Are you worried that a person, government or company is going to ruin the economy as we know it? Well, here is a nice video that may persuade you otherwise. The original essay was written by Leonard Read in 1958, titled I, Pencil: My Family Tree, still holds true to today’s markets. One of my favorite economists, Milton Friedman, has touched on it many times as he attempted to explain that structure and central planning is not always necessary to produce goods and services that people will want to use. In other words, leave all creative energies uninhibited.


If you don’t have time to watch the 3-minute video, here is the gist of it. Take an ordinary pencil. None of the thousands of persons involved in producing the pencil performed his task because he wanted a pencil. Some of them never saw a pencil and would not know what it is for. Each saw his work as a way to get the goods and services he wanted—goods and services we produced in order to get the pencil we wanted. Every time we go to the store and buy a pencil, we are exchanging a little our services for the infinitesimal amount of services that each of the thousands contributed toward producing the pencil.

It is even more astounding that the pencil was ever produced. No one sitting in a central office gave orders to these thousands of people. No military police enforced the orders that were not given. These people live in many lands, speak different languages, practice different religions, may even hate one another—yet none of these differences prevented them from cooperating to produce a pencil. How did it happen? Adam Smith gave us the answer two hundred forty years ago. Some of the greatest assets we have as Americans are private property rights, free competition, limited government, inalienable rights, equality and justice under the law to name a few. We have the ability to keep the fruits of our labor which gives us a head start in this lifetime. An ingredient for freedom is to have faith in free people. So, my question is why haven’t some people started to save and invest for their future? Do you have faith in yourself to be able to afford the things you enjoy doing in life?

“If I, pencil, were the only thing that could offer testimony on what men and women can accomplish when free to try, then those with little faith would have a fair case”, explains Read. I might add to this. It’s all about us and on every hand. Read refers to our hands as the invisible hand. Mail delivery is exceedingly simple these days around the globe and I don’t even stop to think about all of the processes and people involved in getting my letter to another home. In Manhattan, Amazon just successfully implemented two-hour shipping for the holidays. Incredible strides have been made in logistics for many things. Natural gas and refined fuels are shipped via pipeline all over the United States to ensure every American has easy access to inexpensive electricity. Moving people is easy with the available use of public transportation, Uber coming up with a better way to travel than a taxi, affording our own car, flying on a plane, and soon driverless trucks and cars will be moving product and people with ease. Who doesn’t have a cell phone with numerous free apps to help us navigate on the run? Communication is taken for granted in an age where we don’t have the pony express to lean on. Look at the advances in cancer treatment, big data, human genome, 3-d printing, artificial intelligence, robotics, tablets, etc.

The lesson I have is this. Government and politicians are formed to organize society to act in harmony with the creative energies of the people and to keep them safe. Society’s legal apparatus can remove obstacles and lend a hand in keeping the environment pollution free, but it can also permit the Mark Zuckerberg’s of the world to freely flow by not interfering. Leonard Read says, “Have faith that free men and free women will respond to the Invisible Hand”. Invest for your future today.

Let us help your family with financial matters as you grow your personal wealth and ownership.

Blake Parrish
Senior VP, Portfolio Manager
Phone: (503) 619-7237
E-mail: blake@bpfinancialassoc.com

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