In 1958, Leonard Read, in an attempt to write a version of Hayek’s “The Use of Knowledge in Society” for a wider audience, wrote “I, Pencil.” (It doesn’t cover all of Hayek’s points but it’s pretty good given its short length.)
Many economists use Read’s short article in their classes to great effect. It became much wider known when Milton Friedman used it in his PBS TV series, “Free to Choose.”
One interesting thing I just thought of is that in laying out the various elements of a pencil that come from other countries, Read does not talk about tariff rates. It wasn’t because there was free trade. In fact, tariff rates around the world were pretty high when Read wrote. Indeed, as I wrote 2 months ago, Trump is single-handedly undoing much of the progress that the world has made on trade since the 1940s. So tariff rates were quite high when Leonard Read was writing.
Still, I think it’s interesting to take the 4 countries from which some of the inputs come and note the tariff rates that will now be assigned under Trump’s new high (though not reciprocal) tariff regime.
So here are the 4 passages, with the tariff rate after each. Remember that the ✏️ is talking. Hokey? Sure, but it works. A lot of my 30-something military officer students loved it.
“My ‘lead’ itself—it contains no lead at all—is complex. The graphite is mined in Ceylon [Sri Lanka].” Tariff rate: 44%.
“To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.” Tariff rate: 25%.
“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.” Tariff rate: 32%.
“The pumice comes from Italy; and the pigment which gives “the plug” its color is cadmium sulfide.” Tariff rate: 20%. Italy is part of the EU and therefore gets the EU tariff rate.
Postscript:
Thanks to commenter Andrew_FL for pointing out the tariff rate for Italy.
