Jordan Peterson is surfing on a wave of popularity. Within a very short time, the Canadian professor has managed to create a cult like following. This is not something he intended. All he did was to stand up for his own liberty in Canada. Nothing suggested that he would be very successful when he started protesting. In fact, he took some great personal risks. His timing, however, turned out to be very good. He evoked a silent mass, which, just like him, thought that political correctness had gone way too far.
I have a great deal of respect for someone who is fighting for his believes at the risk of personal costs. Not surprisingly, I also happen to agree with his fight for liberty. But since he is now an authority for so many people, he also deserves to be criticized whenever he gets somethings wrong. As an advocate of open debate, I am sure Peterson would agree with that.
And he does seem to get quite a few things wrong. His popularity puts him under a lot of pressure to always have an answer to everything. Because he was protesting against political correctness, he is now often interviewed about politics in general. Peterson, however, does not strike me to be particularly interested in politics. His real passion clearly is psychology and religion. This is something he shares with many of his followers. The major cause for his huge popularity appears to be his personal development advise rather than his political philosophy.
It is not necessarily a good idea to take someone as an authority on every subject, just because he is clearly smart. Like everyone else, Peterson is only an expert in things that he has spend enough time thinking about. Listening to him, I get the impression that one of the areas he knows little about is economics. I recently came across a video of an interview, in which he discusses the importance of IQ for productivity. His thesis is that people with a too low IQ are unable to contribute to the economy. This, according to Peterson, is a significant problem, because the group of people with relevantly low IQs is quite large.
This opinion is based on common misconceptions. In order to understand the mistakes in his reasoning, let us go through his argument systematically. He starts out by quoting a number of studies which show a clear correlation between IQ and success in life. In fact, Peterson claims that IQ is the most important predictor for long term success known to us. Consequently, people with a too low IQ seem to be doomed to failure.
Jordan Peterson is a clinical psychologist, so it is reasonable to assume that he knows what he is talking about. That is not to say that IQ is the only factor important for success – personality traits like high conscientiousness and low neuroticism are also important. But apparently, none of these can compensate for a low IQ. This is not just true for personal success, but is particularly true for economic success. People with low IQs apparently struggle to be productive.
Let us look at the relationship between productivity and IQ. The argument that people with low IQs struggle to succeed in a modern economy is based on the observation that intelligence helps us to complete complex tasks. In fact that is exactly what IQ test questions are all about. That means, the more complex a task, the more IQ is needed to complete it. Peterson claims that modern economies have already become very complex, with simple task being automated. And it is reasonably to assume that the trend towards more complexity is going to continue in the future. Therefore, people with low IQs will increasingly not be able to add value to such an economy. In other words “there is not a job for everyone”, as he puts it.
It is certainly true that there is not a job for everyone. Some people clearly find it difficult to produce wealth. Examples of these would be certain drug addicts or those with a mental disease like Schizophrenia. The latter distorts the view of reality and makes a person dysfunctional in the real world. However, is Peterson right that a low IQ on its own prevents people from adding value to the economy?
As proof that this is indeed the case, Peterson quotes a policy of the armed forces, to not allow recruits with an IQ lower than 83 to join. This threshold is based on long term internal studies which have apparently shown that people with such low IQs simply are incapable of performing any needed task in the military.
The reason why Peterson things this is relevant is because the military is in constant shortage of bodies, and has jobs that require very few skills. He also mentions that one of the purposes of the military is to lift people out of poverty, by giving them a good education. Therefore, he concludes, if the military isn’t capable of employing them, no one is. Having established these facts, he points out that about 10% of society have an IQ that low, clearly suggesting that 10% of society will therefore not be employable. If all of this were true, it would be a grim outlook indeed.
But there are a number of fallacies in this argument. First of all, it is questionable to take a centrally planned bureaucracy, like the military, as a good indicator of who can and who cannot be productive. For some reason, intellectuals love hierarchical bureaucratic structures, and even Peterson, who is not a socialist, does not seem to be able to resist that temptation. The real testing ground, however, should be the actual private economy. No central planner can know what is and what is not productive work. This is of course the fundamental flaw in socialism, and the reason why it can never work. Ludwig von Mises famously pointed this out in his groundbreaking 1920 article “Economic Calculation in the Social Commonwealth”.
The real economy often gives us surprising answers as to what is and what is not productive. And looking at real world economic data, we find that the free market does seem to find productive tasks for low IQ people. If it were true that people with an IQ below 83 are unproductive, and those are 10% of society, then we would not expect to find unemployment rates in any free market economy to be under 10%.
Unfortunately, we do not have any economies that are totally free of state intervention to test this. However, we can at least have a look at some of the most free and advanced economies. Two good examples for these are Singapore and Switzerland. Both, according to the Heritage Index of Economic Freedom, have been among the most advanced and productive economies in the world for a very long time. They are also two of the most free and unregulated. Singapore, a city state, even has hardly any welfare state at all. As far as I can tell, neither of these two economies has had an unemployment rate even close to 10% in the last three decades. In fact, during that period of time, the highest unemployment rate has been a little over 5%. Today it is 2% in Singapore, and 3% in Switzerland.
From this alone, it is save to conclude that, if a low IQ is a growing problem in increasingly complex societies, then, at least at the moment, the economy is clearly not complex enough for this to have a significant effect. In fact, as far as I am aware, even people with seriously low IQs can be trained to be somewhat productive. People with Down Syndrome, for example, who have an average IQ of around 50, can be trained to fulfill productive tasks. And luckily they are often exempt from damaging protective policies like the minimum wage.
But to be fair, at such low levels, the productivity is indeed strongly reduced. This does suggest that Peterson is not completely wrong. There is some relationship between IQ and productivity. But at least at the IQ 83 level, this does not seem to be significant enough to make a person unable to contribute to a modern economy.
The next question is, is this going to change in the future? Will people with low IQs increasingly struggle to be productive as the economy becomes more complex? It sure looks like strong reasoning to suggest so. The argument, however, rests on a very questionable assumption. Is the economy really getting increasingly complex? Do we therefore need better skills to handle complexity in order to be productive in the future? What is the evidence that we are witnessing such a development?
I think this is a fallacy. The exact opposite appears to be happening. Sure, being able to handle complexity, unquestionably makes people currently more productive. That is why managers and engineers have a higher salary than cleaners or garbage collectors. But this is not a new development. Managers and engineers have always earned more than workers doing simple tasks.
In order for there to be a problem one would need to argue that simple tasks are disappearing completely. And in fact, many people would argue that we have seen a shift away from simple jobs to more complex ones. Historically, the majority of people worked in farm jobs, which mainly required physical strength, and were repetitive. Whipped, uneducated slaves were able to do these jobs. Nowadays, however, we have clearly moved towards thinking office jobs.
It is true that most people have stopped making a living through physical labour. This change came with the rise of machines which were able to do the physical for us. Throughout history, whenever we saw new technology been introduced, the assumption of most people, at all times, has been that this would lead to a rise in unemployment.
Yet, people have always been wrong to assume so. As we have seen with the unemployment rates of modern economies, their concerns have so far not materialized. There are still an enormous amount of very simple jobs left. That is as long as the government does not regulate these jobs out of existence. Almost every human being, even people with low IQs, have skills that machines are unable to perform. These skills include things like common sense or the enormous fine motor skills of the human hand. The latter is still unmatched by robotics.
Has all this new technology made our work more complex? Why would it? Technology is a tool. And the better these tools are, the easier it is to use them. Usually, technology is only complex in its early development stages. This is the stage when it is not widely used yet. A simplification for the user is usually a necessary condition for a technology to spread widely.
When computers first were invented, only the most highly trained engineers could use them. Today, my three year old niece can operate an iPad. The latter, of course, is orders of magnitude more complex than the first computers that needed to be operated by experts. Advanced tools do not make things more complex, they make them easier.
There does not seem to be much evidence that our jobs have become more complex. Sure, we now have more office jobs. But thanks to increasingly sophisticated tools, we also have more idiots doing office jobs. And there is absolutely no reason to expect the situation to get worse.
A lot of people are worried about the advent of AI and robotics. These, so they think, will create machines that will be able to beat us in any skill we have. Therefore, there will be no more jobs left for us to do. No more jobs, except for the highly complex task of coordinating these machines. This will lead to a society in which there is a great divide between a small elite in control on the one hand, and all the rest of us on the other, who will be left out of the economy.
This is an absolute fallacy that I have written about before. Machines are tools and not competitors. They are not competitors, because they do not have any interests on their own. Every tool makes us more productive, and most tools are even superior to us in some way. That is why we use them. Even a very simple tool, like a hammer, is used by us, because it is superior in certain ways to our hand. It is therefore misguided to thing that machines who are better than us are a problem. We cannot have too good tools!
And the better the tools, the simpler they will make jobs. Tools help us to complete tasks more quickly, and to a higher standard. That is another way of saying, they make us more productive. The more intelligent machines get, the more they can handle complexity themselves. That is why my niece can operate a highly complex iPad. The complexity of the computer is reduced to a very simple interface. Consequently, if machines are able to handle complexity, they can be used as a tool by people, who are bad in handling complexity. And those are the people for whom these machines will be most useful.
Think about it – when machines were invented to replace our physical labour, was it clever to argue that this was a disaster for the weak? Was it clever to argue that now only the strongest would be able to compete with these machines? Of course not. The exact opposite was the case. With the advent of strong machines, it was particularly weaker people who became more productive, because machines are not competitors, they are tools.
Just like a calculator has the biggest use for people who are bad at calculating in their head, and strong machines are best for weak people, intelligent machines will be best for the not so intelligent. If anyone will get to be disrupted by intelligent machines, it will be intelligent people, who will lose their advantage to produce. They will lose their advantage, because the economy will get a lot more simple rather than complex.
It is also a fallacy that the production of wealth can be concentrated in the hands of a few. This cannot happen, at least not without the use of force. Who would the minority of producers sell their products to? Already in the early 19th century, the economist Jean-Baptiste Say famously figured out that supply creates its own demand. There will always be an advantage of having a division of labour, no matter how advanced machines get. And it will always be better that more people produce rather than fewer, no matter which tools they use.
That means there will always be an economy, and we are not going to all become self-sufficient individuals. The only difference will be, that the more tools we have, the more everyone can potentially fulfill every part of that division. Peterson says that “not everyone can be trained to do everything”. That is true. But in the future, maybe everyone can have a tool which can do everything for them.
Life will not become more complex, but it will become easier, at least economically. That is not to say that it will necessarily be easier to find a purpose in life and be happy. That, however, is a different question from productivity. Economically, technology will be a great equalizer rather than a divider. So there is no need to worry about people with low IQs. The evidence shows that, if the state lets them, they are able to produce now, and they will be even more so in the future.