Thursday, April 20, 2006

The Many Lessons of One Red Paper Clip

A man named Kyle McDonald has set up a website called One Red Paper Clip that tells a fascinating story. If you wade through it enough, here is what you will learn:

Mr. McDonald wanted to buy a house but couldn’t afford one.

One day he offered to trade a single red paper clip for anything better.

Two women traded a fish-shaped pen for the paper clip.

Another woman traded a small doorknob for the fish-shaped pen.

A man offered him a camping stove for a small doorknob.

Another man gave him a generator for the camping stove.

Another man gave him an empty keg, a promise to fill it and a neon beer sign for a generator.

Another man gave him a snowmobile in exchange for a beer keg and a neon beer sign.

He was now starting to get publicity. A snowmobile magazine offered a trip to the Canadian Rockies in exchange for the snowmobile. A new trading partner, an inventory manager of a company with a van it was planning to sell, got permission to give the van to Mr. McDonald in exchange for a trip to the Canadian Rockies.

A musician gave him studio time and an offer to pitch the result to recording companies in exchange for a van.

A singer in Phoenix gave him a year in a Phoenix duplex for a recording contract and a promise to hawk the results.

What does he learn from this, according to Fox News? That "[i]f you say you're going to do something and you start to do it, and people enjoy it or respect it or are entertained by it, people will step up and help you."

That is without question a valuable lesson, but it does not begin to exhaust what we could learn from this episode. A series of questions suggest themselves, in light of prevailing ideas. He didn’t make the house, so did he “earn” it? Since all he did was match (after a few steps in between) the paper clip owner to the home owner, did he do anything economically useful? Did he perform any service of value in matching one trader with another until he got what he ultimately wanted? Or is he just a parasitical middleman, who “marks up” prices without performing any services of value, without, after all, actually “making” anything?

Now change the story. Suppose it is not a charming young man hooking up with various other easy-to-like people. Suppose a worker sells his time to the manager at a pharmaceutical-producing factory. The manager takes the output of the worker and, based on the discretion his boss gives him, sells it to a pharmaceutical wholesaler. The wholesaler then sells to another wholesaler, who sells to another one, who sells to a pharmaceutical-chain buyer, who sells the work product to a local pharmacy, who sells it to a customer, in the presence of a Harvard medical professor, who goes on to goes on to slam drug companies who charge high prices without producing anything of value, and the attorney general of New York, who goes on to subpoena three drug wholesalers as he gears up to run for governor. That, one supposes, is somehow or another a much different story.

4 Comments:

Blogger Libertarian Jason said...

Personally, I would have stopped when I got to the keg of beer.

Mmmm.... Beer.

Oh yeah.. And Spitzer is an ass... His hunger for power knows no end.

2:55 PM  
Blogger rws said...

Evan, I just wanted to thank you for your contributions to the general knowledge base. I come by your blog every day in anticipation of new information and am seldom dissapointed. For poorly educated folk such as myself, your words slowly but surely elevate my level of understanding about many matters, economics perhaps being the least.

Just wanted to let you know that you are, in fact, being read and appreciated.

10:37 PM  
Blogger Evan said...

Thanks for your kinds words, rws. I just try to promote a few key ideas over and over again - that we are generally better left free to pursue our interests rather than being organized into obedient collectives, that Western civilization is worth preserving, and that economics explains a fair amount about the world.

10:58 AM  
Anonymous Libertarian Jason said...

rather than being organized into obedient collectives

....except when it comes to central planning the monetary system.....


;)

1:44 PM  

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