Friday, March 18, 2011

Why Are Wealthy Countries Smart Countries?

A press release of the Association of Psychological Science tells us that Heiner Rindermann of the Chemnitz University of Technology and James Thompson of University College London have analyzed test scores from 90 countries, from the US to New Zealand, and Colombia to Kazakhstan, and found that the intelligence of the people, particularly the smartest 5 percent, is a factor in the strength of their economies.

They also collected data on the country’s excellence in science and technology the number of patents granted per person and how many Nobel Prizes the country’s people had won in science.

They found that intelligence made a difference in gross domestic product. For each one point increase in a country’s average IQ, the GDP per capita was $229 higher. For every additional IQ point in the smartest 5 percent of the population, a country’s per capita GDP was $468 higher. Rindermann says:

Within a society, the level of the most intelligent people is important for economic productivity. I think in the modern economy, human capital and cognitive ability are more important than economic freedom.

The press release is inadequate, admittedly, but the obvious criticism in the way these data are presented is that it is a typical chicken and egg question. IQ is not solely intrinsic, it can be trained, and nothing suggests that intelligence is the independent variable, and economic success the dependent one. It could be the exact opposite. Economic success provides some people with a surplus that they can use to recruit able people into their businesses, and educate their own children to a higher standard than ordinary workers. They can also marry their daughters to the most successful of their employees. Through successive generations, then, the ruling elite get cleverer and better educated.

Meanwhile successful managers who did not marry the boss’s daughter can launch businesses of their own, and when successful, can join the ruling elite. This latter is, of course, the American Dream, but it gets harder and harder for anyone actually to go from rags to riches via enterprise. Startup costs are prohibitive in a technological age unless someone is willing to sell their idea to a rich man called a “venture capitalist”. The entrepreneur from then on is no longer his own boss. The megarich insulate themselves from failure by buying the best ideas from potential rivals, employing clever managers and lawyers to preserve their wealth for them, and bribing politicians to wangle the political and economic system to suit them.

So what is the chicken and what is the egg? As ever the rich have grabbed all the best seats, and they are not going to give them up. They think they’ve paid for them. They will!

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