The Best Explanation for Free Markets and why Socialism Never Works
I, Pencil: The Movie
Sixty years ago the short story ‘I, Pencil‘ was written by Leonard Read and published in December 1958. This short, eloquent masterpiece is one of the greatest explanations of the free market ever written. It demonstrates how no single person alone can make a pencil; yet you can buy a ‘Number 2 Yellow Pencil’ for 8¢ because people from all over the world contributed their ingenuity and labor to get it to you.
When you break down the manufacture of a simple little pencil to all its constituent parts and every bit of input from wood, to saws, to trucks, sourced from all over the world to quote Read “what you see is the market at work.” The entire essay is a brilliant explanation of the phrase “the invisible hand” used by Adam Smith to describe free market forces in his book ‘The Wealth of Nations‘.
Leonard Read’s main point in ‘I, Pencil’ is that economies are way too complex to be “planned” when not one single person possesses all the knowledge and skills to produce a seemingly simple, ordinary, everyday pencil. Leonard Read also shows how much worldwide cooperation is required to you make a simple little writing instrument. And like all great ideas, other people have used other common items to replicate and demonstrate what Leonard Read so eloquently summarized. You can see the same idea in this video series on making a sandwich:
How to Make Everything: Sandwich
Mr. Reid was waging a battle for the minds of people living in the United States in the 1950s. Then, like now, people were warming to the idea of socialism. Socialism and Communism assert that things would be much better if a few really smart people in the government were to run everything. Socialism / Communism has never, ever worked. Where ever it has been tried financial misery, slavery and lots of killing follows in its wake. Look at the misery in Venezuela for its most recent iteration.
The free market, with billions of individuals making their own financial decisions has lifted hundreds of millions of people out of poverty. And while not perfect, the free market has allowed billions of people to live peaceful, purpose filled lives. ‘I, Pencil’ Leonard E. Read (1898–1983) established the Foundation for Economic Education in 1946 and served as its president for 37 years.
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