Friedman famously used the pencil as an example of the virtues of markets. A socialist/interventionist country (CHN) runs that industry now.Ugh, it wasn't Milton Friedman that first pointed out the importance of markets by using the pencil as an example.
It was Leonard Read, who wrote about the manufacture of the pencil, in a piece called, I, Pencil.Second, note that Friedman in an afterword to the piece acknowledges Read as creator of the story.
Third, although Rodrik comments on the story, I doubt he has ever read it,(or he really has a problem with comprehension, if he did) since he smugly and incorrectly states that the pencil is now made in China. It may be assembled in China, but the sense in which Read (and Friedman) look at the creation of the pencil goes way beyond where it is assembled.
As Read points out, the lead in the pencil may come from an entirely different country (In Read's story Sri Lanka]
Read goes on:
Consider these [Sri Lankan]miners and those who make their many tools and the makers of the paper sacks in which the graphite is shipped and those who make the string that ties the sacks and those who put them aboard ships and those who make the ships. Even the lighthouse keepers along the way assisted in my birth—and the harbor pilots...
Then there’s [the pencil's] crowning glory, inelegantly referred to in the trade as “the plug,” the part man uses to erase the errors he makes with me. An ingredient called “factice” is what does the erasing. It is a rubber-like product made by reacting rapeseed oil from the Dutch East Indies [Indonesia] with sulfur chloride. Rubber, contrary to the common notion, is only for binding purposes. Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives “the plug” its color is cadmium sulfide.
Fourth, although Rodrik calls China a socialist/interventionist state, it is far from that. It is a mixed mayhem of parts government and parts private sector. The pencils are made by a wide variety of Chinese private sector manufacturers, including Tonglu Kechao Pen Co., Ltd., Fujian Best Stationery Co., Ltd. Jiangyin Ordg Trading Co., Ltd. and Harbin Hairun Pencil Co., Ltd.
Bottom Line: Pencil assembly in China has nothing to do with the socialist/interventionist state and as Read pointed out, the fact holds that no one knows how to manufacture a pencil from start to finish. Rodrik has missed the complete point of Read's story and attempts to smear it, without having an ounce of knowledge of what he is talking about.
If proof was ever needed of Friedrich Hayek's assertion that knowledge is not dispersed evenly to all, Rodrik sure just proved that.
This reminds me of the (odious) Bill Buckley's lucid moment when he quipped:
ReplyDelete"I'd rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University."
http://www.brainyquote.com/quotes/quotes/w/williamfb400600.html
Which goes to show why these people must hide behind tenure or in a union because they can't or are afraid to compete in the free market.
ReplyDelete"If proof was ever needed of Friedrich Hayek's assertion that knowledge is not dispersed evenly to all, Rodrik sure just proved that."
ReplyDeleteWow, Robert. I think that that is probably one of the slickest intellectual insults that I have read in quite some time. Granted, I prefer Mises and Rothbard to Hayek, but his (Hayek's) work still does represent a great deal of my understanding of economics.
While I would disagree with some of his (Hayek's) particular leanings with regard to the state and monetary theory, he was quite good with elaborating upon the reality that the economy works by individuals, all with certain traits, abilities, means, etc; working together cooperatively. That all of this happens due to mutual benefit and exchange.
The funny thing is that it was Hayek (not Friedman) that was known for making this (dispersed knowledge, spontaneous order, etc) a central issue in his thinking; obviously other Austrians did, but Hayek was well-known for it. The fact that Rodrik doesn't understand that Read's story is primarily from a Hayekian view is astonishing.
That is why, Robert, that I think the last sentence in your post is so hilarious, because I know exactly what you mean: Rodrik completely missed EVERYTHING!!!
If this were some blogger on the internet, then I would not feel the way that I do right now. But, no. Instead, this is a guy getting paid big bucks to teach at Harvard. Even worse, I am sure that he fancies himself an "intellectual".
Did he think that he could just wing it and nobody would notice? Seriously....
What Joseph said.
ReplyDeletePencils are made in China because the world market demands it. Perhaps if western governments hadn't made it so costly to hire labour, pencils would be made in other countries too.
It also reminds me of a story I read about a dozen years ago to the effect that Hong Kong businessmen, who had moved in droves to Vancouver just prior to 1997 handover of Hong Kong to the Chinese, pretty quickly decided to move back. The reason? It was just too hard to make money in Canada. In other words, they preferred to take their chances with what was at the time still viewed as one of the worst totalitarian states, the fear of which had initially caused them to come to Canada. Doing business in Canada was that bad.
Where else can a grown man continue to be a bratty child aside from a tenured professor in a University "Humanities" department? These infantiles actually think that stealing money from people who earned it and handing it to people that didn't is "Human" when adults understand that it is just criminal theft. My 14 year old daughter is more adult than tenured Dani.
ReplyDeleteThe parents of the kids going to Harvard ought to start a class action lawsuit for tuition repayment and use articles like this as proof!
ReplyDeletedani_rodrik@harvard.edu
ReplyDeleteSend him an e-mail, tell him what a jerk-off he is :)