I expect that most of you have seen this before, but if you haven't, I implore you to watch:
Milton Friedman on Trade - The Story of the Pencil.
I'm working on memorizing this speech, so I can give it in every international trade course I will be teaching for the rest of my life. Mind you, that might only be one more class, but it will still be worth it.
I absolutely love the ending:
Milton Friedman on Trade - The Story of the Pencil.
I'm working on memorizing this speech, so I can give it in every international trade course I will be teaching for the rest of my life. Mind you, that might only be one more class, but it will still be worth it.
I absolutely love the ending:
-
What brought them together and induced them to cooperate to make this pencil? There was no Commissar sending out orders from some central office. It was the magic of the price system - the impersonal operation of prices that brought them together and got them to cooperate to make this pencil so that you could have it for a trifling sum.
"That is why the operation of the free market is so essential. Not only to promote productive efficiency, but even more, to foster harmony and peace among the peoples of the world."
Comments
The market system is a power institution for organising economic operation. However, an essential element missing from Friedman’s perspective is that alongside and within free markets there are other systems of ‘governance’ essential to thr coordination of economic activities. Gary Geriffi et al. have identified five such types that structure the value chains discussed by Friedman. This is an essential recognition as the isolation of free markets leads to the assumption of their supremacy: in all contexts and to achieve all ends. However, empirical observation shows that they are neither the only, nor necessarily always the best system for governing economic activities, and students of economics should be well aware of this – especially when they turn their understanding in to real life policy.