Milton Friedman – The Power of the Pencil
Look at this LED pencil.
There’s not a single person in the world who could make this pencil.
Not at all.
The wood from which it was made, for all I know, comes from a tree that was cut down in the state of Washington.
To cut down that tree, it took a saw.
To make the song, it took steel.
To make the steel it took iron ore.
This black center….we call it led, but it’s really graphite compressed graphite.
I’m not sure where it comes from, but I think it comes from some mines in South America.
This red top up here, the eraser, that of rubber probably comes from Malaya, where the rubber tree isn’t even native it was imported from South America by some businessmen…with the help of the British government.
This brass pharaoh, I haven’t the slightest idea where it came from or the yellow paint or the paint and made the black lines or the glue that holds it together.
Literally thousands of people cooperated to make this pencil.
People who don’t speak the same language, who practice different religions, who might hate one another if they ever met.
When you go down to the store and buy this pencil, you are in effect, trading a few minutes of your time for a few seconds of the time of all those thousands of people.
What brought them together and induced them to cooperate to make this pencil?
There was no commissar sending out officers from sending out orders from some central office.
It was a magic of the price system, the impersonal operation of prices that brought them together and got them to cooperate to make this pencil so that you could have it for a trifling sum.
That is why the operation of the free market is so essential, NOT ONLY to promote productive efficiency, but EVEN MORESO, to foster harmony and peace…..among the peoples of the world.