IPencil

ℹ️IPencil
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By :	Aristotle Sabouni
Created :	2017-04-28

1Liner :

I listen regularly to the Freakanomics Podcast (Radio). I pencil was a great treatise from 1958, but applicable today.

Summary :

The podcast on i pencil is an economics treatise by Lawrence W. Reed, founder of fee.org (circa 1958), explaining the complexity of making something as simple as a pencil in the modern world. (No one person knows it all, thus no one person/committee can optimize it). I’d heard parts of this, was very familiar with fee.org, so read I pencil in it’s entirety. It’s definitely worth a listen and/or read.

I listen regularly to the Freakanomics Podcast (Radio). I normally really enjoy Dubner and Freakanomics, but it can be a little too superficial, and miss deeper teaching opportunities. And the second half of the show was an even shallower, covering of making a toaster from scratch in the modern world. So it wasn’t a bad, it just fell short on where I wanted it to go.

Now where I wanted it to go was that I Pencil was a key economics lesson — explaining that something as simple as a pencil, was too complex for anyone in the world to understand how to make one, at least if you look at all the parts. Back in 1958 it was a global supply chain, that had iterated many times. Capitalisms creative destruction, and continuous improvement, had enabled every part of a pencil to be optimized in ways that no central planner could have foreseen or managed.

The point is that communism and central planners aren't as good at bringing order out of chaos as free markets are. And the truth about the simple pencil proves it. No one person knows all the nuances of how to make every part of a pencil: the knowledge is dispersed through many people, in many places. Which is why central planners are destined to fail: no one knows it all. You need dispersed planners that the free market gives you -- specialists all over the globe trying to optimize making every part. And someone will put it altogether, without having to know all the nuances of everything. But a central planner trying to plan for all that, is destined to fail, or underperform the alternative.

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