Seth's Blog : Pareto optimality

Pareto optimality

It’s easier to understand than it is to say.

The baker and the blacksmith should trade. The baker can make a loaf of bread more easily and efficiently than the blacksmith, and the blacksmith would ruin her productivity if she stopped making rakes and horseshoes in order to put a loaf in the oven.

If someone over there can do their particular work efficiently, and you can trade your particular work to them, everyone comes out ahead. It works even if the intermediate step is using cash. Sell your services to one person, use the cash to buy something from someone else.

And yet–freelancers have trouble trading. We think we should do every job ourselves. That’s not only non-productive, it reduces the magic we have left for the work that only we can do.