Adam Smith’s most profound insight was on 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 at the World Cup was an extraordinary event. And so was the metamorphosis of the Tour de France into the Tour de Yorkshire. Both the rout of the Brazilians by the Germans and British success on two wheels seem to reinforce the thesis touted by authors such as Malcolm Gladwell, Geoff Colvin, Daniel Coyle, David Brooks and Matthew Syed – that hard work trumps talent. In Mr Gladwell’s world, 10,000 hours of practice will make you a superstar.
Yet it is not just modesty that leads me to suspect that even after 10,000 hours I would not be ready to perform at Wembley Stadium. Academic research confirms this common sense. David Hambrick and Elizabeth Meinz are co-authors of a study in which they conclude that Messrs Gladwell and 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 be 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 1930s? Why do Britain’s table tennis stars come, such as Mr Syed, mostly from an area near the town of Reading?
The pool of people from which US corporate lawyers or leading UK table tennis players are 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 identifies outstanding talent in youngsters from some social group or area and directs them to a particular activity from an early age, there will be a link between success in that activity and irrelevant characteristics such as Jewishness or proximity to a certain town. Smart Jewish boys in the Bronx and Brooklyn were encouraged to become lawyers. Children with an aptitude for table tennis in Reading received intensive coaching from an early age.
For a young man in Britain at the turn of this century with physical attributes attuned to cycling, the country offered finance, facilities and inspired coaching. Modest but focused resources applied to a second-tier sport produce a high proportion of global stars. The success of Venus and Serena Williams, intended to be tennis champions before they were born, can be seen as a tribute to hard work or as a measure of the genetic and environmental impact of their father Richard. Or both.
Yet football is different. Not everyone wants to be a corporate lawyer, a table tennis ace or even a software entrepreneur. But almost every boy and not a few girls in every favela or kindergarten dreams of being a football star. The talent pool from which top players is drawn is perhaps wider than for any other activity (save that it excludes the US). Luck in football is consequently less important (though Mr Gladwell’s readers will note that a quarter of the German squad was born in January or February).
So, it is no surprise that with a football-mad population of 200m Brazil produces many leading players. While talent is a prerequisite, organisation and hard work make a big difference: so, it is equally no surprise that the winning team is from Germany, a country with a population of 80m.
Strong institutions and effective education – the economic parallel of the organisation and hard work needed to develop individual talent – are requirements for business. In big industries – automobiles and aerospace – they combine with scale to produce success for the US, Germany, Japan and potentially China. In smaller industries – precision engineering or business services – they combine with specialism to produce success for Switzerland and the UK.
As the authors of Soccernomics, FT columnist 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.
This article was first published in the Financial Times on July 16th, 2014.