“We live in a time where many people doubt the fundamentals of our Western way of life, specifically the free market system.
In 1958, Leonard E. Read published the essay I, Pencil, as a way to explain how the free market system and how voluntary interactions around the world contribute to the manufacture of the simple pencil. Given the desire by so many for a centrally planned world, I offer this up for those that have yet to read it” – Brian Lilley
(May I recommmend the written version as far superior – Rob)
Actually Milton freidmans short and brilliant summary of the lesson of the pencil is far more compelling:
http://www.youtube.com/watch?v=4ERbC7JyCfU
It should be required viewing for all students around grade 4 or 5.
But the teachers would fight that tooth and nail as it devastates so much of the current curriculum.
I didn’t know you needed all those accessory production facilities to make a pencil. I thought you just went to the Torsun (Soviet store) and purchased one, you know, just like how you get milk and bread.
PS.
Then along came Obama!
Anyone familiar wth the Austrian school of economics will see that we have never had a true free market capitalist system here. That said, we did get pretty close to it before the advent of big government at the turn of the 20th century, but western capitalism has devolved into a limited player oligopoly through government intervention in markets and officially sanctioned nepotism. Then there is “globalism” (essentialy transnational mercantilism and economic standardization) which government and the resident oligarchy pay service to under the guise of “free trade”.
In a world in which 4% of the population owns 96% of the wealth, it’s rally a stretch of reality and reason to believe the west has a functional free market inclusive, level playing field capitalist system.
If that were true, (as true capitalism spreads wealth and wealth creation over the widest portion of the population) anyone who could scratch together some ven-cap and a creative marketing plan would offer a threat/competition to Walmart – but we all know that isn’t possible. The natural selection inherent in a functional capitalist system, where adaptation to conditions and better ideas and technology don’t win in a market dominated by lethargic dinosaur oligopolies subsudized with public funding – bail outs, tax breaks, industry specific protectionist taxes and levies have eviscerated a true capitalist system.
Anyone who can break the coveted profit ceiling to take their business from small local player into international player has to buy political immunity/protection.
Thanks for posting that,Gord. I’d seen the video before,but never the essay from which the inspiration for Friedman’s speech sprang.
I find MF addictive,go to Youtube to watch one,and end up spending hours on his videos.
As you said,should be required viewing for students.
Great observation, however, I would like to know your take on the following:
“The Canadian and Ontario governments will invest nearly $34 million to help retool a Toyota plant in Cambridge, Ontario, where a hybrid Lexus SUV will be produced.
“The Lexus RX450h will be the first hybrid to be built in Canada, said Prime Minister Stephen Harper, who announced that the federal and provincial governments will each provide $16.9 million.”
anyone who could scratch together some ven-cap and a creative marketing plan would offer a threat/competition to Walmart – but we all know that isn’t possible.
Oh, stuff and nonsense. WM’s dominance comes from Sam’s realization of two things: better logistics translates to lower costs, and lower costs translates to lower prices. Lower prices bring droves in the door. WM invested in computer technology, warehousing, and transport logistics while Sears, MonkeyWard, and others were still trying to figure whether they should keep catalog sales going. That’s the huge competitive advantage they still have, along with brand awareness and physical presence. Those are mighty barriers to entry to someone trying to become ‘the next Wal-Mart’.
On the other hand, jiu-jitsu techniques will work. Wal-Mart’s weakness is it depends on suppliers who can supply huge volumes of product; niche stores can work with someone who can only supply a few dozen of an item. So, any item that can be mass produced will naturally gravitate to a WM distribution scenario, while artisanal items cannot. And that’s exactly what you see – small furniture stores offering handmade maple or walnut furniture at high prices and markups, while WM offers particle board and veneer at low prices, as just one example.
I don’t deny that we don’t live in any type of a free capitalist system at the moment. We live under a crony capitalist system, which is as rife with corruption as, say, England in the 1660’s. (Read Neil Stephenson’s Quicksilver for an astonishingly detailed description of it; it practically reads off today’s front pages). But you chose a singularly bad example.
Occam @ 11:19 “Anyone familiar wth the Austrian school of economics will see that we have never had a true free market capitalist system here. ” Do you mean on earth, in Canada, or in the US? Ideal conditions don’t even exist in a lab, let alone outside of one. The question should be, IMHO, which nation has come closest to having an Austrian school free market economy, and when?
Ken @ 9:47 Illigitimi non carborundum.
Mr. A. Show, Thank you for providing such an excellent juxtaposition. Now back under your bridge.