Author: Curt Doolittle

I’ll finish with this: Entrepreneurship is the art of finding problems and solving them for less cost than the customer is willing to pay for it. So entrepreneurship is starting with a set of customers and working backward to the solution, not with the idea, and searching for customers. And hopefully that process is entertaining. At least, that’s why I do it…. And this advice is no value to the zillions of guys out there doing the opposite. They don’t want to hear it.

Hi. Thanks for the invite. Interesting posts. But having built or founded a number of companies from 5M-150M, I have to say that most of the inspirational propaganda read be entrepreneurs is largely nonsense. Most CEO’s are quantitative operational disciplinarians, quantitative disciplined salesmen or quantitative disciplined master craftsmen and by and large they are pedantically boring to people outside of their field. Ideas are cheap. Passion is cheap. Planning is cheap. Strategy is cheap. Operational discipline is costly. Credit is very expensive. But most importantly, customers are priceless: they are the ultimate scarcity. If you have customers, then you have a business. If you don’t, you have a very expensive form of entertainment.

Kenneth V. asks:

I’m curious about your opinion on China’s future. As the democratic empire collapses in the west and power shifts its balance, do you think that the Chinese people will demand more political freedom, especially since libertarian books are bestsellers? Or do you think the oligarchy will be successful in suppressing dissent? What do you think of the demographic trends there? Chinese couples do a trial-and-error with childbirth where babies who are less than perfect are killed. The massive gender imbalance of 40 million more males than females. What do you think of this kind of extreme eugenics? I personally find it abhorrent, but I’d like to ask your opinion.

Ken, The Chinese are driven by the conflict between northern government, southern trading prosperity, interior poverty, and hostile borders. The cultural tradition is ancient and it’s purpose is to avoid civil wars at all costs, simply because civil wars were so common for them, because they are exposed to what they see as threats (their country needs the china seas open in order not to be starved into submission), and because of natural conflicts between the regions. This history is as important to china as the sense of freedom is to the west. (a sentiment which is in no small part a reaction to the middle eastern model – which westerners considered horrid.)

[callout]I suspect that they will never achieve the middle-class society as we understand it. They will bypass that phase of development. They will go from totalitarian rural poverty to totalitarian urban poverty, and maintain their corrupt bureaucracy. The reasons for retaining that bureaucracy will simply evolve to support a different set of objectives.[/callout]

Now, to avoid drinking our own Kool Aid, we probably should understand that the west has always had an advantage of being a society filled with craftsmen rather than laborers, not the least of which was the result of widespread metal smithing, easy river trade, and the western agrarian cycle which was very seasonal. The importance of that sentence may not be obvious to you unless you think of the 360 day a year job of a rice farmer. So Romans conquered northern europe because the ‘barbarians’ were fairly wealthy by contrast, and presided over resources. While they exploited the warmer climes for food. But western wealth over the past 500 years, has largely to do with selling off the american continent to immigrants. Not to any particular western genius. IN fact, the continental view of exploiting the continent as they had the islands, by bringing resources back home paled by comparison to the money that could be made by settling, populating, and selling consumer goods to immigrants to the north american continent. In this broader context, our political order is more dynamic, and by that I mean, flexible, and the republican model with capitalistic institutions (for cooperation) is the only one that is effective for mobilizing enough people to accomplish such a task. China by contrast is simply doing the same thing without inventing it: they are selling off apartments, electricity, water, and food to immigrants to the coastal cities. Their model is better for doing their migration under their circumstances. Our model was better for doing our migration under our circumstances. The question is, for them, for us, what will happen when that’s done. Because we are going to have very densely populated cities, and in that model FARMER ETHICS AND MORALS EVAPORATE. Traditional religious principles, ethical constructs, and the ability to manage class differences become very difficult in those environments. The difference is that the chinese have the benefits of monarchy (long term thinking), the capital concentration of totalitarianism (which is very useful) and the institutions of capitalism (banking, finance, accounting, interest and credit, western laws), and they get to profit on the implementation of western technology – without having to have had to discover it. This is a very good model for competing externally. it is not a good model when you’re the ‘winner’. It’s a very good model for when you’re a century and a half behind the rest of the world. I suspect that they will never achieve the middle-class society as we understand it. They will bypass that phase of development. They will go from totalitarian rural poverty to totalitarian urban poverty, and maintain their corrupt bureaucracy. The reasons for retaining that bureaucracy will simply evolve to support a different set of objectives. But the damage that they will cause in that transition, to the world in general, if they are faced with uprisings, is substantial. I think your question begs the wrong assumptions: political models are utilitarian goods, not absolute goods. Societies need to concentrate capital in order to compete and cooperate with other societies. Then they need internal institutions for everything else. Complex market capitalism when combined with totalitarian command of large investments, with the least corruption possible is probably the most competitive form of political order. As long as investments are competitive rather than redistributive. Redistribution is the result of competition. Not a replacement for it. There is no inherent value in political freedom on its own. It’s not a virtue. It is an acceptable risk in a homogenous society. But it is a net danger in a pluralistic society. The struggle for power must never be available to factions or minorities. Only the struggle to compete in the market. Political freedom is the freedom to usurp the market. THere is no other reason for it. The only value of political freedom is in reducing corruption, which is an impediment to trade, exchange and capital formation. The problem for a people is suppressing corruption, not obtaining political freedom. People don’t really choose their political system. It’s determined by their circumstances and they are pragmatic in adopting it. They don’t pick idealistic things, and if they do, they fail (Iran). Democracy is just slow moving communism. As Schumpeter said, Democracy will just lead to socialism. Republicanism and oligarchy are rule by the middle classes (trade). Totalitarianism is rule by the upper classes (force). Theocracy by definition, rule by the lower classes (fraud). (IQ and Atheism increase with class structure, although under capitalism moral behaviors tend to emerge with the decline in religiosity.)

A work of personal experience by a reporter cohabitating with soldiers in Afghanistan. A work that states the patently obvious. At least, patently obvious to anyone with testosterone: That men fight for the men beside them. That the bond between soldiers is the greatest emotional bond that men can experience. That the platoon is approximately the same size as the maximum survivable hunter gatherer group. That this level of in-group altruism is particular to man. In that sense, the book is perhaps interesting to the common man. In the political sense, it is yet another silly book by silly people, for silly people.

[callout]Or let me put it this way: there isn’t anything in that part of the world that’s more interesting to do than go hunt and kill people. It’s status enhancing. It’s entertaining. And it’s simply more interesting than the absolutely fruitless and boring alternatives.[/callout]

I explain to people often, universally at their amazement, why it’s so hard to convert people in that part of the world to something on the order of advanced civilization. It’s not a complicated reason. It’s that in a world where farming is so fruitless, the land so barren, and the civilization so lacking in infrastructure, that the comfort, thrill, joy, and sense of success that men can possess as raiders is impossible to replicate elsewhere. Or let me put it this way: there isn’t anything in that part of the world that’s more interesting to do than go hunt and kill people. It’s status enhancing. It’s entertaining. And it’s simply more interesting than the absolutely fruitless and boring alternatives. Our boys are captured in prisons we call classrooms. Forbidden to move. Forbidden to compete. Forbidden to display dominance. Forbidden in fact, to be male. Forbidden to interact with the world except with words, like girls. These boys disassociate from society because of these deprivations. They play video games. They play sports. They wear clothing that represents abandonment. They don’t enter college. They just simply give up on society. They don’t ‘own’ responsibility for society any longer. THey don’t want it. And in many respects, they can’t handle it. Because they have been so sensory-deprived that they have no capacity, nor any learned method of how to do so. How many of these boys, when deprived of modern entertainment and food surpluses, when given the chance, would happily carry around rifles and grenades, and with joy, enthusiasm, and wonder, attack an entrenched enemy sequestered in small numbers, in fixed positions, on the defensive?

[callout]How many of (our) boys, when deprived of modern entertainment and food surpluses, when given the chance, would happily carry around rifles and grenades, and with joy, enthusiasm, and wonder, attack an entrenched enemy sequestered in small numbers, in fixed positions, on the defensive?[/callout]

How many of our current soldiers, if told ‘select your team, select your weapons and ammunition, take your time, and kill everyone on the other side you can, while taking the fewest casualties of your own’ would not happily join up in record numbers? It’s not a small number. It’s just surprising that Junger, or anyone for that matter, would fail to understand these basic human traits. That is, unless you’re a member of the church of secular humanism. Where you live an abstracted view of christianity. Where you think that submission and safety are the same as competition, winning and experience. It’s also surprising that any military historian, any military strategist, would fail to understand Kegan’s Thesis: that ‘winning’ is a cultural, and perhaps, civilization-defining construct that has been inherited and reinforced for millennia. And that the western concept of winning is pointless in central asia. Indeed, pointless among any of the Raiding-Cultures. And that in turn, how one could fail to understand just how endemic the ‘Raiding’ concept is to central asian and arab thinking. And how they cannot conceive of any other, just as how westerners can rarely conceive of any other. And once that Tribal-Raider-versus-Heroic-Army is understood, it becomes obvious that islam is a Raider’s Political Strategy rather than a western heroic army strategy, or western ‘religion’ in any sense of the word. Or more strategically, the raider sits and waits until you’re vunlerable to strike, and the heroic army seeks the defining clash. Therefore: 1) We cannot win a war fighting it on our terms. We can only win the war fighting it on their terms. 2) It is enjoyable, and even preferable for many men to live in combat, versus the tedious and boring farming or industrial life. It is only when the benefits of capitalism and trade are sufficient to be vaguely fascinating, and the freedoms are sufficiently broad, competitive and entertaining, that men will, on occasion, for some period of time, find peace all that interesting.

[callout]… each civilization embodies the behaviors of it’s early military traditions. Bushmen and simple herders. Plain and desert raiders. Western individualist river and forest farmers, boatmen and horsemen. Eastern hierarchical farmers. And the jews, hindus and buddhists who abandoned all political pursuit (land holding) for submission and mysticism.[/callout]

Every historian who studies the vastness of human history, for the purpose of learning what is there, rather than projecting upon it what he desires to find in it, will eventually come to the conclusion that each civilization embodies the behaviors of it’s early military traditions. Bushmen and simple herders. Plain and desert raiders. Western individualist river and forest farmers, boatmen and horsemen. Eastern hierarchical farmers. And the jews, hindus and buddhists who abandoned all political pursuit (land holding) for submission and mysticism. If you don’t know this obvious bit of human cultural development, then its only because you weren’t given any history by the same cadre of pacifists that are destroying our boys minds one package of unexercised neurons at a time.

I’m watching Obama talk about the new small business jobs bill on the news. And I”m struck by the observation that he has a really hard time saying ‘small business’. While any phrase with the world ‘government’ in it, simply rolls comfortably off his tongue. Freudian. Absolutely Freudian.

Over on Questions and Observations, Bruce McQuain questions whether we’re having another “Great Depression” or just a very slow recovery. An unnamed visitor pointed to a graphic from The Atlantic and commented:

“The median duration of unemployment is higher today than any time in the last 50 years. That’s an understatement. It is more than twice as high today than any time in the last 50 years.”

Which is a true statement that leads to false conclusions. Instead, how about you increase the period of time you’re considering even further and say, that: “The unnaturally low rate of employment for the past century, and in particular the past fifty years, has been largely do to the combination of selling off north america to immigrants and their children, the increase in consumer products consumed by these people, the collapse of european war economies, followed by the results of the monopolization of the world monetary system. The current unemployment level is the natural consequence of the loss of the US’s temporary economic advantage, as europe caught up, and china, india, russia and other developing countries have developed similar economic models and levels of production.” That’s the analysis that has meaning. Not medium term unemployment. The monetary policy since Reagan was an attempt to revitalize american entrepreneurship and individualism by using the US’s unique position in world history to borrow against future production. However, the winning of the war against ideological managed-economies made that borrowing impossible to maintain. Furthermore, the unregulated use of that credit to fund unproductive investment (housing) rather than relative competitive investment (innovation) led to a bubble, which has now compounded the overall problem. This is not to say that we had an alternative to the revitalization of the country. Or that the european model would have yielded better results in the domestic american empire than it did in the homogenous nation states. But we are now headed toward the south american model : the exact opposite of what both the left and right desired.

No. But increased liability would. I found the Straight Dope forums and they’re full of fairly good libertarian thinking. So I’m going to add them to my crawler’s roundtable. This is the second or third posting I”ve made there. And in it I’m making a bold claim in response to this statement:

And I think you’ll find it makes a difference to the wider community, too. It’s hard to imagine a worker-owned oil company, with broad shopfloor participation in decisionmaking, making the kind of decisions that led to the BP oil spill — and got several BP workers killed.

That’s an interesting statement. The problem is, that such an organization would never be able to exist at any size in order to make that kind of decision, and without that size could not concentrate enough capital to create and combine sufficient technologies to get into the position in the first place.

[callout]**In general there will be no case that you can contrive of where the above sequence of logic does not apply.**[/callout]

Why? Because of the very reason we have markets, corporations, organizations, political systems: because while people can agree upon the sentimental ends, they cannot agree upon the requisite means, cannot do so in time to sieze opportunities, and they cannot do so in large numbers, and as the complexity of the division of labor increases, necessary ignorance intervenes on the part of all people involved such that additional opinions actually REGRESS back to the mean. This fact in turns results in the “Iron Law Of Oligarchy” wherein decisions making is delegated in every form of voluntary organization to an elite, which upon attaining the ability to make decisions, always seeks to preserve it, expand it, and to expand it to the point of their necessary ignorance and incompetence.

[callout] while people can agree upon the sentimental ends, they cannot agree upon the requisite means, cannot do so in time to sieze opportunities, and they cannot do so in large numbers, and as the complexity of the division of labor increases, necessary ignorance intervenes on the part of all people involved such that additional opinions actually REGRESS back to the mean. This fact in turns results in the “Iron Law Of Oligarchy” wherein decisions making is delegated in every form of voluntary organization to an elite, which upon attaining the ability to make decisions, always seeks to preserve it, expand it, and to expand it to the point of their necessary ignorance and incompetence.[/callout]

The problem isn’t the corporation’s size, or the worker interest, it’s the limits of liability granted to the executives, and the limit of liability given to the insurers. These limits were GIVEN by GOVERNMENT with KNOWING INTENT to these companies precisely to avoid the principle of responsibility inherent in Capitalism, to ensure that we would have oil supplies. In other words, the state became the insurer, and did a bad job of quality control, and the insurer, the state (the people) have to pay for taking that risk. WHen they should have maintained liability of all involved. This would have dramatically increased the costs, and made the drilling unprofitable, and it would not have occurred. We transfer risk all over society. Between age groups, between classes, between races. IN fact, that has become the purpose of 20th century government. Transfer. We grant people all sorts of special rights as a means of mutual insurance. THe most controversial is free speech. Much free speech is theft of abstract forms from one person or another (libel and slander). Much of it is erroneous, deceptive, ignorant or intentionally harmful, for the purpose of transferring property from one group to another (Political). We allow one group rights of expression but deny another group the same expression. (Political) Most news opinion for example, upon analysis, is patently false. (Profitable) Most advertising is targeted at the proletariat and middle class, for the purpose of selling the consumer fantasy by appealing to human status senses. We have not (as an absurd example) sued the Bank Of Sweden for awarding Nobel prizes to purveyors of the use of probabilistic Gaussian mathematics in economic theory, which in turn was used to create this debacle of an economy over the past half century or more. So the Nobel Prize was issued and used as a political lever and caused vast harm. The Academy ‘insured’ these theories, and then marketed them. Yet we do not hold them accountable for this damage to society, as we do any other product like hot coffee or ladders. Because we grant them the freedom to err, under the assumption that we are better off this way than the opposite. Capitalism and markets exist to provide calculative capacity to the mediocrity of human minds. Socialist should focus on redistribution and avoid the fallacy of believing their own opinion. Ignorance is mandatory for all human beings. And it is nothing but a childish vanity to think otherwise, and is demonstrable in all fields of human activity. it is even MEASURABLE in most fields of human activity. (in particular, the horrid errors in academic research.) Property rights allow for accountability, because they require risk in order to obtain the rewards from the use of them. It is when we do not respect those rights and their liabilities, and grant limits to the liability for those rights that we have oil spills. **In general there will be no case that you can contrive of where the above sequence of logic does not apply.** That is why the world has adopted capitalism. TOtalitarian capitalism. But capitalism none the less. It’s democracy that’s being abandoned as a goal. Worldwide.

On Straight Dope, there is a thread on whether one can be anti-capitalist but pro-market. I’ve captured my response below. DEFINITIONS 1) Capitalism (distributed planning and control using the technologies of property and the pricing system). Or politically: a bias toward letting the market solve problems of production. 2) Socialism (centralized planning and control in the necessary absence of the pricing system). Or politically: a bias toward political centralization of solving problems of production. 3) Mixed Economy ( distributed planning and control using property and pricing system, with redistribution of wealth through taxation). Or politically, letting the market solve problems of production, while centralizing some amount of the wealth generated for redistribution and investment in outcomes where the market process is unable to concentrate capital. 4) Market: the voluntary production of property for the purpose of speculating on it’s voluntary trade. The speculative pricing assigned to the goods or services. The reliance upon prices to determine the products to be produced, and the factors of production to be consumed. Implies the regulation of products into the market. and implies the defense of property rights and conflict resolution within the market of goods and services by a third party. 5) Trade: the voluntary transfer of property from one individual to another. (which implies knowledge of the purchaser, and the irrelevance of third parties) DISCUSSION Early Leftist were traditional luddites who confused the necessity of ownership of the means of production (property) with the ability to redistribute the results of that system of ownership: It is not necessary to control the means of production in order to redistribute wealth. While property and prices are necessary for complex production, and incentives are necessary to encourage people to produce, it appears that we can determine rules of property use, and we can determine some level of redistribution while maintaining sufficient incentives to produce. At least, that has been the general course of events over the past century. Contrarily, unstated but implied in that statement, such a redistribution will affect the ability to consume, but not ‘organized control over’ what is produced. This may disappoint some. However, since all groups are led by elites and elites must make decisions on production, the such centralized control creates only the illusion of proletariat control over what is produced. You cannot have a market (speculative production in anticipation of trade wherein prices communicate relative demand) without prices and property. This is logically impossible. While communists have forever posited the opposite, people will not produce excess for market purposes without the incentive to do so (and will resort to black markets, and therefore recreate the market). If what you define as “anti-capitalist” (i suspect) is having a number of people with knowledge and relationships and control of property concentrate resources toward productive ends that you disagree with, then you can indeed be “anti-capitalist”. If you define anti-capitalist as a status-criticism, wherein you dislike the fact that you are most likely a permanent member of the proletariat, which decreases your access to mates and opportunity, then you indeed can be an ant-capitalist. Those are sentimental objections. (Despite the fact that our society is largely run by the middle class and upper proletariat.) But if you mean that you dislike the nature of prices and property, then you’re just illogical, and the result of your beliefs would result in destitute poverty, murder and war. The market evolved because of the limitation of the human mind. We cannot replace it without making the human mind far better than it is. And perhaps far better than it can be. Redistribution is a biological sentiment in the human animal that evolved because it is necessary for group-persistence: to retain competitive ability against other groups, and to insure the group’s survival. Universal egalitarian equality, which is a member of the set of leftist sentiment of “harm/care/nurture” or the sentiment of eliminating the sensation of status differences, or the sentiment eliminating the material differences between people’s access to resources, is simply an illogical construct regardless of which sentiment is being applied: Because we need incentives to produce, and we must over produce and divide our labor to reduce prices. (“We are not wealthier than cave men, everything is just infinitely cheaper due to the division of labor”) Because people will always seek status differences even under socialism. Because the iron law of oligarchy mandates that elites and leaders emerge, and once they emerge they form a self-serving bureaucracy. Because it is impossible for more than a family sized group of people to agree on both the means and ends of doing anything meaningful in a division of labor sufficient to produce low prices. (this last, is the virtue of what we call the market). Participating in the market is also voluntary. One can consume the goods of the market without participating in the market one’s self. Some people, in fact, a majority of people, are not sufficiently competitive in any form of production that they can conceive of, or afford to speculate in the market. So they TRADE their productivity rather than SPECULATE on by producing goods or services for the market. To be a member of a market economy, one only needs to refrain from theft. To be a ‘good’ member of a market economy, once needs additionally to refrain from fraud and deception. But these are the means by which we obtain citizenship in the market, not participate in the market. To enter the market itself, means that you risk capital and compete in the arena that is the market, and are willing and able to accept losses. The problem for the proletariat is that their value-system is predicated on self-production for consumption purposes, and trading for goods that cannot be self produced. People only a century ago would put to market only their over-production, and purchase from the market only for goods that they could not produce themselves. Except there is precious little in modern society that a person can produce himself, let alone, produce for market consumption himself. This necessitates an uncomfortable uncertainty for those people who must speculate in order to survive in the market. Hence leftist sentiments of the family, epistemology of the family, organization of the family, production of the family must compete with rightist sentiments of the market.

[callout]It is quite likely that the right and left will both fail. That we will instead of succeeding in incorporating all people into the market (the error of the right) or incorporating all people into the luddite familial structure (the error of the left) that we will adopt the european and south american models of a wealthy urban and rural groups, and a ring of abject destitute hyper-breeding poverty around the urban cores, wherein the upper and middle classes pay the permanent proletariat just enough to subsist, and we emerge with a tiered society both geographically, genetically, and materially. [/callout]

It is quite likely that the right and left will both fail. That we will instead of succeeding in incorporating all people into the market (the error of the right) or incorporating all people into the luddite familial structure (the error of the left) that we will adopt the european and south american models of a wealthy urban and rural groups, and a ring of abject destitute hyper-breeding poverty around the urban cores, wherein the upper and middle classes pay the permanent proletariat just enough to subsist, and we emerge with a tiered society both geographically, genetically, and materially. And this end result will in no small part be due to the christian error of egalitarianism sentiments that deny the productive differences of human beings in the real and material world – the majority of which differences derive from the ability and rate at which one can learn and apply abstractions (IQ) in a dynamic and rapidly moving economy. While neither left or right can achieve it’s idealistic ends, leftism is an attempt to enslave the productive (innovative) class’s attempt to increase production and increase prices for the purpose of status enhancement. But by that restraint doom all people to poverty. This is the strategy behind all monotheistic religions. They are resistance movements that attempt to make status among the proletariat a spiritual rather than material construct. Capitalism (or right-ism) on the other hand is an attempt to keep sufficient productive resources in the hands of market producers that all society benefits, despite the fact that the proletariat feels increasingly left behind and deprived of status because of the accelerating rate at which the productive classes (those who take speculative risks and thereby increase choices and decrease prices) seemingly depart from the lower classes, despite the fact that in all but the rarest circumstances (catastrophic health care) that the difference between the quintiles is one of symbolic status and diversity of forms of entertainment, rather than differences in material well being. As it stands Quantitative Keynesianism is the socialist research program, and Anarcho capitalism is the capitalist research program. The difference between these methods lies in both their ambitions and their methods. By applying 19th century advances in the mathematics of the natural world (closed probabilism) to the aggregate symbols of production of the economy (monetary values), it became possible to try to fulfill some methods of the socialist program by using capitalism for socialistic ends. The problem for the capitalists, and the reason for the failure of the Austrian (qualitative) program’s emphasis on micro-economic behavior, is that they do not have a method of mathematics to provide sufficient explanatory power equal to the left’s program, despite knowing, with absolute certainty, that the Keynesian program must fail. This is because despite the efforts of Poincare, Mandelbrot, Hayek, Popper, Mises, and Parsons, more recently Taleb, and a host of others, there appears to be no symbolic language that can represent the plasticity and organic behavior of the property-pricing system and how it reacts to human knowledge. (This is typically called ‘Hume’s Problem’ of Induction.) It appears, at least at this point in time, that we will need a vast amount of data, on the order of many times that of the Google indexes, to provide us with enough of a basis from which to derive the patterns in that symbolic information. Even if we could find that information, we could find the patterns, and develop a mathematics of economics and the social sciences, the question would remain whether these innovations would have any material impact on the fact that humans are of pedagogical NECESSITY, epistemic status seekers, and that there are those who lead that pack of humanity and those who are forever followers in it, and the envy of the followers, and the arrogance of the leaders mandate that we will remain competitive, and that the problem of human difference is both permanent and valuable to the division of knowledge and labor.

Reposted here for reference.

Social class IQ differences and university access By Bruce G Charlton A feature for the Times Higher Education – 23 May 2008 Since ‘the Laura Spence Affair’ in 2000, the UK government has spent a great deal of time and effort in asserting that universities, especially Oxford and Cambridge, are unfairly excluding people from low social class backgrounds and privileging those from higher social classes. Evidence to support the allegation of systematic unfairness has never been presented, nevertheless the accusation has been used to fuel a populist ‘class war’ agenda. Yet in all this debate a simple and vital fact has been missed: higher social classes have a significantly higher average IQ than lower social classes. The exact size of the measured IQ difference varies according to the precision of definitions of social class – but in all studies I have seen, the measured social class IQ difference is substantial and of significance and relevance to the issue of university admissions. The existence of substantial class differences in average IQ seems to be uncontroversial and widely accepted for many decades among those who have studied the scientific literature. And IQ is highly predictive of a wide range of positive outcomes in terms of educational duration and attainment, attained income levels, and social status (see Deary – Intelligence, 2001). This means that in a meritocratic university admissions system there will be a greater proportion of higher class students than lower class students admitted to university. What is less widely understood is that – on simple mathematical grounds – it is inevitable that the differential between upper and lower classes admitted to university will become greater the more selective is the university. *** There have been numerous studies of IQ according to occupational social class, stretching back over many decades. In the UK, average IQ is 100 and the standard deviation is 15 with a normal distribution curve. Social class is not an absolute measure, and the size of differences between social classes in biological variables (such as health or life expectancy) varies according to how socio-economic status is defined (eg. by job, income or education) and also by how precisely defined is the socio-economic status (for example, the number of categories of class, and the exactness of the measurement method – so that years of education or annual salary will generate bigger differentials than cruder measures such as job allocation, postcode deprivation ratings or state versus private education). In general, the more precise the definition of social class, the larger will be the measured social class differences in IQ and other biological variables. Typically, the average IQ of the highest occupational Social Class (SC) – mainly professional and senior managerial workers such as professors, doctors and bank managers – is 115 or more when social class is measured precisely, and about 110 when social class is measured less precisely (eg. mixing-in lower status groups such as teachers and middle managers). By comparison, the average IQ of the lowest social class of unskilled workers is about 90 when measured precisely, or about 95 when measured less precisely (eg. mixing-in higher social classes such as foremen and supervisors or jobs requiring some significant formal qualification or training). The non-symmetrical distribution of high and low social class around the average of 100 is probably due to the fact that some of the highest IQ people can be found doing unskilled jobs (such as catering or labouring) but the lowest IQ people are very unlikely to be found doing selective-education-type professional jobs (such as medicine, architecture, science or law). In round numbers, there are differences of nearly two standard deviations (or 25 IQ points) between the highest and lowest occupational social classes when class is measured precisely; and about one standard deviation (or 15 IQ points) difference when SC is measured less precisely. I will use these measured social class IQ differences of either one or nearly two standard deviations to give upper and lower bounds to estimates of the differential or ratio of upper and lower social classes we would expect to see at universities of varying degrees of selectivity. We can assume that there are three types of universities of differing selectivity roughly corresponding to some post-1992 ex-polytechnic universities; some of the pre-1992 Redbrick or Plateglass universities (eg. the less selective members of the Russell Group and 1994 Group), and Oxbridge. The ‘ex-poly’ university has a threshold minimum IQ of 100 for admissions (ie. the top half of the age cohort of 18 year olds in the population – given that about half the UK population now attend a higher education institution), the ‘Redbrick’ university has a minimum IQ of 115 (ie. the top 16 percent of the age cohort); while ‘Oxbridge’ is assumed to have a minimum IQ of about 130 (ie. the top 2 percent of the age cohort). *** Table 1: Precise measurement of Social Class (SC) – Approx proportion of 18 year old students eligible for admission to three universities of differing minimum IQ selectivity Ex-poly – IQ 100; Redbrick – IQ 115; Oxbridge IQ 130 Highest SC– av. IQ 115: 84 percent; 50 percent; 16 percent Lowest SC– av. IQ 90: 25 percent; 5 percent; ½ percent Expected SC diff: 3.3 fold; 10 fold; 32 fold Table 2: Imprecise measurement of Social Class (SC) – Approx proportion of 18 year old students eligible for admission to three universities of differing minimum IQ selectivity Ex-Poly – IQ 100; Redbrick – IQ 115; Oxbridge – IQ 130 Highest SC –av. IQ 110: 75 percent; 37 percent; 9 percent Lowest SC –av. IQ 95: 37 percent; 9 percent; 1 percent Expected SC diff: 2 fold; 4 fold; 9 fold *** When social class is measured precisely, it can be seen that the expected Highest SC to Lowest SC differential would probably be expected to increase from about three-fold (when the percentages at university are compared with the proportions in the national population) in relatively unselective universities to more than thirty-fold at highly selective universities. In other words, if this social class IQ difference is accurate, the average child from the highest social class is approximately thirty times more likely to qualify for admission to a highly selective university than the average child from the lowest social class. When using a more conservative assumption of just one standard deviation in average IQ between upper (IQ 110) and lower (IQ 95) social classes there will be significant differentials between Highest and Lowest social classes, increasing from two-fold at the ‘ex-poly’ through four-fold at the ‘Redbrick’ university to ninefold at ‘Oxbridge’. Naturally, this simple analysis is based on several assumptions, each of which could be challenged and adjusted; and further factors could be introduced. However, the take-home-message is simple. When admissions are assumed to be absolutely meritocratic, social class IQ differences of plausible magnitude lead to highly significant effects on the social class ratios of students at university when compared with the general population. Furthermore, the social class differentials inevitably become highly amplified at the most selective universities such as Oxbridge. Indeed, it can be predicted that around half of a random selection of kids whose parents are among the IQ 130 ‘cognitive elite’ (eg. with both parents and all grandparents successful in professions requiring high levels of highly selective education) would probably be eligible for admission to the most-selective universities or the most selective professional courses such as medicine, law and veterinary medicine; but only about one in two hundred of kids from the lowest social stratum would be eligible for admission on meritocratic grounds. In other words, with a fully-meritocratic admissions policy we should expect to see a differential in favour of the highest social classes relative to the lowest social classes at all universities, and this differential would become very large at a highly-selective university such as Oxford or Cambridge. The highly unequal class distributions seen in elite universities compared to the general population are unlikely to be due to prejudice or corruption in the admissions process. On the contrary, the observed pattern is a natural outcome of meritocracy. Indeed, anything other than very unequal outcomes would need to be a consequence of non-merit-based selection methods. Selected references for social class and IQ: Argyle, M. The psychology of social class. London: Routledge, 1994. (Page 153 contains tabulated summaries of several studies with social class I IQs estimated from 115-132 and lowest social classes IQ from 94-97). C.L. Hart et al. Scottish Mental Health Survey 1932 linked to the Midspan Studies: a prospective investigation of childhood intelligence and future health. Public Health. 2003; 117: 187-195. (Social class 1 IQ 115, Social class V IQ 90; Deprivation category 1 – IQ 110, deprivation category 7 – IQ 92). Nettle D. 2003. Intelligence and class mobility in the British population. British Journal of Psychology. 94: 551-561. (Estimates approx one standard deviation between lowest and highest social classes). Validity of IQ – See Deary IJ. Intelligence – A very short introduction. Oxford University Press 2001. Note – It is very likely that IQ is _mostly_ hereditary (I would favour the upper bound of the estimates of heredity, with a correlation of around 0.8), but because IQ is not _fully_ hereditary there is a ‘regression towards the mean’ such that the children of high IQ parents will average lower IQ than their parents (and vice versa). But the degree to which this regression happens will vary according to the genetic population from which the people are drawn – so that high IQ individuals from a high IQ population will exhibit less regression towards the mean, because the ancestral population mean IQ is higher. Because reproduction in modern societies is ‘assortative’ with respect to IQ (i.e. people tend to have children with other people of similar IQ), and because this assortative mating has been going on for several generations, the expected regression towards the mean will be different according to specific ancestry. Due to this complexity, I have omitted any discussion of regression to the mean IQ from parents to children in the above journalistic article which had a non-scientific target audience.

via What Spies Really Do | Capital Gains and Games. Bruce Bartlett, in reference to the recent Russian spy case, uses an example from his past to pick on the behavioral economics of spying.  But I think, like anything else, there is more to be understood here than meets the eye. He writes:

I remembered all this some years later when I was working at the Treasury Department and was on the distribution for some CIA raw material relating to economic issues. Almost all of it was worthless. It involved conversations some CIA agent had with a prominent foreign businessman or economist relaying information that could easily be gleaned from that day’s Financial Times.

Suddenly, I understood what [the spy who had been interviewing me] had been up to. He could have written a memo to his bosses just regurgitating what was in the daily papers, news magazines and other public sources, but that wouldn’t have been very spy-like. It undoubtedly sounded so much better if he could relay the same identical information but say that it had been secured from a high-level congressional staffer. That’s what spies do.

Bruce, You’re right in part. But there are other factors that might change your opinion of that experience: 0) Yes, a spy is often a bureaucrat, because he exists in a bureaucracy. Often with dismay, frustration and resignation. 1) Spies try a lot of trial-and-error relationship building. In fact, trial and error are a very important part of the business. 2) While Spies are largely from that social group we call ‘nerds’, US spies are usually amazing, wonderful, engaging, intelligent people. But they are, like everyone else, expressions of a bell curve. There are good spies and bad spies and smarter spies and dumber spies. 3) Being a spy is not necessarily doing interesting things and meeting interesting people. And these days, it is a lot more about using relationships to get access to data than it is about human opinion, which is fraught with eror and deception. When a spy talks to you, he is generally looking, like MOST ECONOMISTS ARE, for sources of data, not sources of opinion. And this is very important. Data is more valuable than opinion. They are looking for relationships that will give them access to data. So any conversational content is irrelevant. Your opinion is only a measure of the trustworthiness of the relationship.  The data on the other hand is the reward he is looking for. 4) The value in human intelligence on economic opinion, is not to be found in what you tell them. It’s to be found in the SET of ALL economic opinions found by ALL spies speaking to ALL contacts in any administration and by looking for POLITICAL patterns among the participants. It is not in what you tell them. In fact, a spy will NEVER ask you a direct question regarding his real intentions. This information is then fed to Analysts (Super nerds) who try to obtain value from it. This is a round-about way of saying that you were just a cog in a wheel. And spying is an art of subtlety. And you shouldn’t try to deduce too much about spying from your experience. A spy is, in general, engaged in the trial and error process of creating a large number of relationships while looking for opportunities to gain access to some sort of data. It is a very nerdy business. Forensic accounting and forensic communication data are considered valuable to the trade. By contrast, relationships that are valuable are ‘lottery winnings’. Sure, they target specific people and specific industries, but all the good data is actually in the private sector, and it’s far easier to get there than it is from “another bureaucratic wonk in another bureaucracy who is even more ignorant about that is going on in his country than I am”.