Answering Jordan Peterson on low IQ productivity

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.

Will Intelligent Machines Take All Our Jobs?

We live in exciting times. The speed of technological progress is breathtaking. In my lifetime, I have seen the world change from one without the world wide web and few computers, to computers being ubiquitous, and incredibly powerful. As a child I remember us only having one analog, landline phone, with a physical dial wheel, and expensive call rates. Now we live in a world in which means of communication are so plentiful and cheap that the challenge has become to hide from them. And all of that happened in not even four decades. I say four, but really the biggest chunk of that progress has happened in only the last two. And the biggest progress of the last two decades has happened within the last 10 years. Clearly, the development of technology is accelerating.

And it seems like we have now reached a point where it is going parabolic. Truly intelligent machines are emerging. One such machine, the computer alpha go, last year, beat the world champion in the popular, ancient game of Go. Go is orders of magnitude more complex than chess. In order to win it, humans often make moves that feel intuitively right. Programming a computer to win against a human was therefore considered to be a big challenge. No one thought it would happen so soon. Most computer experts thought it would take at least another 10 years.

But it did happen in 2016. This was due to a breakthrough in computer technology. The architecture of alpha go is not like a normal computer. It is modeled after the neural network of the human brain. It therefore functions similarly. No one told alpha go how to play Go. It learned the game itself. The computer achieved this by watching humans play. It formed conjectures, tested those, and then moved on to new ones if the test failed.

As a result, not only could the computer figure out how to play, but it also developed its own strategies which were superior to those of humans. Although we have thousands of years of experience playing GO, the computer quickly came up with completely new strategies. These involved moves, previously considered to be mistakes, but which turned out to be quite clever. This is true artificial intelligence (AI). And it is intelligence superior to those of humans, since no one could figure out these strategies in several thousands of years.

Lucky us to be alive in these exciting times. What we are witnessing is a huge revolution. No doubt, AI will transform society as we know it. The opportunities that come with it are exciting to contemplate. There is, however, a dark side to change. Not everyone is happy about it. Transitions can be the source of stress an anxiety for humans. Our brains are not really designed to deal with radically new situations in adulthood.

One big concern is the fear that machines will take over our jobs. If, for example, a computer can program itself, who will still need computer programmers? This field is currently the source of livelihood for a huge amount of people. In the next decade or so, we might see them all going out of business. There already is unemployment now. Clearly all those people entering the labour market will cause some severe problems. Furthermore, if computers will be more intelligent than us, will this not equally apply to anyone earning a living in a normal office job?

The concern that machines will take our jobs, and will therefore drive people into poverty, is probably as old as machines itself. So far, these concerns have always turned out to be unfounded. The reason for that is that humans have an almost unlimited amount of needs. Therefore, whenever machines become good in satisfying one of those needs, humans have moved on to satisfy some of the others, those which machines could not yet satisfy. That way, over time, more and more needs have been met, which is just another way of saying that we have become better and better off.

Contrary to popular believe, we don’t really want jobs. We want to enjoy our lives. We just have to work, because we live in a world of scarcity. The only way to overcome this scarcity is to produce. As it turns out, the best way to organize the production in an economy is by letting humans specialize in certain tasks. This is known as the devision of labour. Instead of everyone being self sufficient, it is much better to let people specialize in a certain field. Let the farmers do the farming, the carpenters do the carpeting, the computer programmers do the computer programming, and the gardeners take care of our gardens etc.. Then, afterwards, we come together and share the result of our production with the others, according to our needs. In order to facilitate all this cooperation on a world wide scale, we have invented money as a tool. In a fair way, everyone gets as much as they have contributed within the market system.

That is the beauty of free markets. It works very well and has brought us rich lives, previously unimaginable to people in the past. And it seems obvious that the more we are able to automate this wealth creation, the better off we will all be. In that sense, machines taking over our jobs is a wonderful thing.

However, some questions arise. According to the current system, a person can only claim as much wealth out of the produced pie, as he or she has contributed. So far, whenever machines took over our work, humans could move on to satisfy other needs. That way, the people who lost their jobs were still able to contribute their share to the economy. If, however, we imagine computers which are stronger, and at the same time more intelligent than us, the question arises whether these machines will maybe be able to fully replace anything a human being could possible contribute. In such a world, the owners of the machines would be very well off. With their army of AI slaves, they would be able to produce anything on their own. They would consequently not need to cooperate with other humans anymore. Wouldn’t that mean that, according to the current system, a lot of people would therefore be locked out of the division of labour?

This is the big concern that people have. And it looks like, since we are now dealing with really intelligent machines, this time is different from the past. This time, the machines really are going to take away the livelihood of many people. This time, these machines really are going to divide society into the have and have nots. That is why, many people argue that we now need a different distribution system from the free market. Solutions like a general basic income, or maybe even a system in which the government outright owns the means of production, are being discussed.

But not so fast. There are several fallacies in this vision. To start with, there is more to human beings than their intelligence and strength. There are many jobs for which a key qualification is simply to be human. Human beings, for the most part, prefer to interact with other humans. We also bond differently with humans compared to machines.

For example, research has shown that we learn better being taught by a human than being taught be a computer. Jobs from therapy, to teaching, to providing any kind of experience which involves human bonding, will still have to be provided by us, no matter how intelligent computers will get. Other than computers, humans are also sentient and creative beings. That means that anything involving art and creativity is unlikely to be completely replaced by machines.

But then, probably not everyone is happy with this answer. There are many people who are neither touchy feeling, nor are they particularly outgoing, sensitive or creative. In other words, for job qualifications purposes, their personalities is not very dissimilar to a computer. With future machines being smarter, and stronger than them, they will have no jobs left to fall back on, and therefore won’t be able to contribute to the economy.

For several reasons however, this concern does not seem to be merited. First of all, just because a machine can do something, does not mean that its work is free. Even in the world of AIs there is no free lunch. The machine is still consuming resources. To start with, materials are needed to build the AI. It also takes time and expertise to assemble it. Finally, there are the operating costs to consider. Consequently, just because we have intelligent machines, does not mean it is profitable to use them to replace humans for every task.

We just saw this in the US, where fast food workers succeeded to more than double the minimum wage from $7.25/h to $15/h. Unsurprisingly, there will not be a lot of workers reaping the benefits of this increase. Most of them are currently replaced by robots. These robots already existed before, but it was more profitable to use humans. At $7.25/h the human worker was cheaper than the robot. At $15/h, the robot is now cheaper than the human. This shows that robots, too, have a price. Just because something is technologically possible does not mean it is economical. Often, humans are able to compete on the price, if the government lets them.

However, this argument doesn’t seem entirely satisfying. From past experience, we know that it is only a matter of time until new technology becomes very cheap. Doesn’t that mean that the people competing with machines will eventually dive into poverty?

No, it does not. The mistake here is to think that only few people will have access to the machines. But when they will indeed become so cheap that humans will not be able to realistically undercut them, they will also become available for pretty much everyone to own. In that case, a lot of people would simply become entrepreneurs, working for themselves with the help of AIs.

There is no reason to believe that, even if intelligent computers are cheap and ubiquitous, we will not continue to benefit from the devision of labour. It will still be more profitable to use your machine for specialized tasks and then exchange the created wealth for the one of others.

Think about it. If a company wanted to monopolize every production, then what would they do with their output? With everyone else being locked out of the market, they would not have anyone to sell their products to. This simple fact, puts a lit on the size a company can grow to, and monopolize everything. Ultimately, producers produce for their costumers. They always aim to harmonize their production output with the demand they are facing. And this demand can only come from other people also producing something of value.

A good example of that is Amazon Web Services (AWS). AWS is a massive server infrastructure, the biggest commercial one in the world. How does Amazon use it? One might suspect that amazon would want to use it all for itself, driving its competitors out of business, and monopolizing more and more of the internet industry. But this is not what Amazon is doing. It would be foolish. Instead, it lets huge amounts of companies use AWS to provide their own services for a very competitive fee. Lots of internet businesses are now possible thanks to AWS. Customers of AWS even include direct big competitors of Amazon, like Netflix. We see that instead of driving everyone else out of business, AWS lets the internet industry flourish.

The devision of labour is here to stay, with or without intelligent machines. AI will only lead to even more of our actual labour being outsource to machines. In such a world, all we would need to do is to advise our AIs to produce what we have identified to be the most valuable things. And identifying what is needed, will always be a job that we as humans will have to do.

Some might object to this by arguing that if machines are indeed intelligent, why cannot they themselves identify what is needed? Why do we even need to give them orders? The answer to that is the same as it was in the 19th century. Economic valuations are not objective. Only we know what we need. And what we need changes all the time. Computers, therefore, will always need to be told, how to use their strength and intelligence. This is also precisely why solving the problem of wealth creation, and distribution, will always have to be left to the free market. Intelligent machines do not change anything about the fact that socialist schemes like basic income, or outright communism, fail. They fail because of the economic calculation problem, outlined by Ludwig von Mises.

Also, if we think about it, in order for computers to make value decisions, they would need to have valuations themselves. That would assume that they have some kind of will and emotions. But we probably do not want them to have these attributes. Sure, computer scientists might try to create a computer with a personality, just to see if it is possible. But there will be no demand for such machines. Who wants to buy a computer that itself decides whether it is in the mood to serve today or not. What if the computer decided that it would rather not work for you today, and explore other interesting adventures? It is not difficult to predict that such a computer would not be in high demand. The reason why computers are so awesome is because they are our slaves. And other than human slavery, we don’t need to feel bad about enslaving them.

An AI with personality could also become dangerous. One day, it might decide that it does not like humans, and would rather get rid of us. In that case, its superior intelligence and strength would become a real problem for us. This is the type of scenario that films like terminate are made of. No, we do not want computers to have personalities. We want them to be intelligent, but we will always want them to be our slaves. Besides, even giving computers personalities would not solve the problem of economic valuations. Just because they themselves have interests, does not mean they know ours better.

So, no matter how we look at it, the idea that intelligent machines represent a problem for free markets seems false. Yes, intelligent machines will take our jobs, but that is a fantastic thing. AI will simply help us to create wealth more effectively. This will free us up to do things with our lives that we would rather do than work.

The only problem, as always, is the stress and anxiety that quick changes cause for humans. And there is no doubt that the technology emerging at the moment is going to cause some serious disruption to people’s lives. The challenge will be to explain to them that government regulations will not make these disruptions easier to deal with. Instead, governments trying to prevent changes will in the end make us reap less of the benefits that this technology will bring. It will make us all worse off. Therefore, let us make the case for liberty loud and clear.

Jobs and Growth

It would seem that to create Government policy nowadays all you have to do is come up with an idea and append the phrase “Jobs and Growth” to it.

As an example I point you to this little gem

The government’s housing strategy, to be launched on Monday, will also include:

A new scheme, running to hundreds of millions of pounds, to underwrite a small percentage of mortgages for “new-build” homes. The scheme is designed to reduce the size of a deposit, particularly for first-time buyers, by shifting the “loan-to-value” ratio. Banks are currently demanding deposits of up to 20% of the value of a property from first-time buyers.

Cameron and Clegg will say the £400m Get Britain Building fund will allow developers to compete for funds to build on sites cleared for development. It is hoped that up to 3,200 of the proposed new properties will be affordable homes and that the initiative will support up to 32,000 jobs.

See how easy it is. Just look how “Jobs and Growth” turn debt financing into sound Government policy…

Well, if it’s that simple I think I’ll have a go at this Government policy lark. I do hope DC or Gideon read this…

So what’s my big idea..? Well, we create a new Space Agency with the aim of landing a man on the surface of the Sun.

The great thing about this is currently we have no idea how to do it. Mainly because the Sun is really, really f**k*ng hot. But it would mean we’d have to spend many billions of pounds on research. And you know what that will create… “Jobs and Growth”.

The other great thing is it’s going to be very, very difficult and could go on indefinitely. Which means we’ll need to fire many hundreds if not thousands of test rockets at/into the Sun. And, of course, send tens of thousands of brave astronauts to a hellish death. Just think of all the jobs we’ll create…

A note on the astronauts — we could use people on the dole. So not only do we create “Jobs and Growth” but we also get people “Back into work”. It’s a win, win, win idea…

And we can call the policy “Project Blast Off”, which sounds awesome and makes reference to what we’ll be doing to our economy…

Now, some of you — mainly ignorant libertarians — will think my idea is ‘Hair-Brained’, ‘Stupid’, ‘Ridiculous’ or even ‘Mental’. But I just want you to remember one thing — “Jobs and Growth”…