Sharp Evidence

Vidyohs,

I don't bend any of my students to my views; that's not teaching. I said they move on from their initial questions so quickly because they realize what Read's piece is actually about. You, apparently, still haven't. It's too bad you never took my class . . .

I don't think I would have lasted long in your class. Dogmatic inflexible arbitrary people tend to become useless very quickly in an intellectual world. I asked you to reread what I had written and had you done so with an open mind, like Barbarossa, Gil, Randy, Sam did, you would see the point I was making was not to deny Read's description of the vast complexity in division of labor etc. that go into creating and bringing to market the #2 lead pencil, but to deny that it was impossible for one man to make a pencil, even one so fine as the #2 lead pencil, should he choose to do so. I even said I agree that it is simply ridiculous for one man to do so because the process delivers great pencils to his local store cheaply. For some reason you're blind to all of that. My words bounce off that concrete (all mixed up and permanently set) mind of yours.

The mistake you make and the mistake you allow your students to make is turning away from the truth that all the knowledge, skills, and abilities Read describes do not have to be known or skillfully possessed by one man, that is his error, or at least the error you take away from his essay.

The man who created the first pencil did not have to know how to mine ore, smelt it, and shape it into tools: He just had to know where to obtain the tool, because the tool was already made and was never pencil specific. The same tools that created fine furniture could also be used to work on fine pencils.

The man who created the first pencil did not have to understand the cultivation of cedar: He just had to locate a source for cedar already grown, and grown it certainly was.

The man who created the first pencil did not have to build a truck (means of transportation) from scratch in order to get his pencils to market: He simply had to buy a truck, because trucks are not pencil specific.

Take each of Read's points and examine them with an open mind and you see nothing there that was ever pencil specific: So, that leaves us with one conclusion, yes indeed a reasonably intelligent, skilled, and educated man could indeed fashion his own functional pencil if required to so do.

If you, sir, can do no better than you have demonstrated here in your comments and total lack of willingness to crack that concrete mind, do your students a favor and just set the text book on your desk and go home.

"DonBoudreaux [Moderator] 21 hours ago in reply to vidyohs
Vidyohs -- You are mistaken. You could indeed make a crude pencil, but you could not make a commercial-grade pencil, which is the product that Leonard Read describes. No one person could possibly possess that much knowledge - not even close."

What Don forgets is that the capable breed of man did not die out when Thomas Jefferson passed away.

Identifying metal bearing ores. One intelligent man can learn to do so rather quickly.

Building a means of smelting that ore. The same intelligent man can learn to do that rather quickly, after all our ancestors did it long before Christ was born. Actually building a smelter like the ancients did is not all that difficult and all most intelligent people today would need is to simply look at what has been done and duplicate it with materials at hand.

Casting that smelted metal into basic shapes. The same intelligent man can learn that in short order.

Metal working skills to make tools. The same intelligent man can learn to do that, and it isn't something that has to be reinvented each time one wants to make something besides a tool and chooses to make a rim for a wagon wheel for instance.

Etc. etc. All the knowledge and skills Read describes can indeed be known and practiced by one man, don't use Vidyohs as the example of this versatile man, use Thomas Jefferson instead and remember Jefferson was not unique in his time and place; but, as Read correctly points out, obtaining one's pencils via all this labor is ridiculous when the division of labor makes the process so efficient and cheap. I have no disagreement with Read on this.

I bet Don could learn and hold all the knowledge necessary if he chose to.

Once more: if you get "the vast complexity in division of labor etc. that go into creating and bringing to market the #2 lead pencil," and you get that "it is simply ridiculous for one man to [make a pencil] because the process delivers great pencils to his local store cheaply," then you've gotten THE ENTIRE POINT of the piece. There's nothing else to argue about.

However, while I love stories about the division of labor and the wealth it creates, I also like stories about how one person can make the world wealthier. So I also give my kids this story:

http://www.freemarketfoundation.com/ShowArticle...

Good piece Greg N., a little along the lines of my Og and Mog, with a little Lucy thrown in, but better written.

This is the last word and then I am going to put my whip down, the pony is dead, you're allowed the last stroke.

What you call THE ENTIRE POINT is not quite that. I am sorry you choose not to look at what I have written and tried to understand what I have said. I know that I am not really skilled at writing, but when I hammer the same statement over and over I would hope that some of the strokes would land.

In addition to your THE ENTIRE POINT Read clearly and distinctly says no one man can possibly hold that knowledge and put it to use, I disagree......which is precisely what I said in the beginning. I said that because, unlike you, I see a lot of bullshit in his elaborate detailed descriptions of making a pencil even unto including the provision of coffee for the loggers......tad over done, doncha think? Maybe, just a tad, huh?

Concentrate on his piece and use your intellect to decide what is really relevant to making the pencil and you'll see what I mean. Com'on, you have to agree that most of his detailed technicalities are not pencil specific, and the makers of your #2 lead pencil did not invent or develop them. Toss out all that BS and you are left with knowledge and application entirely within the scope of an individual.

Thank you very much sir.

I will accept that you can make a pencil, but I don't think that matters. The pencil that Read describes is better than the one that you can make. Given both pencils' quality and price, I'd buy his. I think you've readily admitted that you would as well.

I think the point here is that the market continuously searches for efficiency improvements. Pencil making may have started with a process that you would describe, but it eventually lead (without a single controlling force) to the process much more distributed and complex, but also better.

I think it is fair for Read to list the hydro plant and coffee beans because they are part of that pencil's construction. if you took away the electricity for the saw mills, you'd have to replace that step with something else which would impact the cost or quality of the pencil. if you took away the loggers' coffee something bad would probably happen because coffee drinkers need their coffee.

I bet Don could learn and hold all the knowledge necessary if he chose to.

You are talking about entirely different things if you choose to assume that some inputs (e.g. trucks) are somehow a "given."

Read is referring to every input required down to "the men who poured the concrete for the dam of a Pacific Gas & Electric Company hydro-plant which supplies the mill's power." All things that are required to make the factory pencil (including electric power and trucks) each have their own specific knowledge that one would need to master if they were to duplicate the pencil Read refers to by themselves .

Relying on the knowledge of others for any of these inputs is to rely at least partly on the knowledge of others through the division of labor.

Read is challenging anyone to perform this task exclusively with their own knowledge when he flatly states that "not a single person on the face of this earth knows how to make me." We understand that he means every input when he describes all the various inputs that he must master. If you choose to ignore the framework he sets up and rely on the some inputs from others (and the knowledge of others) that is fine...it is just no longer addressing Reads essay.

See reply to SMV.

Vidyohs,
I think the challenge was to understand and perform all the complex tasks necessary to create a pencil that most people would accept as the pencil described in the essay.

Your response seems to be that there is no "real" difference between a sharpended stick charred in the fire that you could produce in your back yard and a pencil with components from around the world.

Is this the point you are trying to make?

Or is it just that we can do more as individuals than we believe?

SMV

You're close. One of my points is that we can do more as individuals than most people believe because they haven't been enculturated in a world that requires more than specialized knowledge.

But, no my point was never that a sharpened stick of charred wood would serve as an equal to the common #2 lead pencil. I specifically said functional pencil which should be interpreted as a pencil that will have a wood encasement around a substance that would leave a durable mark on paper or other hard surface, and which would not crumble away when it touched a surface, something that would required regular sharpening. A functional pencil, not a pretty pencil, just a pencil that is utilitarian. Now, I do believe that yes, you as an individual could devote the time and effort necessary to even produce an acceptable facsimile of a #2 lead pencil, but why bother when they are so cheap. Last I make the point that some one made pencils that good at one time to serve as the template for the mass produced model. If some one can do it, then most of us could do it.

Last, sir, an honest man can look at Read's essay and realize that his points were carried to the extreme and that many people turn that into a dogma that makes them reactionary as has been shown in the run-up to my public hanging on this issue. LOL.

It is ridiculous to say I have to know how to grow coffee plants to harvest the beans, to properly roast them, grind them, and brew coffee for the loggers who cut the trees, or otherwise I am not truly making the pencil.....that is blatant bull shit, and while dazzling in dissected detail has nothing to do with making the pencil from the wood that the logger cuts.

I do not have to know how to build a huge dam across a might river to produce hydroelectric power to drive the saw mills in order to make a pencil.....that is blatant bull shit. Saw mills operated across this nation on water power and/or steam power for decades prior to the harnessing of electricity or the internal combustion engine. Hell, before that man power sawed wood, fitted wood, and finished wood for thousands of years before electricity.

Fine paints and lacquer were invented and produced well before the 15th century, to say an individual needs to know how to do that on his own before he can make the pencil is blatant bull shit.

None of all the things Read brings up in his essay is pencil specific except (and this is a long shot) the pencil lead itself.

In short, I don't have to reinvent one single thing, I just have to know how to get the materials I need, process those material into usable form, and assemble them.

But, I hold fast to the belief....nay, the knowledge that indeed knowing all those details Read lists is within the capacity of even the most common man if he wants it, and putting that knowledge to work is also within the capacity of most of those with the knowledge.

The truth is that Read is wrong on this point, one man can hold that knowledge necessary to make a polished quality pencil and make it happen, but it is also true that very few would have the ambition or drive to do it. And, why should they, what has evolved through the market is more than adequate.

I, Pencil is where my interest in economics and freedom started, twenty years ago. I only wish I had made more of that interest earlier!

That article is so good, I run it every year on my little blog

Don,
I believe that several years ago there was an effort by economist groups to improve the economics education of US high school and younger students.

I wonder how many high school kids are taught economics and if their courses meet minimum requirements.

It seems most people are unfamiliar with the importance of accurate pricing, supply and demand, and the spontaneous order that appears. Many people, at least mainstream media, seem to believe competition is bad and prices are manipulated against the consumer.

Your co-blogger Russ Roberts wrote a very informative article, "How markets use knowledge" showing how price changes affect the entire I, Pencil process. He used graphite tennis racquets and fishing rods for his examples and showed how production changes as the price of graphite increased because automakers wanted to use more graphite for brake linings. The link is:
http://www.invisibleheart.com/HowMarketsUseKnow...

And of course, Roberts wonderful book, "The Price of Everything."

"I, Pencil" is week two in my high school economics course. In this comments thread, Vidyohs is giving the answers my students give to my preliminary questions. The difference between Vidyohs and my students is that, after a few minutes, my students get the point and can move on.

I agree with vidyohs (shock & horror) - people here believe products can be only be made in factories and require resources sourced from around the globe. Yet history shows that a few centuries ago, before the Industrial Revolution, people did everything by hand and most resources were sourced fairly close to where they would be used. Even then, far from saying "everyone was poor back in those days" there was some with high standards of living and there are existing examples of high art, architecture, philosophy, construction, etc.

Even then, far from saying "everyone was poor back in those days" there was some with high standards of living and there are existing examples of high art, architecture, philosophy, construction, etc.

The people with the highest standard of living during say the Renaissance would be considered materially rather poor these days.

Most of those existing examples came with the price of unfreedom and the dominance of corporate interests (the church, the state, etc.) over the lives of individuals.

"people here believe products can be only be made in factories and require resources sourced from around the globe"

No, people here do not believe that.


"Yet history shows that a few centuries ago, before the Industrial Revolution, people did everything by hand and most resources were sourced fairly close to where they would be used"

By today's standard of living those people lived in abject poverty.


"Even then, far from saying "everyone was poor back in those days" there was some with high standards of living and there are existing examples of high art, architecture, philosophy, construction, etc."

Even the rich then were materially worse off than certainly the middle class of today in the United States and were materially worse off than many of the poor.

Imagine we didn't have the industrial revolution. You would work all day to produce very little. You'd then take your wages to go buy stuff you need only to find it is all very expensive. Why? Because, like you, everybody else is producing very little and there's less stuff to buy.

The industrial revolution is why today you and I, who are not royalty, can buy so much for so little effort.

Western Imperialism began before the Industrial Revolution hence there was surplus goods being made which is hardly the stuff of the theoretical peasant who barely grows enough food to feed himself. Likewise there plenty of art and achitecture that would be impossible if people couldn't produce more than bare subsistence.

You don't really do anything to counter Marcus' point.

As for there being plenty of art and architecture, well, that was largely for the consumption of elites or it was a means to advertise the power of the state. Compare this dispersed, egalitarian nature of art in a world of markets (that is today). Compare to the power of the iPod in other words.

"As for there being plenty of art and architecture, well, that was largely for the consumption of elites or it was a means to advertise the power of the state."

Someone, perhaps Read but I don't remember, wisely wrote that the great success of capitalism is not in producing more silk stockings for Queen Elizabeth, she could already afford all the silk stockings she desired without capitalism. No, the great success of capitalism is in bringing silk stockings within reach of the common factory girl.

There are a significant number of liberals and conservatives who are openly contemptuous of the notion of international trade and believe that it would be better if all things were made locally. It is just a weird and rather impoverishing notion.

Your problem, Greg N., is that you see only what you want to see, and that is a pity.

Because, if you are the kind of teacher that bends his students to his view so strongly that in days they begin to reject the idea that they can do something for themselves, such as fashion a functional pencil, then shame on you.

What answers have I given, when there are no questions being asked? I made a statement of disagreement with the point that no one man can make a pencil.

Go back and reread what I have written. My disagreement and the rationale for it is totally logical and reasonable. I concede to commerce and the markets their due. I give the complexity of mass production of pencils its proper regard. I deny that it is not possible for an individual to make a function pencil.

The key word you and my other detractors are missing is the word functional, which of course means it be some sort of medium that can be drawn across a surface and will leave a mark, and that the medium be encased in wood or something similar such as a stiff plastic (when Read wrote his piece the kinds of plastic available to us today really could replace the cedar). The medium would be the most difficult, but not an impossibility. Functional, in case you never learned it, does not have to be pretty, fine, polished, just workable. Poor country boys raised by depression era parents learn functional at an early age. Spare barbed wire wrapped around the gate post and the upper end of a gate sagging with a broken hinge may not look pretty but it will function as a hinge and allow the gate to be swung until one can afford to buy a new hinge. Functional, my friend comes in all sizes, shapes, and colors.

Again, who made the first pencil? Was it an individual or was it the vast complex process described by Read?

You've seen a pencil, you've held one in your hand and examined it no doubt just like countless bored students through out the decades.

I_am_a_lead_pencil above says this, "You are arguing past the essay. The essay highlights many of the wonders of the division of labor as best illustrated through the mass production process."

My answer to him and you is that no I am not at all, I gave all that its due. You guys just want to be dogmatic, ah ha gotcha on that one! You refuse to read what I have said, and you're making up your own version of it.

However, you might say that Read himself argued past the process of making a pencil by citing all the things that go into making all the tools to do all the wondrous things behind the scene and required to manufacture a #2 lead pencil, when as I said to Marcus, "When Read wrote his thoughts, or even when the pencil was invented or adapted for mass production, all those tools and methods had already been invented and developed. They weren't all invented, developed, and produced specifically to make Read's pencil." Yes they all bear on the production of a #2 lead pencil, but they aren't pencil specific.

Read, correct as he is, is certainly guilty of high drama to be sure. I don't argue against the truth that producing the #2 lead pencil has a lot of complex and intricate process behind it, I just say that an individual can make a functional pencil, just as the first pencil was made by an individual, which you seem to forget and therefore never point out to your students.

I support and celebrate the free market system that gives us the #2 lead pencil.....hooray hooray, the essay makes a point to people who don't understand markets. However, I do even more so support and celebrate the ability of the individual to do anything for himself if he puts his mind to it, even make a functional pencil.

Unless we are talking about left leaning loonies that think it should all come from government initiative and central planning, then all bets are off.

Surely that does not describe you, Greg N., does it?

Of course you can make a pencil, I'm certain I could make a pencil.
Equally obvious, I couldn't make all the tools, and dig up and refine the ore, etc. to make a pencil just like the ones available at the store.

Pencils are still made by hand, though I think people buy the graphite cores that they shove through holes drilled through sticks.

I rarely use a pencil anymore.

Trust me, Greg, Vidyohs gets it. I think he was just trying to come up with something other than the obvious to say. His main point isn't that the author is wrong, but rather that, even if vaguely possible, the cost would be enormous.

Reminds me of Carl Sagan's recipe for making apple pie from scratch "First, you have to create the universe ..." Total preparation time, 14 billion years.

I do not find the argument compelling that no one knows enough or has the capabilities to single handed make a pencil.

Not all pencils are of the identical manufacture or style, for instance there is a distinct difference between the No.2 you used in school and the pencil a carpenter might buy and use.

I have seen a pencil, I have used pencils, and I could make a pencil if I chose to do it, or was forced to do it. Granted it would be at a great expense in time and effort, far beyond the pencil's expected benefit to myself, and would require some experimentation and research on making the lead; and, probably no two of my pencils would be exactly the same, but I could make a functional pencil. I believe that on this 3 acres I could produce all that is necessary to make a crude functional pencil of reasonable durability.

Furthermore, based on how frequently the leads break in the pencils I do use rarely, :-D, I have to wonder if I couldn't improve on those.

From the input I see here, I suspect that there are many of the patrons of this cafe that could do the same if they chose.

It all comes down to the question of, "Is it worth it to me the individual, when the market does a good job of putting pencils in Walmart for me to buy."

Maybe you can use a rock to chip off another rock and fashion it into a crude writing tool to make scratches on something. Or, something similar.

Beyond that, how are you going to dig and/or mine for any material you might need without some sort of external input?

I believe that I indicated that it wouldn't be easy, just possible. Until you have seen and investigated this 3 acres how can you judge what is possible and what is not?

I live on it and I say it is possible.

Talk is cheap. Get busy. Let me know how it turns out. Pencil - not a fantasy fascimile.

Maddog

Ouch ouch ouch, WTF is with you guys? An intellectual exercise turns into an insult to your dogma?

I have no need to make a pencil and I acknowledged that, and also stated that economics makes it impractical for me to do so.....that still does not negate the fact that I can do it, and I bet so could you. The average modern hobbiest has all the tools necessary in his shop, and reverse engineering a functional pencil is within the reach of even a modest intellect and skill.

Are you lacking in those areas, sir?

"The average modern hobbiest has all the tools necessary in his shop, and reverse engineering a functional pencil is within the reach of even a modest intellect and skill."

To meet Read's challenge, you have to make those tools yourself, from scratch.

I quote:

"My family 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..."

"To meet Read's challenge, you have to make those tools yourself, from scratch."

Strawman.

When Read wrote his thoughts, or even when the pencil was invented or adapted for mass production, all those tools and methods had already been invented and developed. They weren't all invented, developed, and produced specifically to make Read's pencil. So as a woefully inadequate hobbiest myself, I have the tools, intellect, and skill necessary to reverse engineer and make a functional pencil.

Besides which, Marcus, have you ever seriously looked at the woodworking tools for the 17th and 18th century? Take a look sometimes at surviving furniture from those eras and ask yourself how the hell did they fit things together so precisely and strongly that they survive 2 or 3 centuries later as equal to anything modern man can produce.

I am dogmatic also in my belief that, though it is not commercially, economically, or even reasonably feasible for me to make a pencil when I can buy one so cheap and at so many places, if it became necessary I could fashion a functional pencil.

I am not saying it would be easy, quick, cost effective (at least at first), or even desirable in this culture. I don't know about you but I carry a hell of a lot of knowledge in my head gathered from 17 years of dirt poor country boy living, another 21 years active duty in the military service where lavish money went to the USAF and we had to keep our stuff running with ingenuity, and now some 30 years of experience in the hands on functioning of business. I know how to do a hell of a lot of things that I do not do because in this culture at this time it is not necessary or desirable that I devote time and effort to it when that time and effort can be well used in some other enterprise that provides better returns.

How the hell can you argue against such a plain unequivocal statement of fact.

Couldn't you fashion a functional pencil if you had to.

I can see both sides, but I kind of agree with vidyohs's point, although I'm too drunk to articulate it in a more concise and persuasive manner from my personal perspective. I think mountains are being made out of mole-hills, here. I think that he understands Reed's point and agrees with it but perhaps disputes the precise statement of it. This is a nuanced subject but perhaps the original assertion by Reed wasn't nuanced enough, and this is his beef. He certainly understands and expresses an important component of Reed's argument, namely, opportunity costs. I doubt vidyohs disputes the "complex structure of production" and "advantages of the division of labor" arguments being made apparently "against" him. Of all people with whom to be arguing, vidyohs is not it; save your energies for the muirgeos and danielkuehns of the world. Anyway, back to my screwdrivers.

I would like to make two concessions, which could be considered minor retractions. First, I would like to say that I have unfairly interpreted Don's use of "commercial," since now I realize that that word includes the concept of profitability--i.e., economic viability and sustainability. Second, while I think that my kind of "corollary" of Mises's Regression Theorem is correct, it misses some points and perhaps partially renders it irrelevant as an argument. No doubt, the division of labor esotericizes knowledge of any particular production method, but this does not mean that such knowledge is not obtainable by any single person, particularly any person involved in any specific aspect of the creation of any specific product, since this allows him potential direct access to the other specific production methods responsible for the finished product. (In the same manner that a CEO of a company started from the bottom and worked his way up by comprehending every aspect of the company and integrating this into holistic knowledge.) Certainly economic progress renders information more affordable and accessible than in the past, assuming that one knows where to look. Anyway, vidyohs is only in apparent contradiction of the position held by others, and this is ultimately a trivial pursuit had by all. I say leave him alone, since he's not really disagreeing and since everyone is talking past each other.

Why are you so defensive? I'm not arguing with you. I thought I was engaged in a discussion.

You don't seem to be getting out of Read's article the same thing I'm getting out of it. From what I am getting out of it, the things I am bringing up have everything to do with.

Read is discussing how the labors of all those people come together to produce a lead pencil and NOBODY planned it. Millions of people and yet no central planner.

The miner mining for iron ore isn't thinking, "Well, I better get this iron ore mined so the kids don't run out of number 2 pencils." He has no idea what his iron ore is going to get used for.

It just so happens, in this case, it got used to make the steel which made the drill bit which drill the hole to get the oil which was sent to the refinery to make the gas to run the chain saw which sawed down the tree which was used to make the pencil.

The coordinator of all that activity is market prices.

If you use your existing tools to make a pencil then you have not produced without the use of that very same market.

So? Did Hitler or Stalin or Pol Pot have know to know the itty-gritty details of every action of very person? Even tyrants know the principle of delegation. If they didn't then tyrants wouldn't attain any power at all and spend their lives in a padded cell.

Yes, oppression does appear to be centrally controllable but we're talking about production and more specifically, what is coordinating all of the activity necessary for it.

This is ridiculous. Don't Austrians always invoke Robinson Crusoe? Did he not make fish-catching nets on his own? An arrow flint can be made by each individual human being on his own in a primitive society in which trade and the division of labor are non-existent or minimal. This is a basic assumption of Mises's regression theorem. These things are, as vidyohs argues, possible and PLAUSIBLE, given restrictive assumptions. And that's his point. But Mises's point, and Reed's, and y'all's, and WHATEVER, is that, in a modern economy, into which equation the division of labor has entered, where the division of labor necessitates specialization and diminishes or entirely eliminates self-sufficiency and broad production knowledge per se, making your own pencil is economically preposterous and unviable and is unlikely to be accomplished by the vast majority of those in society, and those who are capable of doing so, almost by economic law won't. That probably made no sense. Whatever. I'm pouring the "little water."

I don't disagree with anything you said. However, is division of labour the point? I thought the point was that thousands of people were coordinated in the making of a superior pencil without a central planner organizing them - not that division of labour produces a superior product.

Basically, all division of labor results from non-division of labor in the production of a particular good and the subsequent insight by an entrepreneur that specialization in such production and the economies of scale reaped from such can confer upon him a competitive advantage to all self-sufficient producers and upon the consumers a productivity advantage as expressed either in a lower price or higher quality or both.

Well, most of the graphite found in the world looks nothing like that found in Britain in the 16th century (where you could literally saw off a chunk to make a writing implement ). Making graphite into what we think of as "pencil lead" is a fairly time consuming process.

Vidyohs -- You are mistaken. You could indeed make a crude pencil, but you could not make a commercial-grade pencil, which is the product that Leonard Read describes. No one person could possibly possess that much knowledge - not even close.

Er dude,

I don't believe I made the claim that I could make a commercial grade pencil (but we could split hairs on the words commercial grade very easily, couldn't we? If I make a crude functional pencil and someone wants it bad enough to pay me, then it is commercial grade), as a matter of fact (see above) I carefully stated I could make functional pencils of which no two would likely be alike.

And, I disagree that the article specifically addresses as its main point the making of a commercial grade pencil. I believe the point he makes is his claim "that no one person has the knowledge, skill, and resources to make a pencil on his own".

That is the point I disagree with, and that is the point on which I commented.

On reflection I might add this in support of my point. Did the process invent and create the pencil, or did the pencil create the process?

Someone invented the pencil and actually made them and from that the process developed to the point now where specialization is the more efficient manner of producing pencils....but, that does not negate the fact that a pencil can indeed be made by one man.

...but, that does not negate the fact that a pencil can indeed be made by one man.

4 tires can probably be made by one man too. Good luck with your car. As Don says: you could not make a commercial-grade pencil, which is the product that Leonard Read describes.

You are arguing past the essay. The essay highlights many of the wonders of the division of labor as best illustrated through the mass production process. It is not simply the wonder of 'a writing device' that can loosely be labeled a pencil - which, I agree - anyone can fashion. Instead, and quite clearly, Leonard Read is speaking of the factory production process required for the common mass produced pencil we are all familiar with. Nobody contains the full extended knowledge required to make the common pencil which he refers to.

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.

It is making no special point to say "I can make a tire in my backyard too" in response to an essay describing all of the specific inputs required to make a kind of common tire made at a tire factory that nobody can indeed reproduce themselves.

Your moniker implies you’re a pencil. So what’s with the tires?

Why not? The author started to subdivide the processes and materials of making a pencil. The subdivisionsscould be broken down into further subdivision until each basic linear process is found. The complete list would be very large and complex yet it could be done. After all, if it were unknowable then a commercial-grade pencil. By the same token a documentary on how to make a Katana isn't particularly complex rather a Samurai Sword is little more than a very sharp piece of steel with a handle on it hence there were three basic processes still done by hand: one place to make the steel, another place to convert the blobs of steel into a long shaft of steel with a handle on it and, finally, another place where the sword is sharpened.

The fun part of course is that the pencil designers don't have to bother knowing about the components.

Yes, theoretically. I think you can take this one of two ways. If you see it as saying "a lot of people, expertise, and materials go into even simply products and the market has emerged precisely to coordinate this complexity", then that goes without saying. Could you manage to make a pencil? Maybe. But it doesn't really matter. You certainly couldn't supply them in any great quantity or have that be the most efficient use of your time. The point is, market coordination does it better.

Now, if you take it any further and say "the market can and should solve every complicated issue". THAT is not really an accurate metaphor to use (isn't it interesting how often Don argues from metaphor, come to think of it?). The market works to produce good pencils precisely because of how incentives are structured in the market, and precisely because of the nature of the pencil. If those incentives don't carry over to other situations or the nature of the product doesn't carry over to other situations, we shouldn't expect the metaphor to mean anything.

Oh, absolutely! The more complicated the issue, the better a single person with a higher IQ like Krugman is at solving it. for hundreds of millions of people. So simple. If the market doesn't produce the outcome you want, we should torture it until it does. There will be no price to pay for that. Never! You're such a genius, Danny.

I'm having trouble understanding how that response has anything to do with what I said. I'd love to hear clarification... or you can just restate what you just said using a slightly different arrangement and word choice - which I expect is what you'll end up choosing.

Of course you're having trouble understanding.

How are you going to get the steel for you sword? How are you going to get the raw inputs to make the tools you use to mine for the raw inputs you need to make steel? How are you going to make a fire hot enough smelt the raw materials into steel?

Where you going to get the food to eat while you are expending all your time and energy on the above?

No, Don's right. It's impossible.

By the way, here's part 1 on how to make a samurai sword:

http://www.youtube.com/watch?v=ko9vR2_ptlA

Looks like there are a lot of people involved in smelting that steel.

Also, I'd point out that while that might be part one of the video, it decidedly is not part one of the process of making a sword. That's more like part 4, at least. We'd have to start in the iron ore mines for part one.

And the miners, while they might know a lot about mining, probably can't make the tools they're using to mine the iron ore.

And when you put together all this activity, who is coordinating it all? Is there a single person anywhere directing all that activity?

No. The coordinator is prices. That is Read's point.

If it's 'impossible' then it can't be done. If some people know what to do in one particular subsection of a whole process then the whole process can be documented. The pencil was created by people not God hence there's no magical unknowable parts.

Read never suggested that any given part of the process isn't known by human beings. Nor did he suggest that the entire process isn't understood by human beings collectively. He said that the entire process is not known by any one human being.

That's why we have over 500 elected people with no expertise in much of anything to make your pencils and everything else - or at least to decide how pencils should be made and forcing nominally private companies to make them just this way. If one person can't do it, certainly a few hundred people with nothing better to do than run for office can figure it out.

/end sarcasm

Exactly. One of my favorite sayings is that the truly "fair" price of something is what it would cost me to make it myself.

"Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed."

I'll verify when I get a few minutes, but I think it was Hume who clarified that belief and faith are not interchangeable. The gist of it is that belief is a product of the senses and experience, while faith is a denial of the product of the senses and experience. Applied to the above, I don't have "faith" that free men and women will create wonders, the evidence of my senses and experience induces me to "believe" it.