5. The Age of Specialization

5. The Age of Specialization The present century is often referred to as the Age of Specialization. This is true to a degree. But any era in recorded history could have been, and probably was, called an Age of Specialization. There is little doubt that even among primitive men there were individuals who developed special skills which improved the produc tivity of their efforts. With the development of these skills, exchange be came advantageous. The tribesman who was especially clever at fashioning arrowheads from pieces of flint may have traded his arrows to advantage with someone more 23 skillful than he in hunting or fishing or something else. So throughout history, and to a dramatic degree in the past 100 years, men have become specialists. Suppose, for instance, that each person had to produce his own television set. Life just wouldn't be long enough for him to do it. He would have to be an electronics engineer, a mining engineer, a metallurgist, a cabinetmaker, a glass manufacturer, a machine-tool maker-there must be hundreds of skills involved in building a television set.

But while he was mastering the skills necessary to produce his television set, who would provide him with food, clothing, and shelter? And how could he learn electronics without books and the accumulation of years of research? Not many decades past, practically every working hour was required just to provide the food, clothing, and shelter necessary to keep alive. Most people were farm ers. There was precious little besides the products of the farm available to families, for the simple·reason that eight or nine out of every ten families had to work as hard: as they could to feed and clothe the ten families. Specialization? Yes, they had it in a limited way. But today in the United States, it requires little more than one family in ten to produce enough food and animal fiber for all ten families. The other nine families can make television sets, automobiles, household furnishings; they can be teachers, doctors, clergymen, or producers of a host of other goods and services.

Specialization is made possible by what economists call "comparative advantage." We see this clearly in 24 athletic events. Some persons are better than others at throwing a ball or batting a ball or passing a football or playing tennis or running or jumping. They have a com parative advantage and thus are specialists. The same is true of writing a novel, operating a typewriter or a punch press, or treating a disease. Expensive Bananas Comparative advantage is sometimes the result of geography. A clear example is the production of ba nanas. Bananas can be grown under glass in the state of New York-and a few are. Of course, they are very ex pensive when grown this way. Through the co-operation of nature, bananas are grown at much less cost inCen tral America. That area, then, has a comparative ad vantage in the growing of bananas. At:lother example, not quite so obvious, is the raising of beef cattle. They are raised in New York State in a limited way; but with the opening of the ranges in the West and of the feed lots in the corn belt, the raising of beef cattle ceased to be a major enterprise in New York -not because they can't be grown in New York, but rather because they can be grown to better advantage elsewhere. New York farmers now find an advantage in specializing in the production of milk, poultry, fruit, and vegetables.

So it is with nations. Conceivably, individuals within one nation might' be highly efficient at producing every single thing wanted by the people of that nation. Still, 25 by trading with people in other nations, they direct their own productive efforts toward those things which they can produce to greatest advantage. Cost of production is not a complete guide to what will be produced, unless one includes in the cost of production what economists call "opportunity costs." Thus, the principle of comparative advantage is con stantly at work all over the world. It operates not only between nations, but also between parts of the same nation-from town to town, from farm to farm, and even from individual to individual. 6. What Makes Wages High? In a free, competitive market, the price of a commod ity or service depends on what someone is willing to pay for it. So it is with the wages of labor. The employer must be willing to pay if he wants men to work for him.