Division of Labor: Burgers and Ships

A simple example of hamburgers being made at home versus at a restaurant can help illuminate the explosion of prosperity since the Industrial Revolution. The story of the division of labor and development of specialized tools is not a new one — Adam Smith began The Wealth of Nations with this concept. Yet it still has tremendous explanatory power about the world we inhabit.

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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 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 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 increase 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 specialized
technology that dramatically increased

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

for 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?

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