I, Pencil - The Movie

More than fifty years ago, Leonard Read wrote his famous essay, I, Pencil: My Family Tree as told to Leonard E. Read." It has been used in economics classes ever since to help students understand the incredible complexity of market economies. The free market think tank, The Competitive Enterprise Institute, has made a six-minute video that tells the I, Pencil story. There clearly is an advocacy component at the end of the video, but the video tells the story quite well.

The Institute for Faith, Work & Economics has also done a video that features the same ideas using a new ubiquitous technology, "I, Smartphone."

Comments

[NKR]

As Christians, I think it is important to identify the half truths wrapped up in the advocacy at the end of the video. "It gets better every day as long as we are free to interact with each other." Perhaps this is true according to some economic theory, but *who*, exactly does it get better for? Everyone? The already-wealthy? Are there legitimate trade offs for others well-being via our "free" interaction? (I put free in quotes because the cost is another's well-being). All important questions to consider before digesting such a video. In my opinion, it is easy to get lost in the glamor of innovation without considering the impact on "the least of these."

[Michael W. Kruse]

NKR, are you saying weren't enraptured into a mystical experience at the end of the video? ;-) Yes, the CEI video is pretty good until the end with the invisible hand and the mysticism.

Markets are amazing. There is no other system yet devised that provides the real-time interaction of supply and demand generated by countless faceless people as they interact with one another. Our lives would be seriously diminished without them. But markets are not the quasi-deities some make them out to be. (And Adam Smith would be perplexed at how the invisible hand metaphor he mentioned twice in passing while writing "The Wealth of Nations" has taken on mystical qualities and become the organizing principle for some economists.)

Pope John Paul II said that poverty at is core is exclusion from networks of productivity and exchange. Any just society has to find ways bring everyone into economic community and provide for those who simply can't participate. I think that means strong face-to-face communities where people care for each other, supplemented by larger societal structures. The temptation is to expand from a market economy into a market society, where everything is engulfed in market mechanisms. After the first of the year I hope to do a series of posts based on Michael Sandel's book, "What Money Can't Buy," offering some case studies that help us think about when markets are appropriate and when they are not.

[NKR]

Markets are indeed amazing, as are their failures (say, the housing bubble).

I think there is good evidence from the agent-based modelling science to support the need for strong face-to-face communities as a means to solving social issues, such as poverty. Protecting the weak amidst the dominant is, of course, a key role of that larger social structure.

I look forward to reading your Sandel commentary. Along with Pete Singer, I find his questions to be incredibly thought-provoking- an important voice, especially as technology speeds up interaction among actors (with big supply and demand ramifications). Along with the theory and case studies, I hope to see some data that teases out the effectiveness of ideas. It seems both Pencil and Smartphone would rather not go there.