For anyone interested in a good history of using gold as money, Peter Bernstein's The power of gold: the history of an obsession is worth looking into:
People never learn from history, and repeatedly try to fix exchange rates. "By god, this time it will work!"
Price fixing, rent control, anti-gouging laws, etc, all fail for the same reason, but that never discourages the next cohort that imagines they can defy economics.
Price fixing is, as far as I can tell, the single common element that every developed-state health care system other than the US employs, whatever their differences. It certainly appears to work. Anywhere from setting prices in an actual price-book, to leveraging monopsony to set prices, to intervening to set prices only where problems arise (implicitly threatening to do more of that if needed, which I expect has an effect—this is a part of Singapore's approach, for instance). Some (of each approach) work better, some worse, but they basically do seem to work, in that many of these have been working that way for decades and haven't collapsed yet, and most don't seem to be heading toward collapse any time soon.
I don't know of a single counter example, and I'd bet I could find examples of even the US taking similar, extremely limited measures, and that those worked out OK, too. At the very least the harm of those cures, if you will, do not look to be worse than the disease.
I think price-fixing works in, for example healthcare, because then you also have a single payer system. So there is one entity that buys almost all service capacity and thus gets a lot of say in the price.
Also nobody else would want to outbid them because the single payer then turns around and gives all potential users the service for a fraction of the real price.
So this is a great system for providing healthcare at reasonable prices.
For housing. Rent control only works for the first that can get in the system, but what does work I think are widespread and well positioned non-profit housing entities that can provide a large enough share of potential renters reasonable apartment prices so that the for-profit companies can’t raise their prices too much.
Source: I’m an extensively trained armchair economist.
> I think price-fixing works in, for example healthcare, because then you also have a single payer system. So there is one entity that buys almost all service capacity and thus gets a lot of say in the price.
That'd be the monopsony option I mentioned. When you have (actually, or effectively) one buyer, they tell you how much profit you can make, and can pressure you even further to pressure your own suppliers to bring prices down further.
> Source: I’m an extensively trained armchair economist.
Same, to put my cards on the table, but I've spent an unhealthy (haha) amount of time reading about healthcare systems and when I started to draw a line between all the non-US systems among OECD and other rich countries, that was the single thing that stood out as being common to all of them, despite there actually being a huge variety of approaches. They all seem at least medium-term stable (which is more than I can say for our US system, which seems like a train racing straight for a canyon wall, while also coming apart at every seam and bolt) and none appear to exhibit, to a significant degree, the usual problems Econ 101 (and, indeed, plenty of real-world examples) tells you price fixing ought to raise very quickly, which means it's "never a good idea" or "never works". In fact, in this case... I mean, it sure looks like it works, doesn't it? And it's not like we only have one example.
From what I've seen, a lot of people on the economic left actually agree with those criticisms of rent control, and would much prefer to see true public housing take that place. Non profit NGOs don't typically have the capital to own the relevant land and buildings. And when they do, they typically see it as better use of that capital to sell it or rent it out at market rates and use that liquid capital more directly in whatever their mission is. It's typically only .gov that has the right means, motive, and opportunity to pull off public housing in the face of the rest of the market. At that point, when there's no .gov impetus behind such a thing, rent control is viewed as the least shitty of a group of shitty options.
Coins are a sort of niche in that space. They were supposed to have intrinsic value, so arbitrage and the market would kick in as described.
Today our coins are all base metal, worthless except for the face value. Essentially the same as paper money, but smaller and more durable. And we have a different sensibility about them: we don't even consider melting them down (well, not usually) since they are a symbol, not intrinsically valuable.
Nonsense, the exchange rate has been five nickels to the quarter for as long as I've been alive!
Bit of a joke but not really. Bimetallism is an attempt to harmonize two mediums of exchange, and it's worked well enough at various times.
Combines well with a bit of seignorage: not so much that the coins don't have value, but enough that they trade above the melt value of the metal.
If the sovereign says "pay taxes with a 90% silver coin with my face or the same weight of pure silver, don't care", and has the muscle to compel citizens to do it, this puts some slack in the actual exchange rate between gold and silver: one or the other has to exceed the debased rate, rather than the natural rate, for melting to be the rational move.
> Price fixing, rent control, anti-gouging laws, etc, all fail for the same reason, but that never discourages the next cohort that imagines they can defy economics.
According to Google ~39 US States have anti price gouging laws, how have those failed?
Anti gouging laws only kick in when there's a shortage to begin with, and they normally coincide with rationing, so I'm not sure shortages and hoardng are fair to ascribe to the policy. WRT the black market, when your other option is to just keep the regular market unregulated, the inevitable trades happening in the formal economy versus the informal one doesn't make much of a difference, except for doing your best to make sure everyone at least gets access to some of the critical resource in the anti-gouging case.
> doing your best to make sure everyone at least gets access
No, you don't. You're usually just limiting the supply even further by discouraging sales, and at the absolute best, shuffling around the people who get to buy the item. You can't help scarcity at all by fixing prices.
The supplies that just flew off the shelves and were sold at a fair price are more than incentivized for being restocked or even served by pop up wholesale resellers.
It's not like the anti-gouging laws lock in a price under profitablity; the stores wouldn't have the items even before the anti-gouging kicks in if that were the case.
You are ignoring the motivational power of 10x increase in profit, for a vendor. Also the de-motivational power of a 10x increase in price, for a hoarder.
In fact, a high enough price may even turn a hoarder into a vendor.
"You can't help scarcity at all by fixing prices."
Yes, you definitely can.
The price which incurs maximum profits for producers has little to do with consumer surplus or the maximization thereof.
Price fixing alters the distribution of surpluses one way or the other, because we don't measure consumer surplus directly, we often think of 'reduced profits' to the producer, but fail to regard the increased surpluses to consumers.
The term 'scarcity' is a bit of canard, because very, very few things are actually truly 'scarce' like Gold, most things depend on labour inputs, materials, and especially opportunity cost.
Vaccines are an example. Phizer could probably make a lot more profit by charging $150-500/vaccine in the USA, which might leave 65% of Americans in the lurch.
But the surpluses to citizens arrived at through a 'not really market price' negotiated between the US Gov, and Phizer, are much more vast.
Especially the moment you consider longer term effects (i.e. limited deployment of vaccine hurts the economy badly and thus other lines of revenue) you see the systematic effects.
I seriously doubt Pfizer had a choice in how to market the vaccines. I bet governments imposed their rules or else.
And that is how we ended up with the completely f'ed up allocation where in the beginning elder folks completely isolated from the virus had priority while active, exposed younger persons did not have access.
Central planners have failed over and over again to allocate resources as needed in the territory, while a market-based approach will simply and elegantly solve this problem while maximizing the incentives for producers.
>...so I'm not sure shortages and hoardng are fair to ascribe to the policy.
Before all these price gouging laws, in natural disasters there used to be marginal producers (people with a pickup truck etc.) who would load up on some supplies like ice etc. and bring them to the area that was hit to make a quick profit. When the electricity is out and someone wants $12 a bag for ice it would anger you if you just want to keep your drinks cold, but you would think it is an incredible bargain if that way you can keep your insulin chilled:
In the long run, high profits during a shortage also mean that suppliers in general will be incentivized to keep a larger stockpile of goods that have a good shelf-life since they know they will be able to make good money the next time there is a shortage (more than the storage costs). (Or the potential for high profits will incentivize spending money to be more flexible in production in case demand increases for a short time.)
If you are going to literally make it illegal to try this, then you better have a government be willing to spend its tax dollars on creating a stockpile - when the pandemic started we saw that all the talk of the national stockpile the federal government supposedly had was greatly exaggerated.
While politicians like 'price gouging' laws since everyone can see a higher price (but can't see the missing products that won't be available), a majority of economists are opposed to 'price gouging' laws. For example see:
First off, it's not clear that pop up, cross market arbitrage resellers are statistically relevant to these markets, or that they're something that should be optimized for.
Secondly, it's not clear that these resellers given up as examples are truly performing arbitrage, like is generally assumed in thought experiments by opponents of APG laws. These thought experiments also generally assume that the subsequent lack of additional incentive is enough to reduce supply. Let's take the example you gave of the ice sellers (and was given in your econlib citation). This example cites owners of a refrigeration truck with either direct access to the equipment that produces ice (a remarkably time and capital intensive venture), or business connections capable of obtaining large quantities of ice during a shortage. Either those hold true and for some reason these people who have invested heavily in ice distribution are for some reason deciding to stay home on a day of the highest demand because they can't increase the going rate more than 5%, or (more likely in my mind) they aren't actually increasing supply to the market in question, but instead bought locally before the the normal sellers thought to increase their prices (or the normal sellers had ethical issues with greatly increasing their prices in a a time of need).
Additionally, these examples all leave out the key to the idea, simultaneous rationing, which means that the supply isn't reduced by hoarding (at any price to the hoarder) by directly reducing the amount they can get. So in your example, there isn't an issue getting ice for your insulin because of rationing _and_ you didn't have to pay a premium for it.
Finally, as an aside, your first citation is from a far right think tank dedicated to the removal of government influence on all aspects of life, and the second is a polling of economists connected to a specifc branch of economics known to be rife with groupthink. It's unsurprising the conclusion they come to.
>...Either those hold true and for some reason these people who have invested heavily in ice distribution are for some reason deciding to stay home on a day of the highest demand because they can't increase the going rate more than 5%,
This is covered in the article:
>...But no such mass movement of resources to their highest valued use took place. North Carolina had an “anti-gouging law,” which made it illegal to sell anything useful at a price that was “unreasonably excessive under the circumstances.” This had been widely interpreted to limit price increases to around 5% or less. Each instance of violation of this law could result in a fine of up to $5,000. So, ice that happened in Charlotte, stayed in Charlotte. Why drive three hours to Raleigh when you can only charge the Charlotte price, plus just enough for gas money to break even?
>...So in your example, there isn't an issue getting ice for your insulin because of rationing _and_ you didn't have to pay a premium for it.
In the particular example I gave, it wouldn't help if people are limited to the amount they can buy - in an emergency situation like that, when there is no electricity, the demand for ice will be far higher than the local supply. The goal should be that the limited supply goes to the most valuable uses and that there is an incentive to increase the supply from other areas. In the long run, it would be even better if the local supplies of goods was more resilient to a natural disaster.
As I wrote:
>...In the long run, high profits during a shortage also mean that suppliers in general will be incentivized to keep a larger stockpile of goods that have a good shelf-life since they know they will be able to make good money the next time there is a shortage (more than the storage costs). (Or the potential for high profits will incentivize spending money to be more flexible in production in case demand increases for a short time.)
If you are going to literally make it illegal to try this, then you better have a government be willing to spend its tax dollars on creating a stockpile - when the pandemic started we saw that all the talk of the national stockpile the federal government supposedly had was greatly exaggerated.
>...your first citation is from a far right think tank dedicated to the removal of government influence on all aspects of life, and the second is a polling of economists connected to a specifc branch of economics known to be rife with groupthink.
You don't need to stoop to trying to poison the well with ridiculous comments like the above. If you have a point to make, then make it. Shallow dismissals are against the guidelines of this site.
Only in perfectly spherical, frictionless free markets that aren't applicable to reality. Practically changes happen quicker than a supply chain can adjust, and that can leave people without critical supplies.
Some businesses do not raise prices, preferring empty shelves to the bad goodwill and accusations of profiteering. Nevertheless, goods and services are always available if the price is allowed to float.
Anti-gouging laws always leave people without critical supplies.
Remember the Great Toilet Paper Shortage a couple years ago?
Once again, that's ignoring rationing happening at the same time. Yes APG laws without rationing encourage hoarding, but that's not the scheme generally being discussed.
Additionally, jurisdictions without APG laws also empirically faced widespread shortages during the pandemic, that's not a unique feature of APG laws.
Yea, like for hurricanes, there used to be local independent gas stations that "price-gouged", but you could at least go get 5 gallons for 5x the normal price if you really needed it.
With price-gouging laws, it means they run out just like everyone else, and then there's no supply available for anyone, regardless of how bad the need.[0]
But it also makes the problem much worse, because when price is fixed, the sole determining factor of who gets it becomes who can get there first.
[0]Or they hoard it themselves and only sell it to friends and family, or as a favor, or in a quasi black market in exchange for other price controlled items. Eg, negotiating how much they'll sell you at the capped price. "I'll sell you $500 of price-capped gas if you sell me a $500 price-capped generator."
Before anti-gouging laws, people outside the disaster area would fill all their jerry cans with gas, drive into the disaster zone, and sell it. After those laws were enacted, people did without gas until the government got around to trucking some in. Nobody except charities bothered to bring in supplies.
Yea, I've got family members who personally would do it with generators and window air conditioners.
They'd take a trailer with them when evacuating, and load it up with everything they could find locally in stock before returning home.
Now, they might do it as a favor for friends, but they make sure they've got each one claimed before purchasing. Whereas before, a profit margin made speculative buying worthwhile, and would cover expenses without worrying about having to sell 100%.
People who need it more demonstrate that need by being willing to pay more for it.
> does often generated considerably better outcomes.
Nope. Usually, it generates criminal redistribution activity, hoarding, a greatly reduced supply, etc. All the miserable characteristics of a centrally planned economy.
During the gas crisis of the 1970s, gas stations could not sell gas until they were allocated (rationed) gas by the D.O.E. The allocation was based on the previous year's usage pattern. Of course, nothing stays the same, and one year Florida was overflowing with gas while there were loooong lines on the west coast. Also there were lovely instances of one gas station appealing to the DOE to get the allocation of the gas station across the street cut off as being "unneeded".
All these problems disappeared literally overnight when Reagan, as his first act as President, signed an Executive Order eliminating all oil & gas price controls and allocation.
I know it was overnight, because I remember the gas lines evaporating the very next day and never returning in the 40 years since.
Commonly accepted historical viewpoints of the gas crisis of 1979 and subsequent easing in 1980 don't seem to blame controls on gas, but instead the Iranian revolution and Iraqi invasion of Iran disrupting the west's access to large amounts of oil, and the supply bubble in OPEC's subsequent increases in production to overcome that which finally hit was seen by consumers byte the end of 1980 (before Reagan was elected). Reagan's removal of price controls are thought to be ultimately orthogonal.
Additionally there have empirically been gas lines in the US in the 40 years since 1980.
>...but instead the Iranian revolution and Iraqi invasion of Iran
The US suffered much more in 1979 from the disruption of the oil from Iran than other countries that also relied on this oil. It would be wrong to ignore the role the government played in making this oil disruption significantly worse.
From "TheU.S. Petroleum Crisis of 1979", PHILIP K. VERLEGER, JR.
>...On February 28, 1979, DOE published the following notice in the Federal Register:
"It is essential that refiners enter the spring driving season with adequate gasoline stocks to meet seasonal demand requirements. We recognize that gasoline stocks are currently at adequate levels for this time of year, which is usually a period of low demand. Recent industry data indicate that total stocks are now in excess of 265 million barrels, which is less than last year's record high levels during the same period but above the average levels of previous years. Our concern is that these stocks not be drawn down precipitously as soon as the impacts of the Iranian shortfall are felt by refiners. Refiners are urged to keep stocks high enough to meet expected demand during the 1979 summer driving season, even if it is necessary to restrict somewhat the amount of surplus gasoline that is made available to purchasers currently"
>The implementation of these instructions had the effect of restricting the volume of gasoline available to service stations to between 80 and 90 percent of 1978 levels. This reduction was greater than the reduction in total gasoline supplies.
>...In April 1979, DOE ordered the fifteen largest refiners to sell 7.8 million barrels of crude oil to smaller firms that were unable to obtain supplies on the world market at competitive prices. …These transfers probably reduced the volume of gasoline produced in the second quarter because the refineries that purchased the crude oil had only a limited capacity to produce gasoline, while the refineries that sold it could have produced more. ...In addition to reducing the supply of gasoline, the buy/sell program appears to have affected the geographic distribution of crude oil and gasoline. This is because the primary recipients of the crude oil were refineries in the Midwest and the gulf coast areas, while the sellers were companies that were marketing throughout the nation.
>...…In April, DOE turned its attention to the low stock of distillate fuel oil … Two impacts were observed on domestic markets. First, excessive stocks of heating oil were accumulated. Second, companies may have been influenced to increase gasoline stocks in anticipation of the mandator yield controls that DOE threatened to impose. These controls specified the percent of refiner output that had to be heating oil. Such controls were designed to curtail the output of gasoline. By building higher gasoline inventories, refiners could smooth out the month-to-month distribution of gasoline despite the controls.
>...Price controls on gasoline may have also created an incentive to withhold gasoline from the market when the prices of crude oil were rising rapidly. …In summary, the refiners had the capacity and the knowledge to take advantage of this opportunity. Ironically, the instructions from DOE to the companies were to do precisely what was most profitable.
>...In addition to encouraging the buildup of stocks, DOE may have added to the shortages by creating an incentive to reduce the output of crude oil. Although it is difficult to estimate what domestic supplies of crude oil might have been in the absence of any restriction, a DOE announcement in November that control levels of the base period were to be reviewed may have constrained production in the first half of 1979.
Healthcare pricing is regulated and effectively fixed in all modern economies except for the US.
The same goes for rent controls which are ubiquitous in most of Canada and Europe.
And where is the 'black market' for these vast economies?
These ridiculous references to 'communism' are an intellectual canard.
There is no such thing as a 'free market' - a market is a dynamic equilibrium of the balance of power. This becomes a problem when power is asymetrical, i.e. in monopoly, or monopoly-like situations such as 'sole provider of a drug' in which case there is always regulation.
If the 'free market' were fully effective, Phizer would be selling vaccines at Wallgreens instead of via the US Gov.. But it's not, and so we're not, because it wouldn't work as the 'profit maximizing' price point for the vaccine is way above what most people would be willing to pay.
> references to 'communism' are an intellectual canard
For me, they are references to actual events in my past. Unable to provide the bare necessities, in the 80's, the Communist State's central planners had rationed bread, sugar, flour and vegetable oil. A black market has promptly sprung up. Its vendors ranged from regular folks who did not use their entire ration to illegal "entrepreneurs" who had other means of getting stuff.
This market could easily tell you the actual price of these goods. But you had to be careful because some of the participants where actual Secret Service laying traps. It was illegal after all...
The trouble with rationing is it assumes everyone has an equal need for rationed goods. Of course, this is absurd, and the result is gross mis-allocation. WW2 gas rationing is an illustrative example, as people either had more gas than they could use, and so wasted it, or were desperately short of what they needed.
Inevitably, criminal gangs arose to redistribute the rationed gas, complete with drive-by shootings.
See also: the feds recent hijacking of the covid-test market, in order to start the delivery program.
The result was a month of people needing tests, but couldn't find them. While the feds prepared to mail them out 4 at a time to people who, if symptomatic, were likely to be either fully recovered by the time they arrive, or for severe cases, already under medical care.
Delivery time of a week means you have to order them before you know you might need them. Being "free", there's a rational reason to order speculatively, even if you don't currently need them. And no cost to reduce momentary demand so that people who do currently need them (enough to go to the trouble to pay for them and get reimbursed by insurance) can get them, as happens with store distribution.
Perfect example of a market operating efficiently, where un-needed "do-something" govt intervention creates artifical shortages, distributes irrelevant to current need, while reducing efficiency in both availability (same day vs week+) and quantity (delivered 4 at a time vs getting 1 at the store).
You don't think criminal gangs would arise to resell non rationed or APG items, or that violence based arbitration of access doesn't occur? Criminal gangs operate orthogonally to the law chasing profit margin. They have no qualms working in ostensibly legal markets and imposing a near monopoly through violence on it. For one example of many, see the cartels' involvement in the avocado trade.
This is a really weird and frankly naive take IMO, especially after what we witnessed during the pandemic. The demand for some goods is not affected by their price, and such goods have a name that you can hear in any Economics 101 class - "inelastic goods".
I hear all the time that prices for certain goods are inelastic - particularly for gas and housing and medical care. But events always show it most definitely is elastic.
"To keep people from dumping Hong Kong dollars, Hong Kong jacked up overnight interest rates as high as 300 percent last week and to around 20 percent on Monday."
From your article: “If the Hong Kong Monetary Authority had allowed the peg to go, capital flight would ensue and then property prices would tumble. Then there would be massive defaults on mortgages and then the collapse of the banks and then the collapse of the economy," said Joe Zhang, a Hong Kong-based economist with Credit Lyonnais.
Sounds like it was working quite well. Also interest rates as high as 280% only equates to 0.37% that night, considering how short term the disruption they actually survived quite well. The net result the country made out like bandits from the currency traders attack while others fell. “In 1999, the Government started selling those shares by launching the Tracker Fund of Hong Kong, making a profit of about HK$30 billion (US$4 billion).” https://en.wikipedia.org/wiki/1997_Asian_financial_crisis
Compared to say Thailand's booming economy came to a halt amid massive layoffs in finance, real estate, and construction that resulted in huge numbers of workers returning to their villages in the countryside and 600,000 foreign workers being sent back to their home countries.[33] The baht devalued swiftly and lost more than half of its value. The baht reached its lowest point of 56 units to the U.S. dollar in January 1998. The Thai stock market dropped 75%. Finance One, the largest Thai finance company until then, collapsed.
Yeah, that was the so-called "Asian Contagion" financial crisis. IIRC the US dumped a shitload of money into Mexico and maybe some other countries to stop the dominoes falling. Lots of countries had a bad time right around then.
Right, but what point are you making based on that? That fixed exchange rates work, but they come under severe pressure in a crisis? That's actually an argument against fixed exchange rates.
Lots of countries came under severe pressure in that crisis, and I can't even find evidence that HK was among those worst-affected. I'm saying I'd need to see a lot more than pointing out that late 1997 was a shit year for them, to determine if that was the fault of their currency-pegging. If you are only going to provide a single data point, that's like pointing at the US during the '08 crisis and going "well I guess fiat currency doesn't work!" You're gonna need to connect a lot more dots to make that argument, with that example, because that was just a bad year all around.
Actually, the maybe-relevant part of this is that Thailand kicked it off by screwing up currency-pegging and having to switch to float, which led to a panic. But Hong Kong didn't suffer particularly hard from it, overall, compared to those worst-affected, so using HK in late 1997 as the example of this practice failing still isn't very strong.
(I can't find any mention of the Mexico thing on the Wiki article, but have a weirdly-strong memory of that specific detail being mentioned in an IPE class years and years ago, so either I'm wrong or it's one of those things that's considered a kind of folk-knowledge poli-sci and economics but doesn't make it to places like Wikipedia, some action that "wasn't" directly connected, but [by common understanding of folks in those fields] totally was—further digging reveals an Argentine event in 1998 that did affect Mexico, so I'm guessing that's what I'm recalling and that at the very least that particular professor considered it obviously true that the two events were connected, so presented that as a continuation of the Asian Crisis in late '97)
[EDIT] To be clear I'm not even going hard into the paint for pegging currencies, I just think that's a bad example and that lots of readers may not recall or be aware of the late 90s crises to have context for it, especially fellow US readers.
I'm fairly sure that the fixed exchange rate didn't cause the problems. But I think the interest rate craziness shows that the fixed exchange rate sure didn't help. It took away a knob that they really could have used right then. Since they didn't have it, they had to go insane with the interest rate to try to defend the currency at the fixed price. That didn't make it easier to handle the rest of the crisis.
The interest rate was set in response to a short term economic attack by several investors. But the benefit was consistent outside of that time period.
The Bahamanian dollar has a fixed exchange rate of 1 USD, and I believe this has been the case since 1973. The economic mechanism that allows this to persist is also the one that keeps gift certificates denominated in USD pegged to the USD.
The US penny is pegged to be 1/100 US dollars and it is force of law that prevents large scale arbitrage of the form in this article.
I’m not sure if you count the penny (or any other US coin) as “successful” or not, but that peg has not led to calamitous money outcomes for the US currency system.
The zinc majority penny has been more valuable than 1c several times since it was introduced. It was a big story in 2005/2006 as zinc prices surged. Yet there wasn’t large scale arbitrage of this in large part because it was illegal and comes with hefty fines.
It’s also due to the difference not being worth the effort most of the time but that doesn’t change the refutation of the claim that no pegs work. The penny peg works even in a world where the actual utility of a 1/100th usd coin is probably negative.
This is generally true, but I think you might be out of date. About 15 years ago, the US government passed a law that specifically prohibited the melting of pennies and nickels for the purpose of selling the materials for profit:
§ 82.1 Prohibitions.
Except as specifically authorized by the Secretary of the Treasury (or designee) or as otherwise provided in this part, no person shall export, melt, or treat:
(a) Any 5-cent coin of the United States; or
(b) Any one-cent coin of the United States.
> it is force of law that prevents large scale arbitrage of the form in this article.
This is actually exactly analogous; many people don't realize that the status quo of "multiple denominations" have ancestral ties to bimetallic currencies of the sort covered in this article.
It would have been difficult for Henry III to de facto outlaw smelting of gold coins because the scale of the gold penny's distribution was much smaller (making attribution of a smelting operation much harder), and because the ability to surveil this sort of activity was severely limited by geography.
But melting down US pennies is de jure illegal (nb: only since 2007 [1]) and the number of pennies you'd need to smelt down in order to justify the effort would probably make the sourcing operation noticeable to authorities.
* https://www.goodreads.com/book/show/249245.The_Power_of_Gold
Money: The True Story of a Made-Up Thing by Jacob Goldstein (of NPR's Planet Money) is also good:
* https://www.goodreads.com/en/book/show/50358103-money