, paradoxically, resulted in inflation and depreciation of small change. After centuries of technological progress that limited counterfeiting, in the nineteenth century governments replaced the small change in use until then with fiat money (money not literally equal to the value claimed for it)--ensuring a secure flow of small change. But this was not all. By solving this problem, suggest Sargent and Velde, modern European states laid the intellectual and practical basis for the diverse forms of money that make the world go round today.

Alas, I couldn't follow their math. (Maybe I should try again, taking more time.) But their historical examples were quite extensive.

Voted up for coining the phrase "a book I tried to read once" ;-)

>An unappreciated miracle of our world is how rare shortages are among truly free-market goods.

Name some (specifically, name some in the United States).

I lived in Buenos Aires for four months at the beginning of the year and developed the exact same strategies. And the same thing often happened to me at the subway stations. I often resorted to buying some cheap piece of candy at a corner store to get coins.

It's amazing how you find yourself thinking, "okay this is $2.50 so if I pay with a five I'll get a 2 peso bill back and .50 in coins but if I pay with two 2 peso bills I'll get 1.50 back in coins."

P.S. check out 'Juana M.' definitely the best steak I had in the city. (Plus a real salad)

Thanks for the Juana M tip. I hadn't heard of it, but I'll definitely check it out.

I love the steak here, but a real salad is a rare treat in BA!

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