Understanding Scarcity

Economics is a vast and complex field, but in some ways it can be reduced down to one simple principle.
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Excerpt from Supercoach: 10 Secrets to Transform Anyone's Life:

Economics is a vast and complex field, but in some ways it can be reduced down to one simple principle:

The scarcer the resource, the more we are willing to give up in order to get it;
the more common the resource, the less we are willing to give up in order to get it.

That means that on the one hand, a plot of land in the heart of the city will nearly always fetch more than the same size plot of land in the country; on the other, no one would ever bribe the Maitre D to get into a McDonald's.

Why do we put up with boorish behavior and ignorant decision making from the people above us in our company? Why is the customer "always right"?

Because they're the ones with the money. And despite recent estimates placing the wealth of the world at over 65 trillion dollars, we still see ourselves as a common resource in pursuit of a scarce one. Yet in order to turn that equation around, there are only two things you need to understand:

1. You are surrounded by an abundance of visible and invisible money

Years ago I was at a seminar about raising money for film production. When the producer up in front of the room was asked where she intended to get the money for her next film, she said simply "from wherever it is now."

But unlike our successful producer, most of us think that our personal sources of income are limited to our jobs, or the government, or the beneficence of a wealthy relative. We fail to see the opportunities for wealth which surround us every minute of every day.

Here's the simple rule of thumb:

Anywhere there is a positive difference to be made, there is money to be made. If you can't (or won't) make any difference, you're unlikely to make very much money.

2. You are (or can create yourself as) a 'scarce resource'

My first mentor, Stuart Wilde, used to regale us for hours with stories of gas station operators who would attract customers from miles around with their five-star hotel-quality restrooms, or purveyors of knick-knacks who made hundreds of thousands of dollars from people who wanted to "take home a little piece of the store."

His point was always to begin your quest for wealth by working on yourself - your energy, your skills, and your well-being.

"As you become more and more skilled in what you do and happier and happier in yourself," Stuart would say, "people will be drawn to you. They will want to spend time hanging out in your energy. And when they show up - bill 'em!"

The point is this:

As long as you see money as a scarce resource, you will continually inconvenience yourself in order to get it. As soon as you have created yourself as the scarce resource, the money will inconvenience itself to get you.

With all my love,

2014-08-17-20130402michaelsig.gif

For more by Michael Neill, click here.

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