Advice for buyers and sellers, from Justin Ruzicka

Economics 101 – Division of Labor

economics-imageIt is tough talking in terms of “theory” as it makes it hard to conceptualize, so instead lets talk about real life. However we have to use something that we both have in common that is close to our heart…so do you know of a good firefighter? I’m not talking about the guy who just shows up to the station and runs through his routines, but I am talking about a real man, who’s heart is pure, who is loving to both friend and foe, who’s child thinks he is the greatest man in the world, who’s wife loves him to death (that is a high standard), “I will give my life over for yours”…do you know of such a man? I do, I think you know the same man.  There is a widely politicized belief that the Democratic Party has and that is the Government can “fuel job growth.”  One of the theories in which they can do this is by “Division of Labor.”  If you divide up labor tasks into small tasks then more people can eat from the same piece of pie.   This article addresses the fallacy of the division of labor.

The division of labor philosophy is that “the government” (or Labor Unions) can grow the labor force exponentially.  The concept of “division of labor” idea is that each person does a specific job, and does it so efficiently, and their job is so demanding of time, that they can not do any other job than theirs…In Chicago the labor unions make it illegal for a plumber to also fix drywall from the whole he just made in the wall from a broken pipe repair, it is also illegal for that plumber to paint, and it is illegal for him to address repairs in flooring, woodworking, and conversely all those other professionals can not fix anything besides what they are licensed for; electrical, painting, carpentry, flooring, ect, and it is illegal to be part of a more than one union and be licensed in more than one specification…But the ‘Union’ is good for ‘everyone’ and so is the Division of Labor theory.  Lets look at how the division of labor cost the consumer quite a bit more money.  In order to fix a small plumbing leak “legally” the home owner has to employ 4-5 professionals, each of these professionals must have; A minimum level of insurance to protect the consumer from their mistakes (even though they are experts at that they do and you and I not being expert could do their job…I digress), they have an office/warehouse space for materials, they have vehicles, they have signage, advertising, ect…and the real kicker is they have to charge a minimum dollar amount to the consumer in order that nobody is “undercutting” the others.  Of course  just like you or I, thier time has a value…I mean I’m not a “rich man” by worldly standards, from my poor humble situation, I still feel my time is worth $25/hr(mathematically speaking $25/hr is $52,000/year)…if it takes a contractor 30 minutes to drive to a job from their office/warehouse and then 30 minutes back to office or the next jobsite, 30 minutes to estimate the job, and 30 minutes to complete the job, and because they are a succesfful business that is organized, they can’t just do the job on the spot,  they have to come back at a later time to complete it, adding another 60 minutes of travel time…the job is only 30 minutes of actual work, for ONE Contractors perspective of the job will cost the customer, $87.50…assuming each “specific task”; drywall, paint, 2 feet of flooring trim on wall, took the same time then this customer would pay 4 X $87.50 = $350…for this job, in Florida we don’t have the Union laws that Chicago has, and I just had this same job completed for $200 by one guy, who had 1 employee…and they completed the job in 2 hrs of physical work and 2 trips to the job site, they came to job site, ‘knew’ how long it would take to fix the leak… under 60 minutes.   Then came back a different day to complete drywall, paint, and flooring trim.  Who is better off; the person in Chicago that pays 175% more than my cost or me?  I was able to pay less money for a job well done by an efficient company/contractor?  I trust you see that I am better off because I was able to save money and that money was then used to; grow my savings account or was used to pay my electric bill, or buy more groceries, or go to the movies or a combination of all.  Either way the money I saved from the inefficient way Labor Unions (or US Government with Labor Laws) divide up labor, I was able to “employ” many more jobs and business sectors.  I hope it is very clear that the “division of labor” is not the best case scenario for the consumer, and thus for the ‘community’ or country as whole, it is false.   Now you are probably wondering WHERE the heck does Mr. Firemen come in to this picture?

Let’s look at the division of labor from the perspective of a firefighter…lets just assume it is a small house fire with a child trapped in the bedroom…in this case you need a driver for massive truck, you need 1 hose man to hook up the water from hydrant to truck, 1 man to “run” the terminals/controls at truck, you need 1 guy to carry hose from truck to house, 2 guys to run into house and spray fire hose, and bust down the door, then one guy to pick up the child and bring him or her out of the house…this is the division of labor, it is efficient smooth and the kid is saved….NOW based on Labor Laws, the guy who connects the hose from the truck to hydrant CAN NOT DO ANYTHING else otherwise the Division of Labor doesn’t work. After doing his job he has to stand around and watch….The man who runs the water controls, also can’t do anything else, the driver, can’t do anything else, the guy who runs the hose to the house stands around and watches, the 2 guys that run into the house they actually are doing two things, working the hose, and kicking the door down, and after the child is saved, they get to keep running the hose until fire is put out. In this Division of Labor, there are 7 men who are working this fire scene, each man has a specific job, once his job is done according to the theory of Division of Labor and the Labor Laws that man can not do anyone else’s job without breaking the Labor Laws…Before the hose gets into the house you have 2 guys sitting around watching others work because their job is done…1 the driver 2, the guy who hooked up hose from truck to hydrant…those guys just watching…Water mechanic is working throughout the much of the process…The other 4 guys needed are about to go to work, the guy who carries hose to house, once his job is done he is watching, then 3 men are left two running the hose and 1 child carrier…What happens if 1 Man on the hose falls down, because of the division of labor NO Other MAN is trained and qualified to do his job, so then there is not a person to knock down the door while the hose is being sprayed in that area…The 4 men sitting outside are all capable of holding a hose, they are all the same strength same stamina, for crying out loud they know how to hold an ax and break down a door to rescue a child, this is probably something that doesn’t even need to be taught because inherently as a “loving, kind person” anyone would be able to knock down the door to help save a life, especially the life of a child! BUT it is illegal and there are reporters standing around, job bosses (who also can’t help because of division of labor laws) and so you have 1 of two choices to have back up crew members who sit on the truck and are only pulled into the picture if a person doing their job trips and falls, or is incapacitated in some way from doing their job, or scenario #2, the kid dies, because of the division of labor.   Can you see fallacy in the division of labor? Would you really not want every firefighter on the scene to be trained to do more than one job? Does it make sense to pay someone to stand around and watch? Have you ever seen a construction sight? Don’t you get angry when 4 white guys are standing around watching 2 Mexicans and 1 black guy digging a hole, or doing the physically hard work. This happens because of labor unions and laws and the division of labor. The white guy (because he is so superior than the other races) is trained using his best asset his mind, and the other guy’s Mexican and often African American are doing manually labor. Yes, there is truth that being highly trained in specific scenarios does make things seemingly more efficient, but to limit the specifications a man/women is allowed to be trained for does not add to efficiency. Thus the Division of Labor “theory” when put in to action is a theory that does not work.

 

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Justin Ruzika, Realtor
Justin Ruzika, RealtorThe House Guy
Much of my real estate career has been in buying, repairing, then selling the properties for a profit. I work for specific investment groups doing this, as well as manage a personal portfolio. The other 50% of my business is helping my neighbors, I have helped dozens of Families buy or sell their home.

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