236. How Can This Possibly Be True?

A famous economics essay features a pencil (yes, a pencil) arguing that “not a single person on the face of this earth knows how to make me.” Is the pencil just bragging? In any case, what can the pencil teach us about our global interdependence — and the proper role of government in the economy?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Stephen J. Dubner?

  Freakonomics Radio is sponsored by Southern New Hampshire University. There's no hiding how convenient Southern New Hampshire University makes college. They offer over 80 career-focused graduate programs online. Classes have no set meeting times, so you can balance life and learning, and online tuition rates are some of the lowest in the country, making it all a little more manageable. A school this willing to work with you is worth the investment. Visit SNHU.edu/freakonomics to learn more. Freakonomics Radio is sponsored by PNC Bank. Boring. Great word, bad rep. Yet, time and time again, here at Freakonomics, we find that when something culture-changing happens, boring things like calculations and careful planning are usually behind it.

• 0:46Stephen J. Dubner?

  Which begs the question, why not apply it to other aspects of life? Like banking, for example. Well, PNC Bank did, since its inception, proving time and again that the best banking strategy isn't the exciting type, but the steady, reliable, definitely not YOLO type. PNC Bank: Brilliantly Boring Since 1865. Brilliantly Boring Since 1865 is a registered mark of the PNC Financial Services Group, Inc. PNC Bank, National Association, Member FDIC. Freakonomics Radio is sponsored by Hotels.com. Hotels.com helps you find and book the right stay for work faster.

• 1:27Stephen J. Dubner?

  With business preferences, save your travel must-haves, like gym access or breakfast, just once, then get tailored results whenever you search for work travel. Plus, with a free membership, you can save up to 20% on hotels and earn rewards on every stay for future travel. Book now at hotels.com. Visit hotels.com for details. Freakonomics Radio is sponsored by ChatGPT. ChatGPT Work is a new way to work in ChatGPT. ChatGPT Work can pull info from across your apps and connect to your tools to help you create finished work. You can even automate work in ChatGPT with the Scheduled Tasks feature, and the whole

• 2:11Stephen J. Dubner?

  time, you stay in control. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting Work Mode, available on Plus and Pro plans.

• 2:33Stephen J. Dubner?

  Hey, this is Stephen Dubner. Last week on Freakonomics Radio, we pondered the decline of an everyday activity.

• 2:40Speaker 01

  Handwriting's going away.

• 2:42Stephen J. Dubner?

  Anne Trubek studies the history of handwriting and handwriting technology. In a world that is increasingly digital, Trubek argues, teaching handwriting in schools is time poorly spent.

• 2:55Speaker 01

  I think it will continue to diminish in elementary education. It will continue to diminish in our everyday lives as it has already.

• 3:06Stephen J. Dubner?

  And as handwriting diminishes, so does our need for writing instruments.

• 3:11Speaker 01

  The numbers of examples of things that you still need to be able to use a pen or pencil and paper in the ordinary course of a workday, it's shrinking.

• 3:19Stephen J. Dubner?

  Indeed. The market research firm Euromonitor International has found that in the US at least, the sales of writing instruments has had five years of consecutive decline, with a forecast for more of the same. That said, sales of pens have been rising slightly. It's the pencil that is fading in the bright light of the digital age. Global pencil sales this year are expected to reach just $2.6 billion. That means that someone like, say, Steven Spielberg could buy up every single new pencil this year around the world and still have $1 billion left for popcorn, or pie, or a dozen Gulfstream G650s.

• 4:02Stephen J. Dubner?

  And yet, despite the small and shrinking stature of the lowly pencil... Hi.

• 4:09Speaker 02

  Hello.

• 4:10Stephen J. Dubner?

  Good morning. Do you happen to have any pencils I'm looking for?

• 4:13Speaker 02

  Many pencils.

• 4:14Stephen J. Dubner?

  I'm Stephen.

• 4:15Speaker 02

  Caroline.

• 4:16Stephen J. Dubner?

  Nice to meet you. There is a new shop in New York City, a tiny storefront on the Lower East Side, whose stock is most singular.

• 4:23Speaker 02

  We sell only pencils, new pencils, rare pencils, antique pencils, novelty pencils, pencil accessories.

• 4:31Stephen J. Dubner?

  Caroline Weaver is the proprietor of CW Pencil Enterprise.

• 4:36Speaker 02

  I grew up in Marietta, Ohio, which is in the southeast corner of Ohio, just across the river from West Virginia.

• 4:42Stephen J. Dubner?

  Weaver is only 25 years old, which is young to be the proprietor of any shop, much less a pencil shop. But then, after you speak with her a bit, it's hard to imagine Weaver doing anything else.

• 4:53Speaker 02

  It was just kind of a lifelong obsession.

• 4:56Stephen J. Dubner?

  On the inside of her left forearm is a pencil tattoo.

• 5:00Speaker 02

  My mother drew it for me. I asked her to take a black tyconderoga, sharpen it three times, and draw it to scale. And that's what she did.

• 5:08Stephen J. Dubner?

  And you can surely guess what Weaver and a friend dressed up as for Halloween.

• 5:12Speaker 02

  We both wore these paper pencil point hats that we made. And we wore pink shoes, like an eraser, and then painted whatever the logo of our pencil on our clothes.

• 5:22Stephen J. Dubner?

  What is it about the pencil that so captured Caroline Weaver's imagination?

• 5:27Speaker 02

  I like to make things, and I'm really interested in the way that things are made. And so at a really young age, I developed an interest in these objects that appear to be really, really simple, but are actually very complicated in the nature in which they're made and kind of the nuances to all of the parts that they're made of.

• 5:43Stephen J. Dubner?

  She sells American pencils, Japanese, and German, and British, and Swiss, and Indian pencils.

• 5:50Speaker 02

  Every country kind of has its own normal, as far as pencils go. And often, those things aren't available outside of their home countries.

• 5:57Stephen J. Dubner?

  So talk for just a second about the economics of your shop. Is it profitable?

• 6:03Speaker 02

  Believe it or not, it is profitable. It turns out there are a lot of closet pencil nerds out there who want these things as much as I do.

• 6:11Stephen J. Dubner?

  But let me tell you why we're really here today. It is not just to celebrate a young entrepreneur with narrow tastes, nor is it simply to gawk at the variety of her collection, variety in color, in country of origin, even in cost. Some pencils can be had for as little as 30 cents. Some vintage pencils go for $75 a piece. But no, that's not why we're here. We are here to see one particular pencil. Which is so unassuming, so typical in its pencillness, that I didn't even realize Weaver had opened a drawer and pulled out a box of them.

• 6:46Speaker 02

  I'm pretty sure.

• 6:46Stephen J. Dubner?

  Oh, this is the 482?

• 6:48Speaker 02

  That is the 482, yeah. It's a classic Mongol.

• 6:51Stephen J. Dubner?

  From roughly when?

• 6:52Speaker 02

  From roughly the 1950s.

• 6:54Stephen J. Dubner?

  Mongol 482 from Eberhard Faber. It's Faber, not Faber. You say Faber, I say Faber.

• 6:59Speaker 02

  It's technically Faber, but people call it Faber. I often call it Faber.

• 7:03Stephen J. Dubner?

  Okay. So how many different pencils did Eberhard Faber make?

• 7:07Speaker 02

  Oh, probably hundreds. They were mostly known for the Mongol and the Blackwing and the Van Dyke and the Microtonic.

• 7:15Stephen J. Dubner?

  Was the Mongol 482 kind of the star of the line or no?

• 7:19Speaker 02

  I would say that the Blackwing was the star of the line, but the Mongol was their sort of like middle range, everyday pencil. By the point that this one was made, graphite technology had advanced a little bit. And so it's generally a much smoother pencil because that's when they figured out that if they put wax in pencils, they're a whole lot smoother than just using graphite and clay and some sort of binder. They changed the aesthetic of it a little bit, too. The classic Mongol ferrule is black with a gold band. Around that time, that's when pencil companies kind of started developing their signature ferrule for their different pencils.

• 7:55Stephen J. Dubner?

  Today on Freakonomics Radio, the Mongol 482 may be just a middle range, everyday pencil, but it's also one of the most famous pencils in history, famous at least in economics, because the Mongol 482 has written its autobiography.

• 8:14Speaker 03

  My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon.

• 8:21Stephen J. Dubner?

  It is a complex story about how a simple thing comes into being.

• 8:25Speaker 02

  If I really wanted to, I could probably make a pencil.

• 8:28Stephen J. Dubner?

  But could you really, Caroline Weaver? Could you really?

• 8:32Speaker 04

  All these kind of different specialized materials. And I was like, oh, God. You know, so I'm trying to replicate this entirely myself. Where do I start?

• 8:43Stephen J. Dubner?

  And what can a lowly pencil teach us about solving some of the world's hardest problems?

• 8:49Speaker 05

  The lesson I draw, when you try to fix those problems, be humble, be careful, because they're far more complicated than you could possibly imagine.

• 9:08Speaker 06

  From WNYC Studios, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.

• 9:23Stephen J. Dubner?

  Let's begin in 1946. That's when a man named Leonard Reed starts an organization called the Foundation for Economic Education, or FEE. The FEE is a think tank meant to extol the virtues of free market capitalism. It's an early proponent of libertarianism in the US. Reed was a businessman from Michigan. He started out in wholesale groceries, later ran the Los Angeles Chamber of Commerce. In 1958, the FEE published an essay written by Reed called "I Pencil."

• 9:59Speaker 03

  I am a lead pencil, the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.

• 10:07Stephen J. Dubner?

  Yes, the essay is told in the voice of the pencil, an Eberhard Faber Mongol 42.

• 10:13Speaker 03

  You may wonder why I should write a genealogy.

• 10:17Stephen J. Dubner?

  Which is a bit weird, but also, this pencil has a chip on its shoulder.

• 10:22Speaker 03

  Sadly, I'm taken for granted by those who use me as if I were a mere incident and without background.

• 10:29Stephen J. Dubner?

  The pencil is also a bit of a bragger.

• 10:31Speaker 03

  I have a profound lesson to teach.

• 10:36Stephen J. Dubner?

  But you know what? It does have a profound lesson to teach. "I Pencil" has become a classic in the canon of economics literature, translated into every major language.

• 10:45Speaker 07

  He's rather beautifully written, this essay.

• 10:48Stephen J. Dubner?

  That's Matt Ridley. He's a science writer, also a British viscount, and a member of the House of Lords. He's been very much influenced by the ideas of "I Pencil."

• 10:58Speaker 07

  And it really struck me between the eyes because this essay is at once both extremely obvious, when you think about it, and extremely revelatory.

• 11:08Speaker 05

  Hello, hello, this is Tim.

• 11:10Stephen J. Dubner?

  And that is Tim Harford, an economist.

• 11:12Speaker 05

  Sometimes known as the undercover economist. I write books of that title and a Financial Times column.

• 11:18Stephen J. Dubner?

  Tim Harford and Matt Ridley are going to help us retell The Pencil's autobiography, which is really more of a parable. It first conveys a set of facts, then it reaches a shallow conclusion and ultimately a deeper conclusion.

• 11:32Speaker 03

  Just as you can't trace your family tree back very far, so it is impossible for me to name and explain all my antecedents. But I would like to suggest enough of them to impress upon you the richness and complexity of my background.

• 11:45Stephen J. Dubner?

  While researching the essay, Leonard Reed visited an Eberhard Faber pencil factory in Wilkes-Barre, Pennsylvania. What he found was a supply chain that even in the 1950s reached around the globe. Let's start with the wood.

• 12:01Speaker 03

  My family tree begins with what in fact is a tree. A cedar of straight grain that grows in Northern California and Oregon.

• 12:08Speaker 05

  Think about all the processes, all the people who were involved in, in cutting down those trees and in machining those trees. The people who designed the chainsaws and the axes and the trucks that shipped the cedar across country.

• 12:20Speaker 03

  Why, untold, thousands of persons had a hand in every cup of coffee that the loggers drink.

• 12:27Stephen J. Dubner?

  Next, The Pencil tells us the logs were shipped to a mill in San Leandro, California.

• 12:33Speaker 07

  And there they were milled and cut into pencil-like shapes.

• 12:37Stephen J. Dubner?

  The pencil acknowledges all the workers who built the hydroelectric dam that powers the mill. And then there's the lead.

• 12:45Speaker 05

  Which of course is not made of lead.

• 12:47Speaker 07

  Is graphite mined from Sylon, Sri Lanka? Mixed with clay, paraffin wax, candelilla wax, and hydrogenated natural fats. Did we know that? No, we didn't.

• 12:57Stephen J. Dubner?

  And here, The Pencil nods toward all the graphite miners, the men who built the ships that transport the graphite, the harbor pilots who guide those ships in from the sea.

• 13:08Speaker 03

  Even the light housekeepers along the way assisted in my birth.

• 13:12Stephen J. Dubner?

  And then there's the lacquer, the paint that gives the Mongol 482 its bright yellow color.

• 13:17Speaker 03

  My cedar receives six coats of lacquer.

• 13:22Stephen J. Dubner?

  The lacquer is made with oil from castor beans and a load of other ingredients.

• 13:27Speaker 03

  Why, even the process by which the lacquer is made a beautiful yellow involve the skills of more persons than one can enumerate.

• 13:34Speaker 07

  The number of people involved in creating this pencil is enormous.

• 13:38Speaker 05

  And then he goes into the same detail about the ferrule, which is the brass metal at the end of the pencil.

• 13:44Speaker 07

  The brass on the top of the pencil, the so-called ferrule, is made from zinc and copper, which have to be mined.

• 13:49Stephen J. Dubner?

  Again, many, many hands involved, many machines, many processes. The same goes for the eraser, which you might think is made of rubber. I thought it was made of rubber, but it's actually made from...

• 14:01Speaker 07

  Rapeseed oil mixed with sulfur chloride and pumice and calcium sulfide to give it color and that kind of thing. All these incredible ingredients going into this very simple object.

• 14:10Speaker 05

  The pencil explains all this detail, but in each case, the pencil is pointing out that there are these global supply chains. There are all of these different inventions going way back in history, all of these different people involved. And if you put it all together, you realize there isn't a single person in the world who would really understand how to make a pencil from scratch, from the raw materials.

• 14:34Speaker 03

  Simple, yet not a single person on the face of this earth knows how to make me.

• 14:40Stephen J. Dubner?

  This is the shallow conclusion of I pencil.

• 14:44Speaker 03

  Actually, millions of human beings have had a hand in my creation. No one of whom even knows more than a very few of the others. There isn't a single person in all these millions, including the president of the pencil company, who contributes more than a tiny infinitesimal bit of know-how.

• 15:05Stephen J. Dubner?

  It's a bold claim the pencil makes. Not a single person knows how to make me. But the claim would seem to be justified. And it's an interesting way of looking at the world, yes? At how interdependent we are, how specialized we are. The deeper conclusion that Leonard Reed was making, however, this is where things get really interesting.

• 15:26Speaker 08

  The miracle of this pencil isn't that nobody knows how to make it. The miracle of the pencil is how did it get made?

• 15:32Stephen J. Dubner?

  That's Milton Friedman, one of the giants of modern economics. In 1980, he made a public TV series called Free to Choose, based on his book of the same name. He borrowed Leonard Reed's parable.

• 15:44Speaker 08

  This is the only prop I have for this TV show. As you can see, it's a plain yellow pencil.

• 15:50Stephen J. Dubner?

  The miracle that allows for the pencil to be made, Friedman says, is the price mechanism that lets buyers meet sellers and which makes free markets flow freely.

• 16:00Speaker 08

  I am trading with thousands of people all over the world. Not one of them has been forced to do it. Nobody has had a gun to his head. They've all done it. Why? Because each one of them thinks he's better off in this transaction.

• 16:14Stephen J. Dubner?

  You might know this concept as the invisible hand, as the proto-economist Adam Smith named it, which suggests, as the pencil puts it,

• 16:23Speaker 03

  the absence of a mastermind, of anyone dictating or forcibly directing these countless actions which bring me into being.

• 16:31Stephen J. Dubner?

  In other words, none of the millions of people involved, directly or indirectly, in making a pencil, cared one bit about making a pencil. Maybe didn't even know what they were making.

• 16:41Speaker 07

  Not one of them is motivated by making a pencil. They're motivated by earning money, providing for their family. And the astounding thing, as Leonard Reed says, is the absence of a mastermind. There is no one dictating or forcibly directing these countless actions, as he put it.

• 17:00Stephen J. Dubner?

  So the deeper conclusion of I pencil is that a well-oiled free market can create something that even an alchemist wouldn't dream of. Now, this may not be the way you see free market capitalism. Let's be honest, there are market failures. There are segments of the economy that seem stacked against small players or are too susceptible to self-dealing or corruption. But the point is that free market capitalism is better than all the known alternatives. Now, let's keep in mind that Leonard Reed, writing in 1958, and even Milton Friedman, speaking in 1980, were responding to a different political climate. They were both concerned about the legacy of Roosevelt's New Deal programs

• 17:44Stephen J. Dubner?

  and the growing involvement of the government in American economic life. They were also concerned about communism and what they saw as the tyranny of state-run economies in places like the Soviet Union. Just listen to the pencil.

• 17:58Speaker 03

  If you can become aware of the miraculousness, which I symbolize, you can help save the freedom mankind is so unhappily losing.

• 18:13Stephen J. Dubner?

  The freedom mankind is so unhappily losing. Reed sounds worried, worried that the US government and others like it were disastrously veering to the left, that the government wanted to get more involved in running things, and that governments don't always do such a great job of running things, especially when it comes to the economy. So really, the deep, deep conclusion of I pencil is, hey, US government, get out of the way.

• 18:42Speaker 03

  Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society's legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the invisible hand.

• 19:05Stephen J. Dubner?

  Does Leonard Reed's essay sound like libertarian propaganda? Of course it does. That's what it was, to some degree. So if you don't lean that way, you may not buy its message. There's also an argument to be made, as some people have made, that the pencil conveniently omitted some important facts from its autobiography, like all the goods and services the government provides that help, directly or indirectly, in the pencil's manufacture and sale. The roads that move the lumber and other materials, the public schools that educated the loggers and the mill workers, the same schools that, at least in 1958, would have ordered thousands upon thousands of pencils for their students.

• 19:48Stephen J. Dubner?

  And then there are the less tangible things, like a legal system to uphold contracts and the protections provided by police and the courts.

• 19:57Stephen J. Dubner?

  Here again is the economist Tim Harford.

• 20:00Speaker 05

  Clearly, in a modern economy, a tremendous amount of the infrastructure that we rely on has been paid for by taxpayers and coordinated in some way by state government, local government, or by the federal government. Some of these things could be provided privately, but as a matter of fact, they are provided by government, and they seem to be provided reasonably well.

• 20:23Stephen J. Dubner?

  So if your takeaway from Eye Pencil is that governments should get completely out of the way.

• 20:29Speaker 05

  I think that's an extreme reading. It's not impossible to read it that way, but you're really pushing it. If your reading, however, is the free market can do a lot, it does amazing things, and government should be careful before it sort of stamps its great big boots all over free market process, then I think that's a fair reading, and I think that's a wise warning.

• 20:48Stephen J. Dubner?

  It is a warning that Harford says is worth heeding, especially as we are collectively thinking about how to deal with things like climate change, income inequality, the stability of our financial system.

• 21:02Speaker 05

  There are all kinds of areas of the global economy where you could say, I'm not happy with what the free market is giving me. The lesson I draw from the story of Eye Pencil is, when you try to fix those problems, be humble, be careful, because they're far more complicated than you could possibly imagine. And any fix to, for example, the energy system is going to involve far more people, and far more countries, and far more technologies than you could imagine. Now, that doesn't mean that you should just leave the market to do everything, but it does suggest a particular way of solving problems.

• 21:39Stephen J. Dubner?

  And I guess in addition to requiring input from a lot of other people because of the complexity, it also implies that you may indeed, quote, "solve" one part of the problem, but that solution may indeed ripple up and turn into a bigger problem in another realm that you may not care about, but that actually does affect a lot of people. I mean, some kind of unintended consequence, I guess, yes?

• 22:02Speaker 05

  So yes, one lesson is that there will always be unintended consequences whenever you start messing around with a complex system. I think another lesson is that trial and error is a really important process. This is the lesson I draw in my book, Adapt. You need to carry out lots of experiments, and you need to create a system that allows lots of experiments. The free market system is an experimental system, but it's not the only experimental system. If you're going to start messing with global supply chains, with the energy system, with the financial system, you want to make things work better, you are going to need to do that step by step, constantly gathering data about what's working and what's not, and running really good experiments. And I think where Leonard Reed was absolutely

• 22:45Speaker 05

  right was to suggest that when the free market works well, it delivers amazing results. Well, why does it deliver amazing results? One reason is because there's lots and lots of small experiments and lots and lots of small failures. There were pencil manufacturers, or lumberjacks, or coffee companies, or truck companies, making bad decisions and going bankrupt all the time. But the system as a whole is resilient and stable and creative. And as Leonard Reed rightly pointed out, it produces miracles.

• 23:16Speaker 09

  Romantically, that's a nice story. No one makes a pencil. I think we make a pencil.

• 23:22Stephen J. Dubner?

  Coming up on Freakonomics Radio, we visit one of the last pencil factories in America. And because frankly, we'll have had enough of pencils by then, how about iToaster?

• 23:34Speaker 05

  So it's a simple, everyday product. We British, we love our toast.

• 23:39Stephen J. Dubner?

  Has it become easier or harder to make something all by your lonesome? That's coming up. And now you can also listen to Freakonomics Radio on your local public radio station, if you live in the United States, or get all our past episodes on iTunes, where you can also subscribe. And if you feel like it, give us a five star rating.

• 24:14Stephen J. Dubner?

  Freakonomics Radio is sponsored by Quince. You know those pieces in your closet that you find yourself wearing on repeat? The sweater that goes with everything, the perfect pair of pants, or the tea you somehow always reach for first? Those are the pieces that make getting dressed easy, and that's what Quince does best. Quince focuses on high-quality wardrobe staples made with premium materials like 100% Mongolian cashmere.

• 24:37Stephen J. Dubner?

  Organic cotton and merino wool. The styles are timeless, versatile, and designed to become the dependable pieces you reach for day after day. And it's not just clothing. Quince brings that same approach to everything they make, from hotel-quality bedding and bath to kitchen essentials and thoughtfully designed furniture. Find your next fall favorites at Quince. Download the Quince app for app-exclusive offers or go to quince.com/freak. Get free shipping on your order and 365-day returns. Now available in Canada and the UK, too. That's Q-U-I-N-C-E dot com slash freak. Freakonomics Radio is sponsored by Southern New Hampshire University.

• 25:22Stephen J. Dubner?

  There's no hiding how convenient Southern New Hampshire University makes college. They offer over 80 career-focused graduate programs online. Classes have no set meeting times, so you can balance life and learning, and online tuition rates are some of the lowest in the country, making it all a little more manageable. A school this willing to work with you is worth the investment. Visit s n h u dot edu slash Freakonomics to learn more. Freakonomics Radio is sponsored by PNC Bank. Boring. Great word, bad rep. Yet, time and time again, here at Freakonomics, we find that when something culture-changing happens, boring things like calculations and careful planning are usually behind it,

• 26:05Stephen J. Dubner?

  which begs the question, why not apply it to other aspects of life? Like banking, for example? Well, PNC Bank did since its inception, proving time and again that the best banking strategy isn't the exciting type, but the steady, reliable, definitely-not-YOLO type. PNC Bank: Brilliantly boring since 1865. Brilliantly boring since 1865 is a registered mark of the PNC Financial Services Group, Inc. PNC Bank, National Association, Member FDIC.

• 26:40Stephen J. Dubner?

  Today, we've been talking pencils.

• 26:43Speaker 09

  Okay, here we go. Jim Weisenborn, I'm a fourth-generation pencil maker. And we're in Jersey City, New Jersey, at the home of General Pencil Company.

• 26:52Stephen J. Dubner?

  General Pencil was incorporated in the late 19th century.

• 26:56Speaker 09

  We've been in this location since 1917.

• 26:59Stephen J. Dubner?

  Jim Weisenborn is 77. He took over his family's business nearly 40 years ago. General Pencil considers itself the last remaining complete pencil factory in the United States.

• 27:10Speaker 09

  You're gonna see probably something that's not available anyplace in the world. It's a total production of a pencil, from the very rawest materials to the finished product. We even do all our own marketing. It's kind of fun.

• 27:20Stephen J. Dubner?

  There are only a couple other US pencil factories left, in Tennessee, but Weisenborn says they mostly assemble pencil parts made overseas. Over the last 25 years, he's seen 17 US pencil factories close. He's bought a lot of their old machinery at auction, stored it away for spare parts for his own factory.

• 27:39Speaker 09

  I'm gonna take you in the way from the very beginning of the process, okay?

• 27:43Speaker 03

  All right, sounds good.

• 27:44Speaker 09

  We're going down, graphite slippery.

• 27:46Stephen J. Dubner?

  Weisenborn led our producer, Christopher Worth, on a tour. It began by walking down a steep set of stairs into the factory's basement, where giant metal barrels were churning up a mixture of graphite and clay.

• 27:59Speaker 09

  These barrels are the secret to our product. These are tumbling barrels they used in Germany 100 years ago. We've never changed this process. And what you hear going around in there are Belgian stones off the coast of Belgium. And they pulverize the graphite and clay into a top, and you'll find, and that's where your pencils become smooth.

• 28:17Stephen J. Dubner?

  That fine mixture is then dried, ground up again, and mixed with water. Then it's extruded through a machine that makes pencil leads that, at this point, look like long strands of soft gray spaghetti. Those are then dried again and fired in kilns at around 1,800 degrees Fahrenheit.

• 28:37Speaker 09

  This is the traditional way of making-- If you went through a pencil factory 100 years ago in Germany, this is what you'd see. I mean, you're in a time warp.

• 28:46Stephen J. Dubner?

  In 1958, Leonard Reed wrote that the graphite for pencil lead came from Ceylon, which is present-day Sri Lanka. Most of the graphite General Pencil uses today comes from Mexico. Overall, China is the biggest supplier. What about the eraser?

• 29:01Speaker 09

  Nobody makes erasers in the United States, so our erasers are made for us in Spain.

• 29:07Stephen J. Dubner?

  The tour heads into the woodshop.

• 29:09Speaker 09

  Great stuff, huh? Yeah.

• 29:11Stephen J. Dubner?

  A machine is cutting a row of tiny grooves into the thin rectangular wooden slats. This is how the lead gets into the pencil. A lead is laid into each of the grooves, and then another grooved wooden slat is glued on top.

• 29:27Speaker 09

  These are number two HP plaid's coming down the slats. The bonding process is that the glue goes in the bottom one. They're flipped over and make a sandwich.

• 29:40Stephen J. Dubner?

  The wood that General Pencil uses is cedar from the mountains of California and Oregon, just like in iPencil. So some things have stayed the same, although for a company like General Pencil, much has changed.

• 29:51Speaker 09

  The old days, 80% of what we made were yellow pencils. We had all the contracts, the yellow unified school districts in Seattle, school districts in state of New York. We were running truckload, a truckload of pencils out of here. I'd have all the kids, my wife, working in here. This is back 40 years ago.

• 30:05Stephen J. Dubner?

  But today, those standard yellow pencils, Weisenborn says, are made so cheaply elsewhere, primarily in China, that it's impossible to compete. General Pencil's solution was to start making smaller batches of specialized, higher-quality products-- drawing pencils and coloring pencils, things like that. All told, there are 117 steps in making a pencil in this factory, and Jim Weisenborn knows every single one. So what does he think of the pencil's argument in iPencil?

• 30:36Speaker 09

  You know, romantically, that's a nice story. No one makes a pencil. I think we make a pencil.

• 30:42Stephen J. Dubner?

  But Weisenborn admits he's never even been to a graphite mine or a clay mine. He doesn't cut down the cedars out west, which means Leonard Reed was right, doesn't it?

• 30:52Speaker 03

  Simple, yet not a single person on the face of this earth knows how to make me.

• 31:02Stephen J. Dubner?

  Not a single person, even the owner of a complete pencil factory, really knows how to make an object as seemingly simple as a pencil.

• 31:13Stephen J. Dubner?

  Not that most of us would ever want or need to do such a thing, right? That was really Leonard Reed's point, that the miracle of a well-functioning free market is that it provides us with what we want, generally speaking, at a price we can afford, at least most of the time. So a kiwi fruit grown in New Zealand or Italy, I can buy that for a dollar in a New York grocery store, even an online grocery store, which delivers to my door. What do you want to buy? A German-made car? A T-shirt made in Indonesia and Bangladesh, spun from cotton, grown in Mississippi? Yep, you can buy that, too. But this does not stop some people from trying to make their own stuff from the ground up.

• 31:58Speaker 05

  There is a very interesting, modern parallel to Len Reed's iPencil story.

• 32:04Stephen J. Dubner?

  That, again, is the economist and writer Tim Harford.

• 32:07Speaker 05

  A few years ago, a London design student called Thomas Thwaites decided that he was going to build a toaster from scratch.

• 32:17Speaker 04

  You know, mundane, electric toaster.

• 32:20Stephen J. Dubner?

  And that is Thomas Thwaites. He wanted to better understand just how finished consumer goods get to him.

• 32:28Speaker 04

  So I went and bought the cheapest toaster I could find because I thought the cheapest toaster will be the simplest to reverse engineer.

• 32:37Speaker 05

  And this toaster costs about $5 or $6 at the local store. So it's a simple, everyday product. We British, we love our toast.

• 32:44Stephen J. Dubner?

  Thwaites took home the toaster and took it apart.

• 32:47Speaker 04

  And to my dismay, there were kind of 400 individual bits that had been made and then come together into this item whose sole purpose was to make toasting a slice of bread slightly more convenient in the morning.

• 33:05Stephen J. Dubner?

  Those 400 individual bits were made of many different materials.

• 33:10Speaker 05

  There's copper, there's nickel, there's plastic, which is really important because it makes the toaster look good and also means you don't get electrocuted. There's mica, which is a sort of slate-like material, and that's what you wrap the heating elements around.

• 33:24Speaker 04

  All these different specialised materials. And I was like, oh God, I'm trying to replicate this entirely myself. Where do I start? So my strategy became to simplify and substitute and pare back to five materials that I thought I could manage and would give me the best toaster I could make.

• 33:48Stephen J. Dubner?

  Yeah. Those five materials were steel, nickel, copper, mica and plastic. But even with the first material, steel, Thwaites hit a roadblock. The steel making process is incredibly difficult, especially for an art and design student. So he settled on iron, which is somewhat less complicated.

• 34:08Speaker 05

  It turns out Britain's a post-industrial society. We don't have any iron mines anymore, but we have a disused iron mine.

• 34:14Stephen J. Dubner?

  Thwaites called up an old iron mine in Wales that had been turned into a museum.

• 34:19Speaker 04

  And said, oh, hi, you know, I'm trying to make a toaster. And the guy on the other end of the phone was like, yeah, sure, come down. So I jumped on the train and went to Wales to this iron mine.

• 34:36Speaker 05

  Turns out when he got there, they'd misunderstood him on the phone. They thought he'd said, I'm a design student and I'm trying to make a poster, which I think makes a lot more sense. But anyway, they cleared that up and he went back home with a suitcase full of iron ore.

• 34:50Speaker 04

  I literally bought an empty suitcase with me and filled it up with iron ore.

• 34:55Speaker 05

  But then, once you've got iron ore, well, what do you do with that? How do you turn iron ore into iron?

• 34:59Speaker 04

  Good question. Yeah, it's like fundamental, isn't it? How do you make metal from rock? I have a vague idea, you've got to get it hot. Turns out it's a little more complex than that.

• 35:12Stephen J. Dubner?

  Thwaites consulted professors and some books on metallurgy. He landed on a method from the 15th century with a few modifications.

• 35:21Speaker 05

  He got a big trash can, he got a leaf blower, he got barbecue coals. And so he created this backyard furnace.

• 35:28Stephen J. Dubner?

  There is a video, just search for Thwaites, that's T H W A I T E S and toaster project. And the video shows flames pouring out of the trash can.

• 35:39Speaker 04

  Well, it might be working. We don't actually know.

• 35:43Stephen J. Dubner?

  The fire produced a big lump of heavy grey matter that looked like metal.

• 35:49Speaker 04

  And I thought, my god, I have done it first time. You know, I must be some kind of genius because it took the rest of humanity, thousands and thousands of years to move from the Bronze Age to the Iron Age. But hey, me, you know, just pulled it out of the bag.

• 36:07Stephen J. Dubner?

  Alas, Thwaites was not quite as genius as he imagined. The lump was still just iron ore. So he read some ore and landed on another idea.

• 36:16Speaker 04

  Hmm, what about a microwave?

• 36:19Stephen J. Dubner?

  He found a patented process for smelting iron in a microwave oven.

• 36:24Speaker 04

  My mum had a microwave, so I went round to her house and kind of borrowed it.

• 36:29Stephen J. Dubner?

  Kind of borrowed because his mother's microwave, in fact, exploded.

• 36:38Speaker 05

  But the second one survived and he managed to get iron.

• 36:41Stephen J. Dubner?

  I love that in the service of making a toaster, he destroys at least one microwave along the way.

• 36:46Speaker 05

  He destroys a microwave and he has to go through a lot of shortcuts in order to get the toaster.

• 36:51Stephen J. Dubner?

  With the nickel he needed, for example. Thwaites couldn't find any old nickel mine turned museum in Britain. The closest extant mine he could find was in Siberia.

• 37:02Speaker 04

  So in the end, I had to, even though they had the picture of the Queen on them, which makes it illegal, I had to melt down some Canadian commemorative nickels to get my nickel.

• 37:12Stephen J. Dubner?

  Thwaites also finally managed to get hold of some copper and mica, but he still needed plastic.

• 37:17Speaker 04

  I was determined that this toaster would have a plastic case because a plastic case is kind of the defining feature of cheap consumer electrical objects. You know, this kind of smooth plastic shell to hide the mess inside. So how do you make plastic? Plastic comes from oil. So I phoned up BP and spent a good 45 minutes on the phone trying to convince this PR guy that it would be fantastic PR for BP, which they really need. If they would put me, you know, spare seat in a helicopter out to an oil rig in

• 37:57Speaker 04

  the North Sea and then there I could get a jug full of crude oil and start going for plastic at source. But he said, we're just really not set up to work on that kind of scale. In fact, it would sort of be easier for me to help you if you wanted a tanker full of crude oil to turn up outside your house.

• 38:19Stephen J. Dubner?

  Instead, Thwaites turned to a less raw source of plastic.

• 38:25Stephen J. Dubner?

  Household waste on the streets of London.

• 38:27Speaker 04

  You know, a plastic baby toy or chair or broken plastic tub. I mean, it's everywhere. So it wasn't difficult to find.

• 38:36Stephen J. Dubner?

  He smashed up the pieces.

• 38:38Speaker 04

  Put them in a bucket floating in oil like a Banmerie for plastic recycling. It was a kind of a horrible process. It was smelly and I worry about my lungs in the future because there were these fumes coming off this stuff, you know, God knows what additives it had in it.

• 38:58Stephen J. Dubner?

  But it worked. And in the end, Thomas Thwaites had something that sort of resembled a toaster.

• 39:05Speaker 04

  To me, it looks kind of beautiful, but other people have said it looks like a weird kind of melted caveman toaster.

• 39:13Speaker 05

  I mean, if I try and describe it to you, it's a bit like, imagine, Stephen, that you were, you were making a birthday cake for one of your children and they had requested a birthday cake in the shape of a toaster for some reason. So you're making this homemade toaster shaped birthday cake. But imagine that before you did that, you drank five or six shots of whiskey. And so you were quite badly drunk and you tried to make this toaster cake. That's effectively what Thomas Thwaites' toaster looks like. And then, of course, the question is, well, does it work? Does it actually make toast?

• 39:45Stephen J. Dubner?

  An art gallery in Rotterdam invited Thwaites to show off his toaster and to try it out. That's when he plugged it in.

• 39:52Speaker 04

  Big demo, put my bread in, switched it on and for like a beautiful moment. This thing was glowing red. It nearly brought a tear to my eye.

• 40:04Speaker 05

  And the toaster immediately caught fire, which he described as a partial success.

• 40:11Speaker 04

  I got my bread out and I think I'd be lying if I said it had changed to toast. It was slightly warm.

• 40:19Stephen J. Dubner?

  And what was the final tally on this partially successful drunken caveman birthday cake bread warmer? About nine months and...

• 40:30Speaker 04

  I think I spent £1,300 on my toaster in the end, yeah.

• 40:36Stephen J. Dubner?

  That's a bit less than $1,900 US dollars as we speak. And he had to cheat quite a bit along the way. The leaf blower, the Canadian nickels, the train from London to Wales.

• 40:46Speaker 04

  You know, I was trying to make this toaster from scratch and that brought up the question of what is from scratch? Because if I was really gonna be making this toaster from scratch, I would have to like go to the middle of the woods, get rid of all of my worldly belongings and burn my clothes. And that would be starting from scratch, starting from naked in the woods. And then the process would begin of making this toaster, but that was impossible. I would have just died.

• 41:18Speaker 05

  And I think that is a perfect illustration of the point that Leonard Reed was making in Eye Pencil.

• 41:24Speaker 04

  I guess I was actually recreating Eye Pencil in a way, but just with a toaster. I could have picked a pencil, I think, and had equally as difficult a time.

• 41:36Stephen J. Dubner?

  As difficult as the project was, it did lead Thwaites to appreciate the march of civilization.

• 41:43Speaker 04

  Trying to do these processes and failing so often really made me think. It's just been this incremental process of slight improvements, lifetimes and lifetimes of building this pyramid of knowledge and techniques.

• 42:01Stephen J. Dubner?

  Tim Harford, as an economist who himself lives near London, a most global city, he understands how any one of us might feel alienated by this pyramid, the big, complicated, global processes that produce the pencil or the toaster that show up in a local shop.

• 42:20Speaker 05

  But of course, you could also take Len Reid's perspective, the more pro-free-market perspective, and say, hey, look, you can have a toaster. It'll cost you $5 or $6. It works really well. All you need to do is to trust the market, and the market will bring all of these things together. There doesn't need to be anybody in charge. Nobody needs to understand it. It will get you your toaster.

• 42:40Stephen J. Dubner?

  Let me ask you one more question. If you, Tim Harford, wanted to take up the Thomas Thwaites challenge or something like it, and go into the forest naked and create something from scratch, anything, what do you think you could pull off, Tim?

• 42:55Speaker 05

  Oh, I would be absolutely finished. If I could light a fire, if I could just light a fire, I'd be delighted.

• 43:03Stephen J. Dubner?

  So you think you'd starve and be eaten to death by squirrels, and that's the end of your line?

• 43:08Speaker 05

  I think being eaten by squirrels would be a mercy. If I could be quickly eaten by squirrels, I would count myself lucky.

• 43:27Stephen J. Dubner?

  Next time on this program, it is open-mic night. We hear how Freakonomics Radio listeners have used the show to make some kind of change or difference in the world, from donating a kidney... There are multiple people who are getting a transplant because of what I'm doing. ...to remaking the classroom.

• 43:46Speaker 10

  This is the only class at Springdale High School and probably the only class in the state of Arkansas that you have to have earbuds.

• 43:55Stephen J. Dubner?

  Plus lots more of your stories. And also, April is self-improvement month here at Freakonomics Radio, and we want to put your voice on our show. So here's a question we want you to answer. Which of the following would you most like to improve and why? Number one, your ability to win any game you play with friends and family. Number two, would you like to improve your productivity? Number three, would you most like to improve your stick-to-it-iveness or grit? Or number four, would you most like to improve your ability to become an expert performer in a sport, at a musical instrument, or some other difficult pursuit?

• 44:37Stephen J. Dubner?

  You can use your phone to make a short audio recording, just use whatever voice memo app you have, and email us the file at [email protected]. Please include your name, where you live, what you do, and most important, what you most want to improve in yourself and why. Thanks.

• 44:59Stephen J. Dubner?

  Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Christopher Wirth. Our staff also includes Irvan Gunja, Jake Howitt, Merritt Jacob, Greg Rosalsky, Kasia Mahalovich, Alison Hockenberry, and Caroline English. Big thanks also to Robert Krulwich of Radiolab for giving voice to Leonard Reed's essay. He sounds just like I always imagined a Mongol 42 pencil would sound. You can find all our previous episodes at Freakonomics.com. You can also subscribe to this podcast on iTunes or wherever you get your podcasts. Thanks for listening.

• 45:46Stephen J. Dubner?

  Freakonomics Radio is sponsored by EverPure. Is the value of AI not living up to the promise? The problem is probably your data, not your AI models. When it's scattered across different systems, getting your data AI-ready is a challenge. You keep your AI waiting and everything slows down. EverPure unifies your data so you can see it, understand it, and control it all from one simple place and get it AI-ready fast. Unlock the true value of your AI at everpuredata.com.

• 46:19Stephen J. Dubner?

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• 47:03Stephen J. Dubner?

  So they are looking ahead and investing $80 billion in infrastructure upgrades and are committed to fueling growth in ways that benefit all customers so that reliable and affordable energy is accessible for generations to come. Go to southerncompany.com to learn more. Southern Company: building the future of energy.

• 47:27Speaker 11

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