Articles

“Specialization and Trade: Because We Can’t Be Good At Everything” | LearnLiberty


Gather ’round everyone and watch as I work
to mow my lawn, build a fence, and install a faucet – all at the same time. How am I
going to mow my lawn, build a fence, and install a faucet all at the same time? Through specialization
and trade. In another set of videos, we discussed how
trade is made of win, and it is. In this case I’m able to specialize in what I do best,
which is teaching, writing, speaking, and making LearnLiberty videos. I’m able to take
the money I earn from all this and then pay people who are better at mowing grass, building
fences, and installing faucets than I am. Everybody is better off. Now I’m sure someone in the comments section
is going to say, yeah, but you’re terrible at this. He might be right. It just so happens
that I’m even worse at cutting grass, building fences, and installing faucets. Don’t believe
me? Ask whether you’d like to hire me to swing
a hammer at your house. Or even whether you’d just let me without having to pay. I’m not
so sure you would like the results. What’s cool is it this works even if one person
is absolutely better at everything than his or her trading partners. Let’s illustrate with a simple example. Let’s
imagine that Wes, my yard guy, has an awesome lawn mower and can mow a lawn in 30 minutes
or prepare a 75-minute economics lecture in an hour. I, on the other hand, take two hours
to mow a lawn and an hour and a half to prepare the same economics lecture. If we don’t specialize
in trade, my yard guy Wes spends a total of an hour and a half cutting grass and prepping
economics lectures. I, on the other hand, spend three and a half hours cutting grass
and preparing economics lectures. What happens after we specialize? If Wes cuts both lawns and I prepare both
economics lectures, he spends an hour cutting grass and I spend three hours prepping economics
lectures. We both save 30 minutes. That’s extra time we can spend doing pretty much
anything we want. Here’s a true story. We used some of that
spare time to have lunch together one day. And Wes, who has a master’s degree in philosophy,
then used some of his free time to attend one of my lectures and make comments and suggestions.
That’s just a simple example of the logic behind a simple but profound idea in economics:
trade creates wealth. And thanks to trade, I can cut grass, build fences, and install
faucets without hurting myself. Well, not too badly anyway.

Comment here