From A. Barton Hinkle: http://reason.com/archives/2012/08/08/got-a-pencil-you-didnt-build-that
Example: In Leonard Read’s famous essay “I, Pencil” – later popularized by Friedman – Read demonstrates the miracle of the free market's invisible hand. Nobody, he explains, can make a pencil by himself. A pencil’s wood comes from cedar trees in California; can you make a saw or fell a tree? It is shipped by rail; can you run a railroad? It is dried in kilns; can you build a kiln? The graphite comes from mines in Ceylon; can you mine graphite? Each pencil is coated in lacquer; can you make lacquer? The brass ferrule – well, you get the point.
Read and Friedman use the pencil to show the folly of central planning: Nobody can possibly know enough to manage the production of pencils. And indeed, history has proven that when governments create Pencil Ministries (metaphorically speaking), they fail – inevitably and spectactularly.
Obama, by contrast, seems to draw the opposite lesson: that because “there are some things we do better together” (his words in Roanoke), those things should be done by, or at least managed by, central government – preferably with him at the helm. (“That’s the reason I’m running for president,” as he said.) Like another liberal heartthrob, Elizabeth Warren, Obama also concludes that entrepreneurs deserve less credit than they take – and less earnings than they keep. And that’s where he goes astray.
What we need here is a distinction between a necessary and sufficient condition. A complex society is necessary for the creation of business, but it is not sufficient. Countless people made modern computing and the Internet possible. But Elon Musk, not anybody else, made PayPal happen.
And even if that were not so – even if Musk’s contribution to the creation of PayPal were no greater than the contribution from Phil, the goateed baristo at Starbucks with the Occupy Everything sticker on his car – Obama’s approach leaves a crucial question unanswered: Why should Phil, rather than Elon, enjoy the proceeds from PayPal’s success?
Suppose you sell me a pencil. You didn’t make that. Still, I freely gave my dollar to you. How much right do you have to that dollar? That’s hard to say, but this is not: You have far more right to keep it than any third party has to take it away.