“I, Pencil” and “The Tragedy of the Commons”

The global economy is complex and the “invisible hand” can work both ways.

The essays "I, Pencil" and “The Tragedy of the Commons” indicate that the “invisible hand” of economics with individuals acting in their own self-interest can work both ways. There is also the potential for ruin when individuals, acting in their own self-interest, overuse a shared resource. 

"I, Pencil"

“economies can hardly be “planned” when not one soul possesses all the know-how and skills to produce a simple pencil”  

“While "I, Pencil" shoots down the baseless expectations for central planning, it provides a supremely uplifting perspective of the individual. Guided by Adam Smith’s “invisible hand” of prices, property, profits, and incentives, free people accomplish economic miracles of which socialist theoreticians can only dream. As the interests of countless individuals from around the world converge to produce pencils without a single “master mind,” so do they also come together in free markets to feed, clothe, house, educate, and entertain hundreds of millions of people at ever higher levels.”                                     – Lawrence W. Reed  

The production of a pencil generally requires 20 to 50 processes.  A pencil can be sharpened about 17 times and write approximately 45000 words. It can draw a line about 35 miles long.  Journey of a Pencil

“The Tragedy of the Commons”

AI Overview from Google

William Forster Lloyd, a British economist and philosopher (1794-1852), first conceptualized the "tragedy of the commons" in 1833, highlighting the potential for ruin when individuals, acting in their own self-interest, overuse a shared resource. 

Here's a more detailed explanation:

• The Core Idea: Lloyd's work, though not as widely known as Garrett Hardin's later essay, established the fundamental concept that unregulated access to a shared resource (like a pasture, or in modern terms, the atmosphere) leads to its depletion or destruction. 

• The Hypothetical Example: Lloyd used the example of a common pasture where multiple herders graze their cattle. Each herder, acting rationally in their own short-term interest, might add more cattle to the pasture, believing they will benefit from the increased grazing. 

• The Unintended Outcome: However, the collective action of all herders, each acting independently, leads to overgrazing, ultimately damaging the pasture and rendering it unusable for everyone. 

• Lloyd's Contribution: Lloyd's work demonstrated how individual self-interest, when applied to a shared resource, can create a situation where everyone loses, even though each individual's actions seem rational in isolation. 

• Hardin's Popularization: While Lloyd's work predates Hardin's, it was Hardin's 1968 essay, "The Tragedy of the Commons," that popularized the concept and brought it to a wider audience.

• Modern Relevance: The "tragedy of the commons" remains a relevant concept today, as it helps explain issues like overfishing, deforestation, pollution, and climate change, where shared resources are being overused or exploited.