If you haven’t yet listened to or viewed “I, Pencil” stop reading this column and do it now. Here’s one version (6:32 minutes).
In its simplicity, “I, Pencil” is brilliant, and one of the more elucidating lessons in economics and capitalism. Each person involved in the process of bringing a pencil into the hands of a student benefits from exchanging his/her physical or intellectual labor for money to buy the things they want and need. It’s one of the more harmonious and enduring lessons of life.
Now let me introduce you to Andy George, who provides us with multiple other lessons in the efficiency of capitalism. I first heard of Andy when he attempted to make his own chicken sandwich from scratch. By scratch, I mean most everything.
He begins his video series by showing that people have become less and less involved in the creation of their own food over time. In less than 150 years, the number of Americans who work in agriculture has dramatically decreased from nearly 50% to less than 1%.
In order to understand where our food comes and how much a single sandwich really costs, he collected the raw materials to make every single ingredient.
He did absolutely everything from making his own cheese to harvesting his own wheat. He made his own salt, which involved a plane ride to the coast to collect ocean water and getting stopped at airport security for his suspicious white powder. He collected honey to make sugar for his bread and even had to kill a chicken, a momentous occasion for someone who says he eats poultry every day.
The cost of Andy’s sandwich: $1,554. Yet, in America, any of us could go to the nearest restaurant and buy the same sandwich for $5-10. This drastic reduction in price can only come from people specializing in their own areas of interest, improving how they deliver value to their customers, and competing with each other on price. As customers, we all win.
Above I said “most everything” because though Andy creates his products on his own, there’s something important missing from his equation. From the same Fortune article:
Perhaps the most impressive task he undertook was making his own oil. He grew sunflowers and collected their seeds from which he would extract the fat, but in order to do that he needed a press. So he built one.
Gardening materials, including the plot, seeds, and manure, cost $113; the plane ticket and boat rental to collect the ocean water was $351; the oil press parts cost $32; the chicken was $20; and miscellaneous items, such as pickle jars, cost him $44. He paid himself $7.25 an hour, minimum wage, and estimated that he had spent about 140 hours on the project. Adding all this up brings the total to $1,554.
Every tool, every jar, every implement, even the labor – all these had to be created in the same way as “I, Pencil” but on a much larger scale. And none of these things required a mastermind, directing the efforts of the participants in this grand equation called capitalism and self-interest. The Invisible Hand as Adam Smith termed it, is nothing but people acting on their own behalf for the good of themselves. This is a good thing.
So, when we see elected or appointed public servants with the jaw-dropping audacity to believe they can manage these hundreds of millions of transactions every day, who seek to force our behavior to further their own personal causes, we should all reject them in our most independent, American voice.
That’s enough. We’ll take it from here.
The opinions expressed by columnists are their own and do not necessarily represent the views of Barb Wire.