Xi Loves Pencils

Where do pencils come from?

Photo: Daniel German. Source: Wikipedia

In 1958 economist Leonard Read wrote a charming essay entitled “I, Pencil” about the miracle that the humble pencil represents: wood, zinc, glue, and graphite combined in a form that makes writing possible. There’s no hive-mind directing the countless individual actions necessary to bring pencils into being. Rather, individual shippers and machinists and miners and foresters work in their own individual interests, and their know-how is organized to offer a coherent product—at a miniscule price.

Over the years, comparable presentations have been written and produced: “I, Smartphone,” “I Toaster,” even “I, Whisky.” The point is the same: the spontaneous organization of individual interests to create complex products based on what we want is little short of a miracle. Four hundred years ago Thomas Hobbes wrote that mankind’s state of nature would be a “war of all against all,” with people living lives that were poor, solitary, nasty, brutish, and short.

Engraving: Abraham Bosse. Source: Library of Congress

But the lesson of “I, Pencil” is that we have incredibly creative energies that need merely be organized to provide a seemingly infinite number of delightful products.

It’s worth keeping in mind as we look at potential trade restrictions and tariffs. Last week China’s president Xi Jinping made a speech in Davos, Switzerland defending the world’s liberal economic order against the dangers of protectionism. Trade has helped hundreds of millions of people rise from poverty to plenty—and allowed consumers to purchase pencils for a few pennies each.

It may be that the protectionist voices we hear today are just rhetorical devices necessary for driving better deals. But let’s hope the rhetoric doesn’t become reality. An essay entitled “I, Protectionist” would not be so charming.

Douglas R. Tengdin, CFA

Charter Trust Company

By | 2017-07-17T12:21:31+00:00 January 23rd, 2017|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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