THE ECONOMICS OF THE PENCIL

How small “things” can affect the Economy

Posted by: Steve Lindsey | October 15, 2021

The Government can’t seem to get their act together on the economy or supply chain and make it better for all. Why? I believe it’s because most of the politicians lack the basic understanding of how our (Capitalist) economy works.

Let me explain that this way…

Let’s look at something that’s been around awhile... the ubiquitous pencil. We have used this little writing instrument since, its invention in 1795. Now how does this little $0.10 item affect the economy? Surely a pencil cannot have much of an effect, right?

First let’s look at the basic components of the pencil an eraser, a metal collar, a wood shaft a lead/graphite core and paint. That’s pretty much it right?

The Eraser is on top, so that’s where we will start.

The Eraser is made of rubber generally from Brazil processed in bulk, refined into a usable raw product and then shipped via Container ships to the USA. Private Companies in the US buy the raw unprocessed rubber and use the product to make the cylindrical eraser we all know.

Now for a moment think about just how many people are involved in just the production of the raw product, purchasing, shipping, unpacking, processing and then installation of the product known as an eraser. There are hundreds of businesses involved in just this one part of a pencil. Suppliers, trucking, vendors (uniform to food) and metal working shops, maintenance companies, production mfg the list goes on and on.

Literally thousands of people owe their job to this simple product and that is just one item on the pencil. Millions of dollars flowing throughout the World economy all for an eraser.

Now let’s explore the rest of the pencil.

The Metal Sleeve

The metal has to be mined, smelted, processed and again shipped to the buyers. Each little sleeve is stamped, punctured and curved all requiring machines made and maintained by workers. The little sleeve is another cog in the economic machine again Millions perhaps billions over time are made and spent again adding to the pool of money in the economy.

The wood of the pencil, the paint on the pencil, the stamping on the wood on the pencil, the paint in the stamping on the wood of the pencil. All individually play their own parts in the economy. Then there’s the Graphite itself, another piece of the puzzle that is the economy.

All told the lowly pencil is responsible for thousands of jobs and billions of dollars to the economy.

It’s just a small cog in a very big machine.

The pencil is but one product in the millions of products that this country either produces or imports. Even an imported item is responsible for millions, if not tens of millions of dollars in the macro economy.

Any one imported item must be handled perhaps hundreds of times from unloading to sorting, repackaging, transportation, marketing and sale and use of the item. Someone is paid to do this at each step and that money is then spent with other vendors, businesses thus touching the micro economy.

Government and the unintended consequences of Interference

Now let’s say the Government decides Graphite is too dangerous for Children. Isn’t it always the ‘children”? I’ve often said if one political party in power announced that a massive asteroid was about to hit the Earth... the opposition party and their media sycophants would run out blame the other party and claim women, children, minorities, and the alphabet soup people would be hardest hit.

So, in their infinite wisdom they regulate that graphite is too dangerous to use in this country and as a result put out of business the pencil manufacturing companies. They rationalize that the loss of jobs will be small because only 500 employees actually make pencils here in the USA. The Government also decides to create “Green Pencils” and create an industry which immediately moves to China or takes the money and promptly file for bankruptcy. (Solindra anyone?)

So, the Employers, employees, uniform suppliers, vending machine suppliers the local businesses, restaurants, energy suppliers, product suppliers, miners, machinist, shippers and producers all suffer which causes a ripple in the economy.

Each individual macro economy affects the next micro economy which affects the next and so on and so on. Everyone that touches someone that touches someone that touches someone and so forth and so forth has their own micro economy affected because the dollars no longer flow from that industry.

We see this example played out in Winchester Virginia. General Electric GE Lighting closed their doors in 2010 . This was the last incandescent light bulb factory in America.  When President Bush signed into law a ban on the Incandescent bulb and President Obama strengthened that law in 2009 it guaranteed that America’s economic engine would sustain a hit.

You see the exact same thing happening today. We have a Transportation Secretary that knows nothing about transportation, except how to pretend he rides a bike to work, we also have a president and administration which NOT A SINGLE ONE has ever held a real job or actually produced a consumable good. Presidential mandates, Government paying people to not work, shutting down our energy sector, importing millions to take welfare, printing/digitizing TRILLIONS of dollars out of thin air, record inflation and more, so, so much more, all is nothing but a drag on our economy and could very well be the end of it. (Cloward and Piven Strategy) Is this intentional… maybe.

Government does not create jobs, but they can destroy them.

We have lost jobs and industries for no gain. The CFL bulbs that we were forced to buy are made in China not the USA. Want an incandescent? You can order it from China or Mexico where we paid to open new factories for the incandescent bulb. Another example of the Transfer of Wealth from this country to another. This is happening all over the US right now. We don’t make much if any of the antibiotic pharmaceuticals in the US now, it to is made in China, as is most of the goods we buy at Walmart and other stores.

4.3 Million people dropped out of the workforce in September 2021.

So, we see the Law of unintended Consequences once again. Government interference and regulations not only lost jobs but shifted our wealth overseas.

Oh and that safe new bulb the government said would save energy…

CFL’s are dangerous. They contain high levels of Mercury a very toxic metal, known to create birth defects and infant death. These CFL’s will also create another issue as homeowners continue throwing these bulbs into the trash. The Mercury will end up in the landfills where it can enter the environment via groundwater transmission.

LEDs were finally allowed to enter the marketplace, yet the Federal Government did everything it could to stop it from coming to market and heavily subsidized the CFL market causing another false economic bubble.

Government creates problems and solves few. Once “WE” the American People decide “WE” have had enough of the Governments inference maybe “WE” can fix the problem of Government. We understand the Economics of a Pencil. Government MUST get out of our way and let us the American People do what we do best.

Make Pencils.

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/07/AR2010090706933.html

http://www.newmoa.org/prevention/mercury/landfillfactsheet.cfm