The Bell Curve is becoming reality, part 2

This went viral a few weeks ago: Ray Dalio on the two economies in America (the top 40% and the bottom 60%)

It’s sorta like this ( but replace top 40% of wealth with top 40% IQ (but I think it’s more like top 10% of IQ, because a top 40% IQ is only 105 or so, which isn’t that high). In our increasingly technological and efficient economy, IQ inequality is tantamount to wealth inequality. I’m sure Ray Dalio knows this, but he doesn’t want the controversy that comes from trying to equate biological reality with socioeconomic reality.

As discussed here, here, and here, millions of Americans (or about as many as 2/5 of the US adult population, or those who have IQs below 95), if by no fault but lousy genetics, are struggling to get by in an economy that is becoming increasingly competitive, automated, and efficient. They aren’t starving to death, but they often live paycheck to paycheck or are on welfare, have little or no retirement savings, no home equity, and are just a single medical emergency away from total financial ruin.

Despite being on the ‘right’, I concede this is a problem that cannot be addressed within a conventional left/right framework. Intellectuals such as Jordan Peterson and Stefan Molyneux, who tend to be more on the ‘fringe’, understand the scope of this problem better than the mainstream right & left, who keep repeating the same tired solutions that have been tried and empirically shown not to work: for example, the head-start program and the war on poverty, both of which failed to narrow the achievement gap between blacks and whites despite costing billions a year in taxpayer-funded dollars. [1] The drug epidemic in the Midwest, which has gotten a lot of media attention lately, affects the unemployed and is also a low-IQ problem.

The ‘information age’ has put more precedence on cognitive ability than physical strength, but also recent economic trends (as shown by Dalio) show that the less intelligent are falling behind. But many on the left argue that IQ does not matter. For example, some say the Terman study was a failure or that it shows that IQ does not matter, because the study failed to produce any Nobel Prize winners. However, Terman subjects on average still outperformed their less intelligent peers. From the paper Personality, IQ, and Lifetime Earnings, Terman subjects earned more money than the census averages:

That was 60 years ago; given recent economic trends, the wealth disparity between the highly intelligent (>2sd which is an IQ > 130) and everyone has only widened even more.

A difference of 20 IQ points is the difference between upper-middle class and lower class. Celebrities like Floyd Mayweather and such are exceptions, but the IQ-income correlation tends to hold true in the aggregate.

However, though, even college grads, who tend to have IQs above 110, are also struggling, saddled with debt and mediocre job prospects. Part of the problem has to do with the proliferation but also the devaluation of ‘worthless degrees’. Two decades ago, maybe having a degree in ‘exercise psychology’ would have opened the door to good-paying job opportunities, but nowadays it seems either too many people have such degrees or employers see such degrees as having no predictive value of employee competence, unlike a STEM degree. But the third problem is that many students go in deep debt to obtain a degree in which the job opportunities are so bleak that paying off the loans is all but impossible.

[1] The biggest problem is that any gains in IQ and academic testing quickly evaporate when the program ends. In 2011, Time magazine’s columnist Joe Klein called for the elimination of Head Start, citing an internal report that the program is costly and makes a negligible impact on children’s well-being over time. Klein wrote:

“You take the million or so poorest 3- and 4-year-old children and give them a leg up on socialization and education by providing preschool for them; if it works, it saves money in the long run by producing fewer criminals and welfare recipients … it is now 45 years later. We spend more than $7 billion providing Head Start to nearly 1 million children each year. And finally there is indisputable evidence about the program’s effectiveness, provided by the Department of Health and Human Services: Head Start simply does not work.”[34]