'I, Pencil' To 'I, Smartphone': Working Together For Good

Jay W. Richards
Investors Business Daily
August 14, 2012
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President Obama's rebuke to business owners, "You didn't build that," has justly entered the pantheon of great political gaffes. His point seemed to be that because there are antecedent conditions for any business — roads, laws, banking rules, an oxygen-rich atmosphere — entrepreneurs shouldn't claim credit for creating successful businesses. Nonsense.

Great entrepreneurs transform existing conditions to create something surprising and new. The existing conditions never built a business on their own.

There is, however, a related truth that seems to have eluded the president: Very few modern goods would exist but for individuals and companies in countless places, cooperating and competing in global markets.

The iconic illustration of this idea is Leonard Read's 1958 story "I, Pencil." One group harvests the trees; others transport and process the wood, mine the graphite from Sri Lanka, mix the yellow paint, combine the factice from Indonesia and pumice from Italy to make the eraser, get the brass to hold the eraser, and so forth. Just making something as "simple" as a pencil surpasses the creative power of any one person.

It's been over half a century since Read wrote "I, Pencil," and yet its only popular visual treatment was when the late economist Milton Friedman (who would just have celebrated his 100th birthday) told the story, pencil in hand, in his 1980 documentary "Free to Choose." That's a shame. It's a brilliant story pregnant with economic truth.

Happily, the Institute for Faith, Work & Economics has just released its first video adaptation. Instead of a pencil, the video features something much more complex: the smartphone. Smartphones show brilliantly how millions of people dispersed across the globe and across time, when coordinated by markets, can bestow their gifts to meet their needs and serve others, most of whom they'll never know.

Of course we all help our families and neighbors locally, personally and sometimes sacrificially. But it is only when human beings are working in widely dispersed and coordinated markets that entire cultures rise out of poverty. The growth of economic freedom across the globe in the last several decades has lifted billions out of poverty. According to the World Bank, embracing market reforms has helped lift 400 million people out of abject poverty in China alone.

We see the hand of providence here. In a fallen world, we should not expect to vanquish all scarcity. But free markets, which presuppose the rule of law, still make it possible for fallen people to "work together for good," to coordinate their legitimate pursuits with the needs of others, to tame the effects of scarcity.

Markets also confer meaning on the most mundane jobs. Certainly anytime we pursue our calling, our work has meaning. But a process superintendent sweating in a copper refinery in El Paso, Texas may think his work is otherwise isolated and insignificant. But no such job would exist in isolation.

After all, copper is not refined for its own sake. There would be no copper mine unless there was at least potential demand for copper. In the market, a demand for copper from smartphone manufacturers sends signals to producers in the copper industry, giving them the information they need in mining, refining and transporting.

Such markets give a hint of the transcendent: They allow us to pursue narrow and mundane ends while simultaneously participating in a reality far bigger than we can comprehend.

Unless someone first had an idea for the iPhone, it wouldn't now exist. And yet no one could create an iPhone, or any smartphone, or even one of its simplest components, from scratch. Markets not only coordinate information about supply and demand, they amplify the ingenuity and creativity of the modest dishwasher and the highest paid computer engineer. As a result, they make previously priceless devices, such as smartphones, widely available, even to that dishwasher.

If we traveled back a century, we'd have a devil of a time explaining fiber optics, computer chips and wafer factories, the Internet and wi-fi, let alone smartphones. Even 20 years ago, such devices didn't exist. And yet, they are now everywhere in the developed, and not-so-developed, world.

It doesn't take a village, or an activist government, for entrepreneurs to start businesses; but villages and entrepreneurs are much better off when they have access to global markets.