9:17 AM

One counter intuitive rule of economics is that a country shouldn't allocate its resources based on how productive it is relative to other countries but rather relative to other things that country could do with those resources. For example, imaging that The United States was the most product textile manufacturer in the world. I doubt this is the case, but it illustrates the point. IOW a dollar invested in creating textiles in the US provides more return than other countries.

That doesn't necessarily imply that all textiles should be manufactured in the US. It really doesn't matter if the US can produce textiles with a 5% profit while other countries can only get 3%. What matters is if there are things that could be done with that dollar that produce more than 5%. If the US can produce boats at 10% profit it makes more sense to allocate the limited resources to produce boats than it would be to produce textiles. This is true even if it results in higher textile prices. I've hear economics defined as the study of allocating scarce resources that have alternative uses. This example goes a long way towards show exactly what that means.

It's also one of the turning points for making your own work more effective and it's key to becoming a leader in an organization. I'm sure that there are many tasks done by your reports or other people in an organization that you could do better. That doesn't mean you should do them. Instead ask yourself a few questions. What would happen if I let the other person run with it? Maybe it wouldn't be as good. But how much worse, really? What else could I do with my time? Is there a an area where my time has more leverage? Is there some other task I am uniquely qualified for?

Of course, this rule is even more interesting in the breach. Classical economics doesn't care if you generate your GDP from housing, financial markets, corn production, or car manufacturing. But because you can't really sell a house located in the US to someone in China and because the underlying assumptions of classical economics on individual behavior just isn't right, it turns out that it really does matter what generates your wealth. Similarly while you may be able to maximize use of your time by focusing on your strengths, the greatest lever you have to improve your overall skill portfolio is to focus on your weaknesses. Besides, there is rarely an area you can ignore and expect to be successful.