Opinion: Free Market Minute

Idolize the Dream Gig

But don't quit your day job--yet

Wanna be an American Idol ? If you can’t make the cut, blame Adam Smith. No, Adam was never a contestant on the show. He was an eighteenth-century Scottish Enlightenment philosopher. I don’t know if Smith could sing, but he could write, and had some interesting things to say, by implication, about why a large number of would-be performers also wait tables, teach lessons, drive school busses, and sometimes even (c’est possible?) work in think tanks.

Adam Smith made the following observation in The Wealth of Nations : “It is the power of exchanging that gives occasion to the division of labor, so the extent of the division must always be limited by the extent of that power, or, in other words, by the extent of the market.”

As for Idol, it’s clear to producers that audiences will support a limited number of full-time professional pop performers at any given point. The fact that Idol selects just one performer doesn’t guarantee audience or sales, but it’s promotions and publicity offer a big boost nonetheless. Win or lose, if contestants want to specialize in singing, they have to be able to sustain recording sales, in fairly large numbers, to stay alive in the music market outside their showers.

Smith used several contemporary examples to make his point. He considered the nailer, for example—the person who made nails in Smith’s day. This was a skilled trade, even if not the highest skilled type. The question is: could the accomplished nailer specialize in his trade, produce a thousand nails a day (and nothing else), and still expect to provide for his other needs?

It depends, Smith would argue. The nailer can eliminate the need to grow his own food, produce his own cloth, build his own shelter, etc, if he produces nails relatively more efficiently than anyone in his vicinity, and a large enough population of other producers is at hand, ready to trade their product for his. The nailer needs accessible markets and individuals to whom he can sell the nails he doesn’t use, or he will be back to producing many of the goods he needs for himself.

Adam Smith’s observation that “There are some sorts of industry, even of the lowest kind, which can be carried on no where but in a great town,” offers a simple but powerful explanation of why Smith’s city porters, or today’s city street sweepers, sidewalk vendors and dog walkers can happily avoid tasks they perform relatively less efficiently—growing their own food, building their own shelters, constructing their own transportation vehicles, etc.

While specialization and division of labor generally lead to higher quality and greater output, there are also limits to how far specialization can go. Some divisions of labor are too minute or costly to be worth pursuing. Dry cleaning plants often employ a tailor or seamstress, and some pressers, for example, but do not usually have separate employees who clean only wools, only cottons, only synthetics, or only white or colored items for their customers. This would create employment, but at undue expense to the firm, and for no productive reason.

Where very narrowly defined specialties do exist, they are always in quantities limited by market demand. Thus, farriers are called in routinely to treat and care for just a horse’s feet, but general-practice large animal veterinarians cover the majority of other health maintenance tasks—eyes, ears, teeth, bones, blood tests, diet, inoculations, and other routine treatments. There are comparatively fewer veterinary specialists in the separate pulmonary, surgical, muscular, orthopaedic and other areas for horses, precisely because fewer clients demand their services.

How do we know that Adam Smith’s ideas about limits to the specialization and division of labor apply in today’s world? Idol Season 6 producers begin auditions this August in cities across the U.S. Only one person will eventually become the Season 6 American Idol. How many of the others can have successful performance careers anyway? More than one, but nothing like the 100,000 expected to try for the top spot.

What of the rest? They will have to find areas of specialization that are relatively more marketable than their music. Some might even join think tanks. Smith would approve.