Pencils and Liberty
by Gary North: These
Threats Will Not Collapse America's Economy
Back in 1958,
Leonard E. Read wrote what has become the most popular essay ever
written in defense of the free market. It was better than Frederic
Bastiat's 1850 essay on a broken window as destructive, not productive.
It was as clever as Bastiat's
humorous petition of the candlemakers calling for laws against
the ruinous competition from the sun. Milton Friedman recommended
delightful story, "I,
Pencil," has become a classic, and deservedly so. I know of
no other piece of literature that so succinctly, persuasively,
and effectively illustrates the meaning of both Adam Smith's invisible
hand the possibility of cooperation without coercion
and Friedrich Hayek's emphasis on the importance of dispersed
knowledge and the role of the price system in communicating information
that "will make the individuals do the desirable things without
anyone having to tell them what to do."
For over half
a century, this essay has stuck in the collective craw of Keynesians,
who regard the free market as in need of government regulation and
extensive government ownership of natural resources. But Keynesians
tend to write turgid, incomprehensible articles. They do not have
the gift of satire. One
Keynesian has attempted to refute Read's essay by an appeal
to government ownership of forests and government regulation of
industry. This is what made pencils possible, he says.
So, I have
updated Read's essay.
Our Family Tree, as Told to Gary North
told Leonard Read the story of his family tree back in 1958. Despite
being notoriously sharp, he was a kindly fellow, always trying to
make his point without sticking it to anyone. So, he neglected to
mention certain aspects of the family tree that nobody in the family
has been proud of. I have decided to be more forthright.
began with the obvious. We pencils spend most of our time helping
people discover the obvious.
am a lead pencil the ordinary wooden pencil familiar to all
boys and girls and adults who can read and write. Writing is both
my vocation and my avocation; that's all I do.
always liked to be humble. But he was really proud of his heritage.
We all are. He explained why.
Pencil, simple though I appear to be, merit your wonder and awe,
a claim I shall attempt to prove. In fact, if you can understand
me no, that's too much to ask of anyone if you can
become aware of the miraculousness which I symbolize, you can help
save the freedom mankind is so unhappily losing. I have a profound
lesson to teach. And I can teach this lesson better than can an
automobile or an airplane or a mechanical dishwasher because
well, because I am seemingly so simple.
not a single person on the face of this earth knows how to make
me. This sounds fantastic, doesn't it? Especially when it is realized
that there are about one and one-half billion of my kind produced
in the U.S.A. each year.
are really highly complex, but we look simple. What is true of
us is true of everything that looks simple right down to a biological
cell. Everything is irreducibly complex. But grandfather had a
way with words.
tree begins with what in fact is a tree, a cedar of straight grain
that grows in Northern California and Oregon. Now contemplate
all the saws and trucks and rope and the countless other gear
used in harvesting and carting the cedar logs to the railroad
siding. Think of all the persons and the numberless skills that
went into their fabrication: the mining of ore, the making of
steel and its refinement into saws, axes, motors; the growing
of hemp and bringing it through all the stages to heavy and strong
rope; the logging camps with their beds and mess halls, the cookery
and the raising of all the foods. Why, untold thousands of persons
had a hand in every cup of coffee the loggers drink!
got going, nobody could get him to stop. He really knew how to lay
it on! When it comes to hidden complexity, he always said, "If you've
got it, flaunt it!"
logs are shipped to a mill in San Leandro, California. Can you imagine
the individuals who make flat cars and rails and railroad engines
and who construct and install the communication systems incidental
thereto? These legions are among my antecedents.
the millwork in San Leandro. The cedar logs are cut into small,
pencil length slats less than one-fourth of an inch in thickness.
These are kiln dried and then tinted for the same reason women
put rouge on their faces. People prefer that I look pretty, not
a pallid white. The slats are waxed and kiln dried again. How
many skills went into the making of the tint and the kilns, into
supplying the heat, the light and power, the belts, motors, and
all the other things a mill requires? Sweepers in the mill among
my ancestors? Yes, and included are the men who poured the concrete
for the dam of a Pacific Gas & Electric Company hydroplant which
supplies the mill's power!
the ancestors present and distant who have a hand in transporting
sixty carloads of slats across the nation.
Once in the
pencil factory $4,000,000 in machinery and building, all
capital accumulated by thrifty and saving parents of mine
each slat is given eight grooves by a complex machine, after which
another machine lays leads in every other slat, applies glue,
and places another slat atop a lead sandwich, so
to speak. Seven brothers and I are mechanically carved from this
itself it contains no lead at all is complex. The
graphite is mined in Ceylon [Sri Lanka]. Consider these miners
and those who make their many tools and the makers of the paper
sacks in which the graphite is shipped and those who make the
string that ties the sacks and those who put them aboard ships
and those who make the ships. Even the lighthouse keepers along
the way assisted in my birth and the harbor pilots.
enough. You get the idea. This complexity is beyond the power of
anyone to explain, let alone centrally plan.
is an astounding fact: Neither the worker in the oil field nor the
chemist nor the digger of graphite or clay nor any who mans or makes
the ships or trains or trucks nor the one who runs the machine that
does the knurling on my bit of metal nor the president of the company
performs his singular task because he wants me. Each one wants me
less, perhaps, than does a child in the first grade. Indeed, there
are some among this vast multitude who never saw a pencil nor would
they know how to use one. Their motivation is other than me. Perhaps
it is something like this: Each of these millions sees that he can
thus exchange his tiny know-how for the goods and services he needs
or wants. I may or may not be among these items.
was always self-effacing. He admitted that most of these workers
were not interested in owning more pencils. Yet, because they could
trade their labor for money, they worked hard to create bits and
pieces of the components that make a pencil.
is a fact still more astounding: The absence of a master mind, of
anyone dictating or forcibly directing these countless actions which
bring me into being. No trace of such a person can be found. Instead,
we find the Invisible Hand at work. This is the mystery to which
I earlier referred.
It has been
said that "only God can make a tree." Why do we agree with this?
Isn't it because we realize that we ourselves could not make one?
Indeed, can we even describe a tree? We cannot, except in superficial
terms. We can say, for instance, that a certain molecular configuration
manifests itself as a tree. But what mind is there among men that
could even record, let alone direct, the constant changes in molecules
that transpire in the life span of a tree? Such a feat is utterly
like to believe in miracles. Pencils are just like people in this
regard. And a pencil would be a miracle indeed, if there were no
voluntary cooperation among people, no contracts, and no exchange.
But, when you get down to it, everyone who has any simple item in
his pocket has a pocket full of miracles.
Pencil, am a complex combination of miracles: a tree, zinc, copper,
graphite, and so on. But to these miracles which manifest themselves
in Nature an even more extraordinary miracle has been added: the
configuration of creative human energies millions of tiny
know-hows configurating naturally and spontaneously in response
to human necessity and desire and in the absence of any human masterminding!
God can make a tree, I insist that only God could make me. Man
can no more direct these millions of know-hows to bring me into
being than he can put molecules together to create a tree.
was never one to waste an important point. (I've got a million of
above is what I meant when writing, "If you can become aware of
the miraculousness which I symbolize, you can help save the freedom
mankind is so unhappily losing." For, if one is aware that these
know-hows will naturally, yes, automatically, arrange themselves
into creative and productive patterns in response to human necessity
and demand that is, in the absence of governmental or any
other coercive masterminding then one will possess an absolutely
essential ingredient for freedom: a faith in free people. Freedom
is impossible without this faith.
All of us family
members agree with grandfather's assessment of our genealogy. But
there is a strange thing. We still find that people find it difficult
to accept our genealogy.
IN THE FAMILY CLOSET
has a dark side to it if you look back far enough. Grandfather admitted
it up front, but passed over it quickly. He mentioned that he came
from either northern California or Oregon. He wasn't sure which.
Our family branch get it? Like I said, I've got a million
of 'em grew up on land owned by the U.S. government. Some
of the family members were owned by the U.S. Forest Service. The
others were owned by the Bureau of Land Management. The two agencies
have never cooperated very well. When you talk about turf wars in
government, it's literal in their case.
Back in 1935,
Forest Service adopted a policy of putting out all fires within
a few hours of their discovery. This was adopted by the National
Park Service, a third government agency overseeing timber.
In 1972, the
National Park Service reversed the older policy, adopting the "let
it burn" approach. But this was adopted after almost 40 years of
fire-free growth of trees and underbrush. Then, in 1988, about 800,000
acres of Yellowstone Park burned to the ground. "Ashes to ashes,
dust to dust. The National Park Service policies giveth, and the
National Park Service policies taketh away. Blessed be the name
of the National Park Service" (except inside the Bureau of Land
The U.S. government
of the nation's land. The U.S. government owns anywhere from
40% to 85% of all land
in the dozen Western states. This does not include land owned
by state and local governments.
leases timber land to private corporations that have no stake in
the future of the land. They never know if they will be top bidders
in 25 years. So, they strip as much of the land as the agencies
these agencies have no direct stake in the profitability of the
corporations, so they do not make their decisions based on customer
demand. They make their decisions in terms of adding more power
to their agencies.
to irrationally priced wood. This has been a problem with family
members in our lineage. We never really know what we're worth. It's
bad for a pencil's self-image, let me tell you. For all I know,
I am the offspring of some Swiss bank payoff to a government bureaucrat
by a corporate deal-maker.
is not one of the main branches. The main branches in the West are
in Washington State. The trees there are managed on privately owned
land. Weyerhaeuser has owned the land ever since 1900. It is the
largest privately owned forest of timber on earth.
is Georgia Pacific. It owns huge tracts of land in the southeast.
It is owned by Koch Industries, a privately held corporation. From
1927 to 2005, it was a publicly traded company. Today, outsiders
have little say in how the timber is managed. Pricing is set between
customers who buy wood products and corporate entrepreneurs who
get the best prices customers offer. The corporate owners have personal
economic incentives to keep the trees healthy and growing. They
want to keep making profitable deals.
A pencil who
can trace his lineage back to one of these firms knows what he is
worth. He knows he's legitimate.
are involved in making the components of pencils in the United States
are the graduates of tax-funded schools. They used pencils in their
youth, but the skills they needed to learn pencil-making used to
be taught at home by mothers in about five years or fewer. After
that, students can educate themselves. Anyone who doubts this needs
to investigate Dr. Art Robinson's
need to know how to read and do basic arithmetic. These skills are
available through curriculum materials that are free of charge online
today. The model is Khan Academy.
The next generation of pencils will be better than ever. They will
be computer designed.
As for illiterate
workers outside the United States who helped make me, they picked
up the necessary skills through apprenticeship. This was funded
by their employers, not taxpayers.
that made me what I am were shipped by rail. These were built with
government money in the late 1860s. But the trees where the really
successful family members grow up are in Washington State. They
were sold to Weyerhaeuser in 1900 by James J. Hill, who built the
Great Northern Railway without government money.
course, patents were the basis of some ancient developments that
shaped pencils way back when. The patent system confers monopoly
grants of privilege to inventors for a few years. Whenever
it has not existed, innovation has been much more rapid. That's
rarely talked about these days.
have contributed to the creation of my family tree, but these are
no more the product of state action than churches are. There is
limited liability protection for both, according to voluntary agreement.
My family tree,
just like yours, is the product of mostly voluntary agreements.
From time to time over the last 150 years, people with badges and
guns have intervened to tell other people making pencil parts what
to do. They always do this on the basis of their perceived self-interest.
I think there would be a lot more pencils serving a lot more users
if people with badges and guns had just stayed out of it. They are
all pen users. Don't put your trust in pen users.
If you understand
the genealogy of a pencil, you should be immunized against Marxism,
Keynesianism, and the other isms that teach that central planning
is required to enjoy the blessings of liberty.
story of I, Pencil is not taught in tax-funded schools. It is not
taught in state-accredited universities. It is taught online.
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 20-volume series, An
Economic Commentary on the Bible.
2011 Gary North
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