Milton Friedman's Pencil

In the video below, Milton Friedman ever so beautifully explains how the whole world cooperates through trade by using a simple pencil as an example.

Milton Friedman's Pencil from the documentary Free to Choose

I've always loved Milton Friedman's free market rhetoric. He's just able to explain it all in simple terms and with real-life examples. It's as if he already has the answers in his head. Always confident and ready, it seems.

This pencil story shows the beauty of free and voluntary trade and is testament to why governments should never hinder trade or put burdens on traders. Fair and voluntary trade always results in peace and prosperity.

I had this joke with a friend once that if North Korea had S&R, the people would instantly embrace capitalism. There was this girl who escaped from NK and when she was interviewed she said she was so surprised that there was so much more food in a market economy as compared to their society that espoused "equality" for all.

And I do wish that we become more open to trade. The other day, my friend got home from Spain and brought some Jamón Curado. I was surprised that we can't make it here. We have pigs too, right? Trading will give us ideas of how to innovate and improve. In the same manner that we have stuff here like rice or whatnot that's probably better than those in Spain. Trading is like collaborating. And through trade, we can have an incentive to compete and become better.

I love a lot of imported goods (that's why I mentioned the S&R thing) but at the same time I also love a lot of local goods. Protectionism is seen as a patriotic position when really all it does is stomp growth and innovation and distorts prices in the market. When the State tries to protect a certain sector from being "killed" by globalization, it is merely creating an artificial growth in that industry that would otherwise have been forced to innovate and compete. I made an example before about the failures of protectionism in the Film and TV industry of the Philippines.

More recently, I saw this article shared on Facebook that the government destroyed millions worth of smuggled onions. The idea, again, is that it kills local farmers of onions. But then that's how the market works. If someone can provide better service or better quality products at lower price, consumers will choose it. We can't just deprive our consumers as a whole of choices because we want to bail out one sector of society.

And this isn't just a local concern. Imagine all the embargo and trade sanctions all over the world on "enemies" of the US. It just creates more hostility and deprives many innocent citizens of those nations with food and technology.

Hong Kong, being the freest economy in the world, having the least taxes and no tariffs whatsoever was successful in converting China into a more capitalist society thereby alleviating so much poverty. And this small city with no natural resources remain to be one of the most peaceful and prosperous in the world. You don't see terrorists landing planes on their buildings or cutting off heads of hostages. When I was there a few years ago, I saw people of different races and religions peacefully engaging in voluntary trade.

And Singapore, the "authoritarian model" that many of the people I've debated with want to copy remains to be the second freest economy in the world next only to Hong Kong (see The Singapore Argument). That's just a fact. It's dangerous when we advocate opinions not backed by research or data. I even recently wrote about Facebook co-founder Eduardo Saverin migrating to singapore because of their very low taxes, minimal red tapes, and less intrusive government.

Many libertarians have a lot of disagreements with Milton Friedman. I haven't researched more about it but apparently he advocated some sort of central banking or something like that. Even Jeffrey Sachs pointed out that he was pretty much statist (see Why Jeffrey Sachs is Mistaken About Libertarianism). I don't really mind. His wonderful rhetoric about free markets and free trade is just so brilliant and undeniably a great contribution to the liberty movement.

The pen(cil) is mightier than the sword. Keep on writing.

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