What is Specialization of Labor?

In Short

As I mentioned in an earlier post, people should focus on what they are best at, and buy/trade for everything else they need. Specialization increases productive capacity and the total sum of knowledge of a community.

Example 1

Let’s imagine a community with 100 people. Every person is completely self-sufficient (they do everything on their own). In this community, every individual has roughly the same knowledge (the same ability to do things). Everyone is a jack of all trades and a master of none. Now let’s say that community splits all the roles of the community so each person has a different task. The ability to specialize would allow each person to become a master of that task and therefore the grand sum of all knowledge within that community to increase. As knowledge increases, productive capacity increases, for people will learn more effective and efficient ways of doing their tasks.

Example 2

I want you to imagine a pencil. No one person created that pencil; it was created via the specialization of labor. We have loggers that obtained the wood, miners that obtained the graphite, drivers that shipped the materials to the pencil factory, the pencil factory itself assembled the product, construction companies that built the roads used, everyone used machines that were made by someone else, etc. Every product in our lives is the effort of millions of people working together. There is likely not a single modern product that you can make entirely on your own. Historically, until specialization of labor and trade occurred, society was extremely unproductive and there was a low quality of life.

Fee Structure

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the entire account. So a person with a $750,000.01 account pays less than a person with a $750,000 account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. If you would like to submit a post to my blog, please contact me.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my explanation make sense? Do you agree or disagree with what I said?

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