Milton Friedman expands on “I, Pencil” – the power of the pricing system within free capitalism

We need to understand how a free market and freedom generated the economic prosperity we have enjoyed over the last 200 years



A few notes after watching the video:

To get the wood for the pencil you have to cut down a tree, which requires a saw, which requires steel, which requires a steel mill, which requires iron ore to make the equipment. So mine the ore, merely cast the equipment to make a steel mill to make a saw to cut down the tree.

Who told the rubber grower to send a bit of rubber to the pencil manufacturer?

Buy one pencil and you indirectly tell all the people throughout the production channel to gather the materials to make a pencil.

Without one speck of coercion, everyone worked together because each person was better off to do the trades.

Pricing makes all that happen. Freedom allows it to function.

The greatest fallacy today is that economic activity is a zero-sum game. That is a false idea. In a free trading system, both parties are better off. Both gain.

Hat tip: Cafe Hayek, of course.

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