Adam Smith’s most profound insight was the relationship between the division of labour and the extent of the market. The old sage would even have been able to explain this summer’s sporting results.

        Germany’s crushing defeat of Brazil was an extraordinary event.  And so was the metamorphosis of the Tour de France into the Tour de Yorkshire.  Both the rout of the exuberant Brazilians by the methodical Germans and the gritty  British success on two wheels seem to reinforce the thesis recently touted in popular books –  authors include Malcolm Gladwell, Geoff Colvin, Daniel Coyle, David Brooks and Matthew Syed – that hard work trumps talent.  In Gladwell’s world, ten thousand hours of practice will make you a superstar.

Yet it is not simply natural modesty that leads me to suspect that even after ten thousand hours I would not be ready to perform at Wembley Stadium, or Carnegie Hall, or cross Niagara Falls on a high wire.  Academic research confirms this common sense. David Hambrick and Elizabeth Meinz conclude that ‘Malcolm Gladwell and David Brooks are simply wrong. …. individual differences in performance on many complex tasks arise from both acquired characteristics and basic abilities’. If you want a Nobel Prize, you had better start by being very smart.

Still, the anecdotes require explanation.   Why have so many successful corporate lawyers in the US been Jewish men born in Brooklyn or the Bronx in the 1930’s?   Why do Britain’s table tennis stars mostly come, like Matthew Syed, from around Reading? 

        The pool of people from which American corporate lawyers or British international table tennis players is drawn is a small fraction of those who might be capable of being corporate lawyers or top table tennis players. If the right parents, coach, role model, or training facility identify outstanding talent in some social group or geographical area and directs those youngsters towards a particular activity from an early age, there will be an association between success in that  activity and fundamentally irrelevant characteristics like Jewishness or proximity to Reading station.  Smart Jewish boys in the Bronx and Brooklyn were encouraged to become lawyers.   Children with aptitude for table tennis in Reading received intensive coaching from an early age. Being born in the mid 1950’s was a really good moment if you were to be a software entrepreneur.

  For a young man in Britain at the turn of the century with physical attributes attuned to cycling, Britain offered unparalleled finance, facilities and inspired coaching.  Modest but focussed  resources applied to a second line sport produce a high proportion of global stars.   The success of Venus and Serena – intended to be tennis champions before they were  conceived – can be seen as a tribute to the power of perseverance and hard work:  or a measure of the genetic and environmental impact of Richard Williams as father. Or, of course, both.

Yet football is different.  Not everyone wants to be a US corporate attorney, a table tennis ace, or even a software entrepreneur:  in fact not many people do.  But almost every boy in every favela or kindergarten dreams of being an international soccer star.  The talent pool from which top footballers is drawn is perhaps wider than for any other activity, (save that it excludes the United States). Luck in football is consequently  less important (though Gladwell readers will note that a quarter of the German squad were born in January or February.)

      No surprise, then, that with a football mad population of 200 million Brazil produces many top players. While talent is obviously a prerequisite, organisation and hard work make a lot of difference:  so equally no surprise that the winning team is selected from Germany’s 80 million population.

Strong institutions and effective education – the economic analogue of the organisation and hard work needed to develop individual talent – are  requirements for business.  In major activities – automobiles and aircraft – they combine with scale to produce success for the US, Germany, Japan, and potentially China.  In minor activities – precision engineering or business services, they combine with specialism to produce success for Switzerland  and the UK.

As Simon Kuper and Stefan Szymanski often point out, mediocre performance in international football is what you would predict for England from its size and per capita income. Still, England can buy the best players in the world and stage the best football league.  There are business lessons in that too.