"I, Pencil" Notes

My Response: The simplicity of the metaphor expressed in this piece makes for a refreshingly easy read. Yet the author is able to define and elaborate on the concept of the "Invisible Hand" with no loss of clarity. It makes the piece accessibly enlightening to even beginning economists. So the format of the piece was excellent. Now onto the content. I struggle to find many flaws with his logic. The "Invisible Hand" certainly exists, it is miraculous, and it is important that we do not take it for granted. I caught one potential "plot hole": the "invisible hand" may not need a "master mind" to function, yet someone has to begin the cycle. Therefore, the hand does not have the ability to magically meet human demand without one person or persons to come up with the original product and means of production. The "magic hand" fuels production, but it cannot create innovation. That is left to individuals. Through education funding and federal funding to private and public research ventures, the government can help advance "invisible hand" production lines. This concurs with Read's point, but may conflict with his implied anti-government position. One other potential oversight would be that this metaphor applies mainly to product engineering. Today's finance world and economy is centered in part around entities that move currency around through investment and capital management, rather than creating product. Finding an "invisible hand" in these workings would be more complex than tying together a string of individual actions, since the process and end product are not nearly as simple. Structures on Wall St. do need a master mind. Not everybody understands the stock exchange, derivative and securities market, or the idea of buying debt through government bonds. Though making a pencil is a complicated process, each step seems simple and able to be quickly learned. This does not hold true for all professions or products.

Implied in the reading strongly is the belief that government should stay out of industry, that regulation is inhibitory and hurts rather than protects the consumer. Fair point, but how do you reconcile this opinion with deceptive marketing techniques and corrupt forms of predatory capitalism. The "magic hand" fuels production, but it cannot create innovation. That is left to individuals. Through education funding and federal funding to private and public research ventures, the government can help advance "invisible hand" production lines. This concurs with Read's point, but may conflict with his anti-interference position.What I took away most from this reading was the wonder that even the most simple product should command admiration and respect.

Discussion Questions:
1. What are positive incentives to prevent corruption, or are negative incentives the better option?
2. When is it appropriate for a government to attempt to streamline the market?
3. What happens when the private sector fails or stifles competition, as in a monopoly?

Main Ideas:
1. If left uninhibited, human ingenuity has the ability to meet human demand with astonishing ability.
2. Simplicity of product does not mean simplicity of production. Even the most everyday object will have an astoundingly elaborate family tree that deserves respect.
3. Government is not more effective than the "invisible hand". Regulation is inhibitory and only gets in the way.