As Mr. Read pointed out, even the production of a “simple” pencil is beyond the capabilities of one person or one firm to plan and implement. It requires an incredibly complex market coordination of land, labor, and capital. A pencil requires graphite and iron miners, trucks, rubber for the tires for the trucks, rubber plantations, workers at the rubber plantations, paint producers, lumberjacks, sawmills, employees for the operation of the sawmills and for all the associated factories, tool manufactures to make the tools used in the various associated industries, and maintenance personnel to keep all the facilities running.

https://www.lewrockwell.com/2020/04/david-hathaway/what-are-essential-services/

By David Hathaway

Arizona Governor Doug Ducey recently issued an Executive Order requiring residents to “stay home.” The Governor said that only businesses providing “essential services” could remain open. When hit with a barrage of questions, he told Arizonans to not worry because “grocery stores and pharmacies” would remain open and their employees would be allowed to leave their homes and go to work. As I considered what an “essential service” is in the free market, I was reminded of Leonard Read’s brilliant essay “I, Pencil.”

As Mr. Read pointed out, even the production of a “simple” pencil is beyond the capabilities of one person or one firm to plan and implement. It requires an incredibly complex market coordination of land, labor, and capital. A pencil requires graphite and iron miners, trucks, rubber for the tires for the trucks, rubber plantations, workers at the rubber plantations, paint producers, lumberjacks, sawmills, employees for the operation of the sawmills and for all the associated factories, tool manufactures to make the tools used in the various associated industries, and maintenance personnel to keep all the facilities running. There is also a myriad of ancillary industries that produce and provide a huge number of items used in the various businesses that produce components in the higher orders of production to make the pencil; things like ink, paper, clothing for the workers, and oil pumping and refinery equipment to keep fuel flowing to all the associated vehicles and industries. The interconnected web of cooperating firms and individuals is almost infinite.

If producing a pencil is complicated and requires the complex coordination and invisible hand of the free market that is well beyond the planning capabilities of any person or any firm, we can only imagine the exponential level of complexity needed to keep a Wal-Mart store open. If a Wal-Mart store is considered to be providing an “essential service” and is allowed to stay open in a “stay at home” state, how can it possibly do so without the invisible market cooperation of an unfathomable number of actors, each being influenced individually by price signals?

Can a Wal-Mart store stay open without wholesalers and producers? Can the producers stay in business without other producers of sub-components? Can the sub-components be produced without raw material producers? Can meat make it to a Wal-Mart store if the rancher and farmer have to stay home and can’t drive around to various properties and check on water and feed sources for his animals? Can the farmer take care of his farm if his tractor is broken and needs maintenance from the mechanic? Has the mechanic been deemed essential? Does the farmer or the mechanic need a special waiver from the Governor? What about the roving livestock wranglers, fruit pickers, well and pump maintenance workers that are needed by the farmer or rancher on irregular schedules?

What if the farmer or the truck driver has broken his glasses? Can he go to his eye doctor? If the eye doctor can stay open, can the glasses producer go to work to make the glasses for the truck driver or the farmer? If the farmer’s cell phone breaks and he can’t communicate with the meat buyer or feed producer, will the cell phone store be designated an “essential service” and remain open to sell him a new one? Can billboard companies operate so that the public can know which facilities are open and providing services in the midst of the closure order? Can graphics designers produce the signs for the billboard companies? Can newspaper employees drive to work and drive around town to take pictures so that the public stays informed? Are the banks an essential service to provide physical cash to those that want it and need it?

Can a Wal-Mart store arrange for its garbage and waste to be hauled off? What about the contractor that keeps the freezers and refrigerators running at Wal-Mart – is he essential? What about the producer and supplier that provides refrigerant to the freezer maintenance contractor – is he essential? I was told by a police officer that people would be pulled over and told to go home if they weren’t on their way to buy groceries. I don’t know what the charge would be if the driver refused to go home since the legislature hasn’t defined a law that is being broken. Current political actions definitely run contrary to the trite John Adams quote, “We are a government of laws not of men.”

Besides Mr. Read’s great essay, this situation brings to mind Henry Hazlitt’s little book “Economics in One Lesson;” the “one lesson” being that politicians will cause harm when they make mandates because they can only consider the effects on a small part of the overall economy. There will be broad ramifications and unintended consequences throughout the economy whenever an activity is expanded or restricted through political action. In short, central planning can never work because it can never consider the full interrelation of all aspects of the economy. Central planners can only consider specific hoped-for outcomes on limited segments of the economy when making decisions.

I don’t see how this magical candy-land enabled by court intellectuals and run by executive branch authoritarians is going to be managed through central planning.  Next thing, prices will go up, gouging will be alleged and more central planning will “be needed to control prices.” We are also all being told to “work at home.”  Wow, what a deal. We will stay home and produce nothing except for internet data shooting back and forth and all the stuff will magically get produced and the shelves will get stocked.  Why didn’t we think of this sooner? “Essential services.” What a nifty idea. Let’s all take a vacation, or better yet, retire. The government has got this under control.

Be seeing you