“What Happens If We Break the Pencil?”

The most significant news of the day may well be the warning from Tyson Foods, made in a full-page ad in the New York Times and several other newspapers, that the food supply chain is breaking down, and could lead to food shortages in the U.S. in another few weeks.

Meat packing plants, where workers are in close quarters in which contagious disease is easily spread, and which has led to several meat packing plants have had to shut down for varying lengths of time, should not be thought of as the only node of difficulty in the food supply chain. There is no intrinsic shortage of livestock or dairy product, yet we are hearing stories of farmers culling their livestock and killing off chickens because they can’t bring them to market—shades of the idiotic policy results of the early New Deal, when farmers also killed livestock and poured milk into the sewer because of idiotic government policy.

The meat packing plant is just one node in a complex chain that has been disrupted by the arbitrary and blanket lockdowns by both state and federal government. Even if meat packing plants all come back online quickly, the disruption in transportation and other distribution factors means that we shouldn’t expect business as usual to snap back quickly or easily.

The scene reminds me of Leonard Read’s famous essay “I, Pencil” that describes the complex unplanned order that coordinates the production of the simple lead pencil. Turns out it is not simple at all—nor is it planned by any central process. The lesson of this brilliant short essay is very timely when you have so many of the usual idiots demanding that Trump can fix everything if he just uses the Defense Production Act more vigorously. I don’t think our political class in Washington or the state capitols have the slightest idea of how they have disrupted the workings of our economy beyond the mere measure of the (huge) number of people filing for unemployment, which they think can be fixed simply by printing more money and sending out checks.

The good folks at CEI produced this six-minute video of “I, Pencil” a few years ago, and it makes for salutary viewing just now as our government contemplates “plans” for “re-opening” the economy. Give it a look, and contemplate the effects the shutdown is having on the millions of daily decisions made by producers and consumers alike. Maybe our political class just needs to just get the hell out of the way.

Responses