19. How Do You Make a Pencil?

A pencil might seem like a simple, boring object. But the truth of the matter is, the production of a pencil is so extensive, no single person can make one on their own. It takes voluntary cooperation and something free market economists call, “spontaneous order.”

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Books:

• Tuttle Twins and Miraculous Pencil 
• I, Pencil

Terms:

• Spontaneous order: The natural occurring phenomenon where human beings are able to organize themselves organically without a central authority. It is the result of human actions, not of human design.

Links:

• Milton Friedman: Nobody Can Make A Pencil

People:

• Leonard Reed
• F.A. Hayek

Here is the transcript of our conversation:

Brittany: Hi Connor.

Connor: Hey Brittany.

Brittany: So our listeners can’t see, but I’m holding something very special. Some might even say miraculous in my hands right now. Can you guess what it is

Connor: Miraculous? I’m gonna say it’s either like, an animal-style cheeseburger from in and out. Which is from San Diego. Amazing. I consider it near miraculous or maybe like an iPhone or your computer.

Brittany: It is a pencil as a writer, a pencil special to me for other reasons. I, you know, I use it to write obviously, but it’s special for another reason. It’s a bit of a mysterious object. In fact, no one can make it on their own. It takes the cooperation of many people and something we call spontaneous order.

Connor: All right. I think you and I both know a certain book that talks a little bit about this, right?

Brittany: You Do, The Tuttle Twins and the Miraculous Pencil, which I was just reading the other day

Connor: So let’s talk about this pencil. What goes into making it? Brittany, I love this book because I, most of our listeners probably don’t know this. And back when school was in session and before coronavirus and all this stuff, I would do a lot of assemblies and I hope to still be able to do them for like fourth graders and fifth graders. And I’ll go in and I’ll bring in all of the different parts of the pencil. And we’ll basically do a little classroom presentation, or sometimes it’s an assembly with like the whole school. And we’ll talk about what is needed to do a pencil. So maybe let’s, since you’ve read the book recently, what are the different parts of, the pencil let’s maybe start there.

Brittany: Yeah. So the graphite that’s important, right? Graphite is what actually makes the mark on the page. What else? There’s I don’t think it’s paint. I think it’s actually lacker, right? The yellow. Yeah. And it could be, it doesn’t have to be yellow. It could be whatever color pencil you get. I have a friend who collects pencils of all sorts of colors. So Let’s See.

Connor: Is that Tom Boel?

Brittany: It’s Tom Boel it Is

Connor: We’ll give Tom a shout-out. He’s a friend of, the podcast. So yeah, he’s a pencil collector.

Brittany: He’s A pencil collector.

Connor: There’s graphite. There’s the rubber

Brittany: And the wood.

Connor: Yep. Certainly the wood often it’s Cedar. And then there’s the metal, the metal, the copper often that goes into making this is a pop quiz. Brittany, do you know what that little piece of metal is called on the pencil?

Brittany: I don’t

Connor: It’s called. I have, fun with this cuz like none of the little kids when I do these presentations have any clue, and I, you know, a hundred dollars if you know what the name of this and the teachers and the adults don’t know either. It’s a word.

Brittany: Anyone Ever Guessed it?

Connor: No one’s ever guessed it. It’s called a ferrule. F E R R U L E. Yeah. A ferrule Tom might be rolling his eyes. Maybe I’m pronouncing it slightly wrong, but yeah, a ferrule I don’t know. But yeah, there’s all, there are all these different parts. But, not really. Right. Cause I said iPhone here we are. And that probably is like a million parts to it. Here we are the pencil. There are only like five or six things that go into it. Why Brittney is miraculous?

Brittany: So that’s the cool part about it. I mentioned earlier that no one can make it on their own. Actually, an iPhone is similar. You could probably do the whole thing for an iPhone as well, but like think about the wood. Like we might just think, oh, I can go to the store and buy the wood, but who’s cutting down the trees? Who’s bringing that wood to the store where you’re gonna buy the wood the same as the rubber, for the eraser? Who’s actually making that rubber? I don’t know how rubbers are made. I mean, I could probably Google it, but I don’t think I could do it. I didn’t even know what a ferrule was until today. So I definitely don’t think I could make that, but what’s cool is every single person who does know how to do these things, each has a piece of the puzzle, a piece of information that they need to bring this pencil together. And so they have to work together. They have to work together to bring it all together and make this pencil. And that’s really cool to me.

Connor: I think it’s also cool. And I love that it’s spontaneous, right?

Brittany: Yes.

Connor: We’re not talking about like order in the sense of like a, you know, a communist dictator, who’s bossing people around and you have to work on that and you have to work on that. There’s no, president of the pencil production, right? There’s no pencils czar. There’s no boss in charge of making sure the pencils are made that president Trump doesn’t have to sit down and you know, every month review the production of pencils and say, oh, you know, we’re short on pencils this month. We need to up our production by a little bit. There’s no one in charge it’s spontaneous. So, why, is pencil production spontaneous Brittany?

Brittany: Well, because again, it’s kind of based on market demand, which might be a little bit of a term we need to unpack, but it, comes about because you and I need pencils. That’s kind of, that’s kind of the best way to tell you what market demand is. It’s we want something. And so someone creates it. So we want to write with something and companies come together and they figure out a way to make it happen. Tell me anything cooler or even more magical than that.

Connor: What I also find interesting Brittany is so many, most maybe all of the people working on all those different parts people chopping down the Cedar trees, the person mining, the, you know, or the person harvesting the plants that, you know, help them produce the lacker. None of these people know that they’re making pencils or helping to make a pencil, right? It’s not like the guy who chops down the tree or the person hauling the logs or the person who helps build the rows upon which all these people drive as they move about. None of them really have said, you know what I did today? I contributed to making pencils right. Like, because we don’t know those people are, involved in a process. And what’s crazy to me, Brittany is what I really like about this story. And we kind of get into this towards the end of the miraculous pencil book because no one really knows who they’re helping. There are so many steps and people and processes along the way you end up probably helping people who are nothing like you. Yeah. Who has a totally different religion or maybe a different ethnic background, maybe they’re from Africa or China or Japan, or somewhere like that, speak a totally different language. And you know what? Your governments might even be enemies, right? Like there may be wars and conflicts and all kinds of problems. And yet people are still working together in the free market solving problems, buying and selling, and trading. I just love that Brittney cuz to me, it’s like, it’s what makes the whole world go around. Right. It’s what it creates. Go ahead.

Brittany: I don’t wanna say that a pencil could bring world peace, but it kind of doesn’t it

Connor: Right in, its own unique way. Right? there’s the quote you’re probably gonna remember who this is from. I don’t know if it was Bastiat yet, but you know, when goods don’t cross borders, then soldiers will

Brittany: Bastiat, Yeah.

Connor: Yeah. And so like trade is so important because it’s how we help one another. As we’ve talked before, Brittany, about how entrepreneurship is service, we’re actually serving other people by helping them solve their problems. And so when you’re, you know someone is in charge of making pencils, they’re like the seller of pencils. They need all of those parts and all of the people involved to help them. And when everyone’s helping them, we’re all kind of getting along and things are happening fine. But yeah, when a government comes in and says, you can’t buy Cedar wood anymore and you know, or a company or a country, excuse me, starts, you know, banning the goods from another country. That’s when you start to get into those political problems and war, especially when you’re talking about like oil, right? That’s a common thing. We all need oil. We all need gasoline and all this stuff. And so when certain countries are trying to fight one another and you know, blocking oil or stealing oil or charging more things like that, then you run into conflict in war. So, yeah, the market is great to promote peace, right?

Brittany: Yes, absolutely. And there are two names I wanna mention here. And these are names, what won’t even go through quoting them because sometimes they’re, a little intense even for me, but there’s a man named Leonard Reid. Who’s very important to me. And he wrote a book called I, pencil which I believe is kind of where the miraculous pencil comes from. That’s right. Yep. So I think that’s very important for our listeners to, know, just because he’s, a fascinating person in general, but he was very big on anything peaceful. So just like you said, we should use the free market because the free market encourages us to be peaceful because we want to work with each other. We want to make these things and you said a word spontaneously. And I don’t know if we actually said spontaneous order. This is kind of a big concept. That again, I barely understand when I read, but there’s a man named FA Hayek. He’s no longer alive, but he kind of coined this term. And so I would encourage our listeners, even if they won’t understand what he says, just to maybe Google FA Hayek and kinda kind of see what he looks like, see what he’s about. Cause I think he’s a pretty interesting guy

Connor: Friedrich, right? Isn’t that? What did I say,

Brittany: Friedrich? Did I say his name? Oh no. I just said FA didn’t I

Connor: Yeah. You said, you said FA, I think it’s like, Friedrich Hayek,

Brittany: Which Is interesting. The reason he went by FA is he got obsessed with British people and he didn’t want people to know he wasn’t like an Anglo person. So he started going by FA Hayek instead.

Connor: Interesting. yeah. Two very smart people who told the story very well. Another one may be that we can mention who often shared the story and, maybe popularized it even a little bit more than the other two was Milton Friedman. He had a popular TV show on, I believe it was PBS. And what’s interesting, Brittany is, I go around at conferences and stuff and I talk to people about the pencil story. They usually say, oh yeah, I remember hearing that from Milton Friedman. Right. And they never heard it from Leonard Reed or FA Hayek who kind of originated these concepts and the stories. And so it’s, great to have, and now, of course, people reading The Tuttle Twins are exposed to the story and they never would’ve, you know, come across mil.

Brittany: They’ll talk about Connor Boyack someday.

Connor: Right. So, this is fun, right? Because when I, remember when we first put the book The Tuttle Twins and the Miraculous Pencil, and I was just so enjoying this concept of trying to understand all the different people that help make things. And so what we started doing for a little bit in our family was as we would sit down to dinner and mom would provide the meal and we’d all sit down and say a prayer and start eating we would then would do this little exercise where just like in the book and in the activity workbook as well, where you can kind of look at the family tree and kind of understand what all goes into it. We would have in front of this, bowl, this plate of delicious food. And we would talk through like, okay, what type of people had to help produce all of the things that like yeah, mom prepared the meal, but really she, like, we used the word prepare, right? Like she didn’t harvest things and grow things and transport things and freeze things.

Brittany: I’m assuming we shouldn’t have a garden in the backyard, or she was, you know, have a, ranch with cattle on it or anything like that.

Connor: Exactly. And so mom was kind of like the chief organizer of all of this like core, you know, supplies and products. And so I, like it because it, helps us to be a little humble, I think, right? A lot of times it’s very easy to be prideful and look at all these great things that I did. And I’m so special when in reality, we stand on the shoulders of giants, right? We rely on so many other people to help us be able to do the things we want and achieve our goals and even just eat meals. And so I, just think it’s special. I think Brittany too, when we talk about the pencil, we, you know, we talked about the wood and we talked about the lacker and the metal for the Foral and all these things. But in the book, you know, we start to talk a little bit about, there are so many more things, right? Cause if you wanna chop down, when I do these little assemblies, you know, with the kids, I, start and I say, who here? Things, they can make a pencil all by themselves. And nearly all of them will confidently raise their hands. And oh, I can. So we started to say, okay, well what about a tree? Oh, I can grow a tree. How would you cut it down? Oh, I would just cut it down with an axe. And that’s where I started to say, well, you know, how would you get an axe?

Brittany: Do you have an axe?

Connor: Yeah. Or how would you get a saw? Remember I said, you have to do this entirely on your own. And that includes all of the, you know, tools and everything. And so you need, if you want a chainsaw, man, you need the people who can generate electricity or, you know get gasoline, you know, from the ground. If it’s a gas-powered thing, you need people who can you know, get the ore the metal ore for the chainsaw metal people who can smelt you need, you know, mechanical engineers who can kind of put it all. I mean, there are so many people involved, let alone the people who build the roads, right? Asphalt and architects and all these people. And so it’s just so humbling to think, wow, my life is better and my life is more convenient because so many people are helping me. And then they don’t even realize they’re helping me. They may hate me if they ever met me, they, might not like me very much. And yet here they are still helping me because of the market. I just think that’s cool.

Brittany: I think it also, it’s cool. Cause it says that we don’t need someone in control. Right. We don’t need a government, like sometimes in socialism or even communism saying you must do this. We must have this many pencils. We must do this. It just happens. It happens organically. And that’s really cool to me.

Connor: So that’s the takeaway guys, the free market. It’s, humbling. It’s powerful. We all end up working together. It’s how there can be harmony in our world because we’re all just kind of assisting one another and serving one another. And so if you haven’t read it in a while, make sure to go back and read The Tuttle Twins in the Miraculous Pencil or as Brittany suggested. And we’ll have this linked on the show notes page for today. So you can check out the information and some links at tuttletwins.com/podcast to go learn about these folks. We can probably even find Brittany in the Milton Friedman episode, where he talked about the pencil and shared the story. I know that’s on YouTube, so we’ll try and link to that as well. So check out tuttletwins.com/podcast. Make sure you subscribe to the episode and we will see you next time. See you later, Brittany

Brittany: See you, Connor.