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- [Don] The benefits of voluntary trade are obvious.
Suppose this guy has bananas and this guy has oranges.
He needs oranges for marmalade and this guy needs bananas
for banana bread.
They swap -- they exchange.
Each guy is made better off through trade.
In our last video, though, we saw that a key fact
about the modern world involves more than simple exchange.
More than merely moving existing things around.
We grew rich by also producing more stuff per person.
Say you're cooking hamburgers and fries for your family.
It might take an hour for you to prepare the meal
because you individually do everything.
You start the grill, you cook burger,
chop the fries, slice the vegetables --
on and on and on.
Now look at how a burger joint makes hamburgers.
Each worker has a specific job in the chain of production
that serves burgers and fries to its customers.
Each worker is specialized.
This specialization, what Adam Smith called
the division of labor, makes individual workers
more productive.
No more lost time switching between tasks.
Plus as a worker concentrates his effort, he gets better
at doing the task at hand.
But it's not just the specialization of workers
that increases output.
It's also the development of specialized tools
that modern workers use.
The burger joint has tools to slice potatoes, to cook burgers,
and to fry the fries.
That's just Specialization 101.
I'm sure you've seen one of these around.
The container: they're everywhere!
Cargo transported by ship used to be stored in barrels,
in sacks, in wooden crates, and off-loaded by hand.
The invention of the container, though, created more
than just a metal box to put stuff in.
With it came a wave of specialized technology
that dramatically increased the productivity of shipping
and offloading.
Ships themselves evolved, dwarfing their predecessors
with the ability to stack containers
below and on the deck.
Ports changed too, dredging deep waters
and providing specialized pilots and gantry cranes
to quickly park and unload ships.
Driverless yard tractors magically whisk containers away.
The containers are put on trucks and trains
built specifically to hold them.
Workers today are superhuman compared to their brethren
of yesteryear.
We went from carrying bags on our backs
to lifting the equivalent of two school buses
with mere flicks of our wrists.
To make specialization worthwhile, you need to make a lot stuff.
For example, there is no point specializing in hamburgers
if you plan to cook only one burger a week,
or buying a forklift or crane simply to unload weekly groceries
from the family car.
Trade provides a market big enough to make it worthwhile
to invest in specialization and the bigger the market,
the more we specialize, and hence, the more we can produce.
Specialization doesn't stop there.
In our next video, we'll explore the specialization
of the most productive engine known to humankind: The human mind.
What about the videos after that?
Well, you decide.
You tell us what topics we should cover.
Here's the current leader board of questions from our viewers.
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