Recently I have been seeing people raging about how globalization and inter-connectivity of economies has done more harm than it has good for us as a human race. I completely and strongly disagree with this point, which I will most likely talk about in depth tomorrow, but today I want to talk about the basics and how specialization in economies has benefited us in almost every way possible. Because the fact of the matter is, everything you purchase in your day to day life is a product of specialization.
In layman’s terms, specialization is basically the focus on producing one or a few goods and becoming very good at doing so. In the old days when there was little trade and no one had something you desired, you had to collect everything yourself. If you wanted to make a burger per se, you would have to collect the wheat, make the dough for the bun, butcher the cow, ect. all for a single meal. There is a reason I picked a burger, because I person actually did this as a test and ill link the video below to prove my point. However, now we can just walk into any supermarket and buy the buns, patties , condiments or whatever, not to mention full burgers that are already made to be microwaved.
What happens is each part of our economy has focused on doing what it is good at and trade for things they aren’t specialized in making. Using a common currency like the dollar those who have specialized in making a certain good now produce more of it at a higher quality because they have done it for so long and can sell the excess which they can use to purchase other goods. Because of specialization we have an economy of surplus of high quality goods at our finger tips. Even if you specialize in something like knowledge, you are paid in dollars and can purchase anything you need.
Specialization can be something that is within a single country’s economy or within the international trade economy as a whole. For example Italians export olive oil, France exports wine, ect. These countries are much better at producing those items on a mass scale because of their location, knowledge, ect that we are better off specializing in other products and purchasing theirs. Making our own olive oil or wine in some areas might be foolish and not worth the effort. Instead the best option for us is to export our own specialized goods to other countries who desire them and to purchase their higher quality items.
China during the cultural revolution proved the importance of specialization when they recommended that everyone stop farming and instead create their own backyard steel mills. Despite regular people not having the know-how or specialization for creating steel, they did it anyway and were left with a lack of rice which lead to the starvation of 10s of millions of people. The steel that was created was also of such low quality almost nothing could be done with it. If China had let the farmers who were specialized in food production, create food, those people might not have died. Instead we have a much darker history.
We as a country and even as individuals, need to do what we are best at and specialize in certain skills that bring us the most return in the long run. If that means we need to move manufacturing out of our country and instead only export knowledge, then we should do so. Failure to continue to create specialized goods that people want in the international community is how a country starts failing. So to the people that believe we should keep all the jobs in America even if it means that we would be more profitable by specializing in another field, tomorrows article is for you. For today I just wanted to go over the basis of specialization, how we encounter it in everyday life and how it has benefited us in the long term. There are millions of examples of the benefits of specialization, I just wanted to show a few.