An Economics Lesson from a Talking Pencil (Update) | Freakonomics Radio

A famous essay argues that “not a single person on the face of this earth” knows how to make a pencil. How true is that? In this 2016 episode, we looked at what pencil-making can teach us about global manufacturing — and the proper role of government in the economy. You can find the transcript and show notes for this episode on our website here: https://freakonomics.com/podcast/an-economics-lesson-from-a-talking-pencil-update/ FOLLOW FREAKONOMICS RADIO: YouTube: https://freak.ws/3yIl6dl Apple Podcasts: https://freak.ws/3yAvQh0 Spotify: https://freak.ws/3TsdCmV ABOUT FREAKONOMICS RADIO: Discover the hidden side of everything with host Stephen J. Dubner, co-author of the Freakonomics books. Each week, Dubner speaks with Nobel laureates and provocateurs, intellectuals and entrepreneurs, and various other underachievers to uncover things you always thought you knew (but didn’t) and things you never thought you wanted to know (but do) — from the economics of sleep to the future of education, from markets for marriage to the surprising utility of wolves. ABOUT THE FREAKONOMICS RADIO NETWORK: Freakonomics began as a book, which led to a blog, a documentary film, more books, a pair of pants, and in 2010, a podcast called Freakonomics Radio. Hosted by Stephen J. Dubner, it’s one of the most popular podcasts in the world, with a reputation for storytelling that is both rigorous and entertaining. Its archive of more than 500 episodes is available, for free, on any podcast app, and the show airs weekly on NPR stations. Freakonomics Radio is now the flagship show of the Freakonomics Radio Network, which includes the podcasts No Stupid Questions, People I (Mostly) Admire, and The Economics of Everyday Things. FREAKONOMICS RADIO NETWORK PODCASTS: Freakonomics Radio: https://freakonomics.com/series/freakonomics-radio/ No Stupid Questions: https://freakonomics.com/series/nsq/ People I (Mostly) Admire: https://freakonomics.com/series/people-i-mostly-admire/ The Economics of Everyday Things: https://freakonomics.com/series/everyday-things/ Special series: https://freakonomics.com/topics/ CONNECT WITH US: [email protected] https://twitter.com/freakonomics https://www.instagram.com/freakonomics/ https://www.facebook.com/freakonomics/ https://www.tiktok.com/@freakonomicsradio https://www.linkedin.com/company/freakonomics-media Subscribe to our newsletter: http://eepurl.com/bKm0cf

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

• 0:04Stephen J. Dubner?

  Hey there. It's Stephen Dubner. We've all been hearing a lot lately about international trade and especially the restrictions on trade in the form of tariffs. President Trump, defending his tariff policy on Meet the Press, said that restricting trade means Americans will have to make do with less stuff, but that that's OK.

• 0:23Speaker 01

  I don't think a beautiful baby girl that's 11 years old needs to have $30. I think they can have three dolls or four dolls. They don't need to have 250 pencils. They can have five.

• 0:37Stephen J. Dubner?

  Most economists think that tariffs are a bad idea. They argue that restricting trade has more downsides than upsides. Elon Musk, back when he was still the president's first buddy, was in that camp, and he reportedly urged Trump to reverse the tariffs. Musk also posted an interesting video on X, formerly known as Twitter.

• 0:58Speaker 02

  There's not a single person in the world who could make this pencil. Remarkable statement? Not at all.

• 1:05Stephen J. Dubner?

  There's a lot more to be said about tariffs and free trade, and we will get into that over time. But for now, here's a simpler question. Why are they talking about pencils? To answer that, we're playing you this bonus episode, which we made in 2016 and have now updated facts and figures as necessary. This episode is about the pencil, something apparently simple that turns out to be very complicated. It begins... Hi.

• 1:34Speaker 03

  Hello.

• 1:35Stephen J. Dubner?

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

• 1:39Speaker 03

  Many pencils.

• 1:40Stephen J. Dubner?

  I'm Stephen.

• 1:41Speaker 03

  Caroline.

• 1:42Stephen J. Dubner?

  Nice to meet you. In an unusual New York City shop, a tiny storefront on the Lower East Side. Back when we made the episode, the shop had just opened.

• 1:50Speaker 03

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

• 1:57Stephen J. Dubner?

  That is Caroline Weaver, who was the proprietor of CW Pencil Enterprise.

• 2:03Speaker 03

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

• 2:09Stephen J. Dubner?

  Weaver was only 25 years old when she opened her store. That's young to be the proprietor of any shop, much less a pencil shop. But then, after you speak with her for a bit, it's hard to imagine Weaver doing anything else.

• 2:22Speaker 03

  It was just kind of a lifelong obsession.

• 2:25Stephen J. Dubner?

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

• 2:29Speaker 03

  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.

• 2:36Stephen J. Dubner?

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

• 2:41Speaker 03

  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.

• 2:50Stephen J. Dubner?

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

• 2:55Speaker 03

  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.

• 3:12Stephen J. Dubner?

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

• 3:19Speaker 03

  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.

• 3:26Stephen J. Dubner?

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

• 3:32Speaker 03

  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.

• 3:41Stephen J. Dubner?

  Weaver's store closed in 2021, which, as you will recall, was a terrible time for most retail. She now runs the Locovore Guide, an online directory that promotes small businesses in New York City, like the one she used to run. While it survived, CW Pencil Enterprise carried an impressive variety of pencils, variety in color, in country of origin, and in price, some costing as little as 30 cents and some vintage pencils selling for $75. We had visited her to see one particular pencil, which is so unassuming, so typical of its pencillness, that I didn't even realize Weaver had opened a drawer and pulled out a box of them.

• 4:24Stephen J. Dubner?

  Oh, this is the 482.

• 4:26Speaker 03

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

• 4:29Stephen J. Dubner?

  From roughly when?

• 4:30Speaker 03

  From roughly the 1950s.

• 4:32Stephen J. Dubner?

  Mongol 482 from Eberhard Faber. It's Faber, not Faber.

• 4:36Speaker 03

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

• 4:39Stephen J. Dubner?

  OK, so how many different pencils did Eberhard Faber make?

• 4:44Speaker 03

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

• 4:51Stephen J. Dubner?

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

• 4:56Speaker 03

  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.

• 5:31Stephen 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.

• 5:47Speaker 04

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

• 5:55Stephen J. Dubner?

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

• 5:59Speaker 03

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

• 6:02Stephen J. Dubner?

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

• 6:06Speaker 05

  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?

• 6:17Stephen J. Dubner?

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

• 6:22Speaker 06

  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.

• 6:44Speaker 07

  This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner.

• 7:00Stephen 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."

• 7:33Speaker 04

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

• 7:40Stephen J. Dubner?

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

• 7:47Speaker 04

  You may wonder why I should write a genealogy.

• 7:51Stephen J. Dubner?

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

• 7:56Speaker 04

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

• 8:02Stephen J. Dubner?

  The pencil is also a bit of a bragger.

• 8:04Speaker 04

  I have a profound lesson to teach.

• 8:09Stephen 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.

• 8:19Speaker 08

  It's rather beautifully written, this essay.

• 8:21Stephen J. Dubner?

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

• 8:32Speaker 08

  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.

• 8:42Speaker 06

  Hello, this is Tim.

• 8:43Stephen J. Dubner?

  And that is Tim Harford, an economist.

• 8:46Speaker 06

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

• 8:51Stephen 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.

• 9:05Speaker 04

  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.

• 9:19Stephen 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.

• 9:34Speaker 04

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

• 9:41Speaker 06

  Think about all the processes, all the people who were involved 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.

• 9:54Speaker 04

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

• 10:00Stephen J. Dubner?

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

• 10:06Speaker 08

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

• 10:11Stephen J. Dubner?

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

• 10:19Speaker 06

  Which of course is not made of lead.

• 10:21Speaker 08

  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.

• 10:31Stephen 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.

• 10:42Speaker 04

  Even the lighthouse keepers along the way assisted in my birth.

• 10:46Stephen J. Dubner?

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

• 10:52Speaker 04

  My cedar receives six coats of lacquer.

• 10:57Stephen J. Dubner?

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

• 11:02Speaker 04

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

• 11:09Speaker 08

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

• 11:13Speaker 06

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

• 11:20Speaker 08

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

• 11:25Stephen 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...

• 11:37Speaker 08

  Grape seed 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.

• 11:46Speaker 06

  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.

• 12:10Speaker 04

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

• 12:17Stephen J. Dubner?

  This is the shallow conclusion of I pencil.

• 12:21Speaker 04

  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.

• 12:42Stephen 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, I think you'd agree, 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. That's coming up after the break. I'm Stephen Dubner, and this is Freakonomics Radio.

• 13:19Stephen J. Dubner?

  Okay, we've been talking about Leonard Reed's amazing talking pencil. He likes to say that "nobody knows how to make me."

• 13:27Speaker 09

  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?

• 13:33Stephen 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 and published a book of the same name. He borrowed Leonard Reed's parable.

• 13:46Speaker 09

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

• 13:52Stephen 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."

• 14:02Speaker 09

  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.

• 14:16Stephen 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...

• 14:25Speaker 04

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

• 14:33Stephen 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.

• 14:44Speaker 08

  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.

• 15:05Stephen 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... We're responding to a different political climate. They were both concerned about the legacy of Roosevelt's New Deal programs and the

• 15:49Stephen J. Dubner?

  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.

• 16:02Speaker 04

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

• 16:12Stephen 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 the 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.

• 16:40Speaker 04

  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.

• 17:03Stephen 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.

• 17:45Stephen 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. Here again is the economist Tim Harford.

• 17:58Speaker 06

  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.

• 18:20Stephen J. Dubner?

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

• 18:26Speaker 06

  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.

• 18:46Stephen 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.

• 18:59Speaker 06

  So 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 I 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.

• 19:35Stephen 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?

• 19:58Speaker 06

  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 a 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.

• 20:39Speaker 06

  And I think where Leonard Reed was absolutely 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 are 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. As Leonard Reed rightly pointed out, it produces miracles.

• 21:12Stephen J. Dubner?

  And some of those miracles are produced here.

• 21:15Speaker 10

  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.

• 21:24Stephen J. Dubner?

  General Pencil was incorporated in the late 19th century.

• 21:28Speaker 10

  We've been this location since 1917.

• 21:31Stephen J. Dubner?

  When we spoke with Weisenborn back in 2015, he was the boss at General Pencil. He's now mostly retired, but he still helps some of the younger members of the Weisenborn family run the company. General Pencil is one of the last few remaining pencil factories in the United States.

• 21:47Speaker 10

  You're going to 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 a kind of fun.

• 21:57Stephen J. Dubner?

  There are only a handful of American pencil factories left. Sometimes, when one shut down, Weisenborn would buy their old machinery and store it away for spare parts.

• 22:07Speaker 10

  I'm going to take you on the way from the very beginning of the process, okay?

• 22:11Stephen J. Dubner?

  All right, sounds good.

• 22:14Stephen 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.

• 22:27Speaker 10

  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.

• 22:45Stephen J. Dubner?

  That fine mixture is then dried, ground up again, 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.

• 23:05Speaker 10

  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.

• 23:14Stephen J. Dubner?

  The tour heads into the wood shop.

• 23:16Speaker 10

  Great stuff, huh? Yeah.

• 23:18Stephen 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.

• 23:35Speaker 10

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

• 23:46Stephen J. Dubner?

  Most of the wood that General Pencil uses is California cedar, just like in iPencil. So some things have stayed the same, but a lot has changed also.

• 23:57Speaker 10

  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.

• 24:10Stephen 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.

• 24:29Stephen J. Dubner?

  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?

• 24:42Speaker 10

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

• 24:47Stephen 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?

• 24:58Speaker 04

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

• 25:07Stephen 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. 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?

• 25:52Stephen J. Dubner?

  Yep, you can buy that, too. But this does not stop some people from trying to make their own stuff from the ground up.

• 26:01Speaker 06

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

• 26:06Stephen J. Dubner?

  That's coming up after the break. I'm Stephen Dubner, and this is Freakonomics Radio.

• 26:23Stephen J. Dubner?

  It could be that by this point in our episode, you are sick of pencils. So it's time to talk about how something else gets made.

• 26:31Speaker 06

  You wouldn't think so, but there is a very interesting, modern parallel to Len Reed's iPencil story.

• 26:39Stephen J. Dubner?

  That, again, is The Economist and writer Tim Harford.

• 26:42Speaker 06

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

• 26:52Speaker 05

  You know, mundane electric toaster.

• 26:55Stephen J. Dubner?

  And that is Thomas Thwaites. He wanted to better understand just how finished consumer goods get to him. A toaster seemed like a relatively simple project.

• 27:06Speaker 05

  You know, obviously I use technology every day. It's like amazingly complex, but at source it came from just a bunch of rocks and sludge buried in holes in the ground around the world.

• 27:22Stephen J. Dubner?

  Thwaites now works as a freelance designer and he teaches at Central Saint Martins, which is part of the University of the Arts, London. His toaster quest began when he was a student at the Royal College of Art.

• 27:34Speaker 05

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

• 27:43Speaker 06

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

• 27:51Stephen J. Dubner?

  Thwaites took home the toaster and took it apart.

• 27:54Speaker 05

  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.

• 28:12Stephen J. Dubner?

  Those 400 individual bits were made of many different materials.

• 28:16Speaker 06

  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.

• 28:30Speaker 05

  All these different specialized 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 pair back to five materials that I thought I could. Manage and would give me the best toaster I could make. Yeah.

• 28:55Stephen J. Dubner?

  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.

• 29:14Speaker 06

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

• 29:19Stephen J. Dubner?

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

• 29:24Speaker 05

  And said, oh, hi, I'm trying to make a toaster.

• 29:29Speaker 05

  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.

• 29:40Speaker 06

  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.

• 29:54Speaker 05

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

• 30:00Speaker 06

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

• 30:03Speaker 05

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

• 30:18Stephen J. Dubner?

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

• 30:27Speaker 06

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

• 30:34Stephen 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.

• 30:46Speaker 05

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

• 30:50Stephen J. Dubner?

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

• 30:56Speaker 05

  And I thought, my God, I have done it first time. 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, just pulled it out of the bag.

• 31:12Stephen 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.

• 31:22Speaker 05

  Hmm. What about a microwave?

• 31:24Stephen J. Dubner?

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

• 31:28Speaker 05

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

• 31:34Stephen J. Dubner?

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

• 31:39Speaker 06

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

• 31:42Stephen J. Dubner?

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

• 31:47Speaker 06

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

• 31:53Stephen 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.

• 32:04Speaker 05

  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.

• 32:14Stephen J. Dubner?

  Thwaites also finally managed to get hold of some copper and mica.

• 32:18Speaker 06

  Tremendous difficulty in making all of these materials.

• 32:22Stephen J. Dubner?

  But he still needed plastic.

• 32:25Speaker 05

  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? The 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.

• 32:59Speaker 05

  If they would put me, you know, spare seat in a helicopter out to an oil rig in 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.

• 33:25Stephen J. Dubner?

  Instead, Thwaites turned to a less raw source of plastic: household waste on the streets of London.

• 33:32Speaker 05

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

• 33:41Stephen J. Dubner?

  He smashed up the pieces.

• 33:43Speaker 05

  Put them in a bucket floating in oil like a Banbury 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. God knows what additives it had in it.

• 34:02Stephen J. Dubner?

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

• 34:10Speaker 05

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

• 34:18Speaker 06

  If I try and describe it to you, it's a bit like, imagine, Stephen, that 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's toaster looks like. And then, of course, the question is, well, does it work? Does it actually make toast?

• 34:48Stephen 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.

• 34:55Speaker 05

  Big demo. Put my bread in. Switched it on and for like a beautiful moment. This thing was glowing red. Nearly brought a tear to my eye.

• 35:08Speaker 06

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

• 35:14Speaker 05

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

• 35:22Stephen J. Dubner?

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

• 35:33Speaker 05

  I think I spent one thousand three hundred pounds on my toaster in the end. Yeah.

• 35:39Stephen J. Dubner?

  Converted to dollars and updated for inflation. That's around twenty five hundred US dollars and Thwaites had to cheat quite a bit along the way. The leaf blower, the Canadian nickels, the train from London to Wales.

• 35:53Speaker 05

  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 going to be making this toaster from scratch, I would have to 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.

• 36:24Speaker 06

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

• 36:30Speaker 05

  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.

• 36:42Stephen J. Dubner?

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

• 36:49Speaker 05

  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.

• 37:06Stephen 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.

• 37:25Speaker 06

  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.

• 37:45Stephen 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?

• 38:00Speaker 06

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

• 38:09Stephen J. Dubner?

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

• 38:14Speaker 06

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

• 38:25Stephen J. Dubner?

  And that's it for this bonus episode. I hope you enjoyed it. We will be back soon with a new episode. Until then, take care of yourself, and if you can, someone else, too. Freakonomics Radio is produced by Stitcher and Renbud Radio. This episode was produced by Christopher Wirth and updated by Dalvin Abawaji. It was mixed by Merritt Jacob and Jasmine Klinger. And special thanks to Robert Krulwich for his excellent performance as the pencil. The Freakonomics Radio Network staff also includes Alina Coleman, Augusta Chapman, Teo Jacobs, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippon, Jeremy Johnston, Morgan Levy, Sarah Lilly, and Zach Lepinski. You can find our

• 39:06Stephen J. Dubner?

  entire archive on any podcast app or at Freakonomics.com, where we also publish transcripts and show notes. Our theme song is "Mr. Fortune" by The Hitchhikers, and our composer is Luis Guerra. As always, thank you for listening.

• 39:27Speaker 05

  Sometimes I'm like, oh, God, and we're all gonna die. And then sometimes I'm like, yeah, it's happening. It's happening.

• 39:39Speaker 07

  The Freakonomics Radio Network, the hidden side of everything.

• 39:46Speaker 10

  Stitcher.