Are we sliding into Idiocracy?

Last night I watched Mike Judge’s 2006 film Idiocracy. I enjoyed it a lot. It is basically a dystopian science fiction film with an element of (slightly dark) comedy, but hides its fairly extreme pessimism and conservatism behind a half-hearted “satire” of modern society.

It imagines what would happen if the less sharp people in society had substantially more kids than the smarter people—and that this trend carried on for centuries. By 2505 the population has an average IQ of something like 60, and society is crude, degenerate and decadent. It limps on only because the last of technological advances went into automating most of the functions needed for basic survival. The personal narrative is that two people, a man and a woman both selected for their extreme averageness in all attributes, get cryonically frozen, wake up in 2505, and are the smartest people in the world. Hijinks ensue.

It’s a fairly enjoyable film on its own merits, but the interesting question is whether it says anything about the real world we live in. Arguably it does. Behavioural genetics tells us, as the film suggests, that intelligence is 50-90% driven by genes. And the extent to which intelligence is linked to genes increases through life (suggesting the impact of school & upbringing wears off quickly). This is true for any given socioeconomic class (unless they are exposed to lots of lead pollution or malnutrition or similar big negative environmental shocks). This is true across the world.


Indeed, a large fraction of this comes identifiably through specific alleles or single-nucleotide-polymorphisms (chunks of genetic code). We also know that intelligence correlates with brain volume, also genetically-driven. We even know that the way brain volume changes is substantially genetic. By contrast shared environment (includes family upbringing, and under certain conditions also the effect of school) has around zero effect on IQ/intelligence.

And so the question becomes: are sharper people having fewer kids than the less sharp? Evidence seems to say “yes”, for the USA, UKTaiwan, and generally across the world. Though, it has to be said, that on the models here (estimating a loss of about .8 IQ points per generation, or perhaps 3 per century), it would take substantially longer than 500 years to get to the idiocratic society.

But wait a second—what about the Flynn Effect? Haven’t measured IQs increased massively over the past hundred years? Aren’t we getting smarter? Sadly, the Flynn Effect does not reflect an improvement in intelligence—it mainly records the many ways that people have got better at tests, e.g. through learning to guess when they don’t know the answer. In fact, the tests with a lower “g loading”, i.e. the ones less good at accurately reflecting intelligence, are the ones reporting the biggest Flynn Effects.

This shouldn’t be surprising, because random selection into a better school typically has no positive impact on achievement (though it does have strong negative impacts on crime) But even if the Flynn Effect were, say, reflecting greater education making up for lower genetic intelligence, it seems like we’ve pretty much exhausted its benefits—and it is now going into reverse in the Netherlands, the UK, Finland, and elsewhere. And thus even if phenotypic IQ (i.e. as measured by tests), and not genetic IQ, is “what matters”, we can’t hope that extra education will make up for duller genetics in the future.



And we have independent reasons to think that genetic IQ is “what matters”. While it is phenotypic IQ that correlates with, e.g. homicides, this faces the serious confound that technology has advanced substantially over the period. Without these advances, homicides would be five times higher (on a static analysis—it’s possible that the extra who would have been killed, but survived, would have committed extra homicides themselves).  And it is genetic IQ that is associated with social advances, innovation, science, technology and so on. Were the Victorians smarter than us? Though the linked paper has been criticised, their response to their critics is persuasive enough that we should take the idea seriously.

But should we be worried? This is the interesting question for me. Thankfully, there are two families of technologies that I see as potentially solving this problem.

The first is artificial wombs. One of the main causes of reduced fertility among the smart, as is documented in Idiocracy’s excellent opening third, is the cost of having children. This cost is not just in terms of feeding, clothing and looking after them, nor even buying more expensive houses to get into better schools, but also in terms of labour market potential—much of the gender wage gap appears when women take time out to have & raise kids, and a large fraction of the rest may come because women expect to take this time out (and thus invest less in human capital). We know that people really do respond to things that make having kids cheaper. Technologies that drastically reduce the cost to smart women of bearing kids could be one way of arresting the alarming trend.

The second is genetic engineering in all its forms. If we can pick embryos, or even engineer people’s DNA, then we could feasibly (after lots more research!) make sure that kids are smart even if their parents are not. While Idiocracy does not mention “my” first solution, it dismisses this one, explaining that the remaining smart people in society spend their precious time perfecting cures for hair loss and impotence.

But I’m much more optimistic than Mike Judge (hopefully rationally!) I have almost unlimited faith in the ability of human ingenuity to overcome threats to society. I feel confident we’ll either develop the aforementioned technologies, or something completely different and entirely unpredictable that solves the issue. And if our best minds solve erectile dysfunction—as in Idiocracy—who knows, that might help solve the problem!

What joy, it’s Marianna Mazzucato again

This time she’s running a conference telling us all how it’s absolutely vital that the UK economy be planned the way that Ms. Mazzucato thinks it ought to be. Which is, if we are fair about it, a plan that rather ignores one of the most basic economic points about economies:

This is encouraging news and shows that the UK is hopefully on the path towards ‘rebalancing’ away from an economy biased towards financial services, towards growth of innovation and productivity in the ‘real economy’.

Hmm. For this to be either true or desirable we’d need to show that we actually have an economy biased towards financial services.

The key problem that he and other international policy makers have is to make sure that such rebalancing tackles finance on two equally important sides. On the one hand, rebalancing so that finance funds the real economy. This means addressing the dire situation that figure 1 shows below, i.e. the degree to which finance has been financing itself leading to the exponential rise in the value added made up of financial intermediation, compared to that of the real economy (everything but finance and agriculture).

Hmm, so, OK, finance has been a greater part of the value added in the economy in recent times. It’s still difficult to understand why this is a bad idea.

The second key issue that rebalancing must address is not just how to get more value added from the ‘real economy’ and less from ‘financial intermediation’ (finance financing finance), but also how to de-financialise the real economy itself!

Hmm again.

So, back to this question of whether the UK economy is in fact excessively financialised. And there’s two parts to that question. In the general economy we’re no more financialised than other advanced economies. We have roughly the same sized pensions industry, insurance and retail and commercial banking industries, mortgages, savings products and all the rest. And we need only invoke Maslow’s Hierarchy of Needs to see why a richer nation might want more of such financial activity. Once the basic needs are met we move on to wanting to have security which is exactly what savings and insurance do for us.

But it is also true that the total financial sector in the UK is larger than it is in most other countries. Almost nowhere else has anything even remotely comparable to The City. but to say that is a problem would be to make the poor departed spirit of David Ricardo cry. For we do seem to have a comparative advantage in being the financial marketplace for the world and that’s an advantage that we should be exploiting.

So if we look at the domestic economy we don’t seem to be excessively financialised. And if we look at the total economy that financialisation is about our successfully selling services to Johnny Foreigner. Neither of which are obviously problems that require solutions. Making Ms. Mazzucato’s conference, and possibly the good professor herself, somewhat redundant.

John Blundell, 1952—2014

The Institute has lost a talented and much valued friend, and those who work to spread economic and personal liberty have lost a staunch and effective campaigner. From the ASI’s foundation in 1977, we worked with John, who was then Press & Parliamentary Officer for Federation of Small Businesses. During his spell in that post from 1977 – 1982, he was also a Lambeth Councillor, and combined knowledge of what worked for business with deep insights into the workings of local government. He was a leading figure among the very small band who worked to restore free markets and opportunities to a nation worn down by years of centralism and state planning.

He engineered a joint publication between the ASI and the Federation of Small Businesses in 1979. Called “An Inspector at the Door,” it detailed the various powers of officials to enter premises and seize materials. It was a media sensation, with numerous articles about Britain’s “Society of Snoopers.” Margaret Thatcher expressed her concern in Parliament, and set up a commission to review and curtail some of those powers.

It was an early example of John’s effectiveness and his skills as an organizer and a communicator. Those skills saw him in good stead when he went to the US, where he became President of the Institute for Humane Studies, the Atlas Economic Research Foundation, the Charles G Koch Foundation, and the Claude R Lambe Foundation.

His appointment in 1993 as Director General of the Institute of Economic Affairs was an inspired one. He rapidly reinvigorated the IEA and restored it to its former glory and influence. Assiduously he built up its network of supporters and its range of influential publications. John’s own temperament, outgoing and enthusiastic, helped turn the IEA’s meetings into ones not to be missed. John’s benign presence not only left its stamp on the IEA, but on the numerous outside bodies that he generously helped to build up and support. Internationally he helped to establish other institutes, and was a stalwart of the Mont Pelerin Society, founded by F A Hayek to propagate liberal, free-market ideas.

John had many publications to his credit, including “Waging the War of Ideas” (2003), together with some important works he co-authored or edited. Under his leadership the IEA supported and publicized works by outside bodies, often hosting launches in the IEA’s premises. Those premises were transformed during John’s tenure, giving the IEA the space it needed for its extended tasks.

He was a good friend and a loyal one. We shall miss his huge personality and his wry humour. He made a major contribution to making the world into a better place, and will deservedly be remembered for that.

Ahhrgh! Terror! The robots are coming to take our jobs!

We’ve another one of those little horror stories that the robots are coming to take all our jobs. This is a follow up, concerning Europe, on a US report that decided that near half of all jobs could simply disappear to the robots (who are coming to take all our jobs, recall) in the next couple of decades. Sadly, both reports fail to note one obvious and simple fact:

Having obtained these risks of computerisation per ISCO job, we combine these with European employment data broken up according to ISCO-defined sectors. This was done using the ILO data which is based on the 2012 EU Labour Force Survey. From this, we generate an overall index of computerisation risk equivalent to the proportion of total employment likely to be challenged significantly by technological advances in the next decade or two across the entirety of EU-28.

The answer being, no not 42, more than 50% of all jobs are threatened by technological obsolescence in the EU over that next couple of decades.

Is this something we should be worried about? Clearly the authors of the paper think it worth bringing to our attention, but is it actually worth worrying about?

Well, no. Because even the most slerotic of European economies is going to destroy and create more jobs than that over that same time period.

Using the UK as a rough example, there are around 30 million jobs in the economy. 3 million of these are destroyed each year: around 10%. The economy also creates around 3 million jobs a year. Roughly you understand: and a recession isn’t, in general, when more jobs get destroyed, a recession is when fewer jobs get created, that’s what makes the unemployment rolls go up.

So the claim is that 50% of jobs in the EU might get destroyed by robot competition in the next two decades. And yet we would expect, just as a straight line estimate, that the EU economy will destroy and create four times as many jobs as that over that same time period, 200% of the current static workforce.

Even if this is something that we want to worry about it’s a worry at the margin, it’s a little bit more of a known and understood process that we can in general observe that we can deal with, rather than some horrific step change in our lives that we’ll have trouble adapting to.

There is one more point here. If you do want to worry about this it’s important to note that it’s not large companies that create jobs, it’s new and small ones. So, if you want to make sure that the robotic unemploymentaggeddon doesn’t in fact carve a swathe through Europe you’ll need to reduce the regulatory and legal burdens that new companies face in establishing themselves. Deregulation, ease of entry into the market, these are the solutions even if you do want to panic.

Goodbye, Green Belt!

Last night BBC London News aired a short film I took part in about the Green Belt. As part of a series of ‘authored’ pieces about various solutions to London’s housing crisis, I suggested that we should allow construction on the Green Belt around London to increase the supply of developable land.

Cheshire-htg-fig-1Land, as Paul Cheshire likes to point out, is the key. The graph above shows how closely house price rises have tracked land price rises. Land-use restrictions on the Green Belt are quite strict: under the National Planning Policy Framework, local councils face a very high burden of proof to approve new developments on Green Belt land. If they were made less strict, then the supply of land and housing would increase and the price of both would fall.

I usually think of people who want to preserve the Green Belt as being motivated by financial considerations. If you own your house, you don’t want its value to fall, so you have a strong incentive to oppose any measure that will increase supply. Perhaps a large proportion of people involved in campaigns to ‘protect the Green Belt’ own their own homes. (And if not, that would certainly falsify this view.)

But filming with the BBC made me realize that this explanation is too neat and too unfair. The preservationist I interviewed, Dr Ann Goddard, was not preoccupied with preserving the value of her home – she believed, as many do, that relatively unspoiled natural areas are valuable and important to protect from development. The meadow she took us to was very pretty and I would regret losing places like it as well. Throughout our conversation Ann made it clear that her idea of England was entwined with its image as a ‘green and pleasant land’, not just somewhere for endless suburban sprawl.

Much of that greenery is worth keeping, but I suggest that the question is not ‘what’ but ‘where’. Since Green Belt land rings cities, it is much more difficult for city slickers to access than, say, gardens or parks. And lots of London already is covered in gardens or parks – more than half, according to one estimate. Allowing London to expand outwards would eat away at the Green Belt, but also allow more people to have gardens and for more (and bigger) parks to be built.

I also realized how important symbols can be: to Ann the meadow we went to WAS the Green Belt. If we’d taken her to a piece of intensive farmland (34% of the Green Belt around London) maybe she would have cared less about the prospect of that being turned into a village. And I wonder if focusing on intensive farmland is the key to changing people’s minds. In the end, if the battle over the Green Belt is about ideas and symbols rather than pocketbooks, a change of language might help us.