The Importance of Specialization
Posted by fivedollargold 13 years, 2 months ago to Economics
A basic economic principle is that trade creates wealth. The reason is that it is incredibly inefficient for a person to try for self-sufficiency. You could live a hundred lifetimes without acquiring the knowledge to make all of the products we take for granted. For instance, the computer or tablet you are reading this on. Can you make the memory chips, display screen, and so forth yourself? This is why in the Gulch each resident had their own specialty. Such distributed expertise increases the variety of goods and services, thus creating a higher standard of living. Well, unless you prefer the lifestyle of a hermit.
However, there are also many areas where general aptitude, intelligence, and motivation can take one a long way. For example, I assume that Lawrence Hammond was not a specialised grocer, nor Dwight Sanders a specialised pig farmer, Judge Narragansett a specialised poultry and dairy farmer, Ted Nielsen a specialised lumberjack, etc.
Further, I think that sometimes people specialise too far---to the point where they neglect the fluid intelligence which allowed them to understand the complex concepts in their area of specialisation in the first place, and as a result, they slowly replace the valuable fluid intelligence with crystallised intelligence (i.e., specialised knowledge) which has more limited utility.
So while I do agree with your basic point, I think it is important to note that overspecialisation can also have negative consequences.
I want to point out the distinctions between knowledge/intelligence and specializing from an economic point of view. You both have good points. When everyone is self-sufficient, they end up very poor. Actually, the only way to increase per capita wealth in the long run is to increase your level of technology. You have to invent. What's interesting, is that the US has slowed dramatically in their level of invention. This is due to two reasons. 1. govt can artificially keep you from using technology (ie environmental nonsense, financial regulations) 2. not protecting property rights
fivedollar, is there an article or real life example on point that made you think of this today?