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Old 04-12-2010, 10:22 PM   #6
silvarilon
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Re: 2nd Great (greatest? worldwide?) Depression

... except, the studies I've been recently looking at show very little correlation between IQ and wealth, especially at the higher levels of wealth.

There *is* a low correlation, but it's something < 0.5 (I can't remember the actual numbers off the top of my head.) - interestingly, there is a similarly low correlation between school marks and final wealth.

There is, however, a very high correlation between *ambition* and wealth. In other words, people who aren't willing to settle for less, (and perhaps are willing to work for it) tend to get richer. That's not really a big surprise.

That doesn't mean hard work will always pay off. The secretary who works hard all day may never make much money. But the secretary who isn't happy being a secretary, and who looks for a higher paid job is more likely to.

It also makes sense, looking around me. I work at a university, and you can see the different attitudes from the students. There are some professions that pay more (accounting, management, chiropractic) - and the students are there because they want jobs that will pay well. Reasonable attitude. Other professions, such as computing, have the potential to pay pretty well, but a lower chance of making megabucks. The students tend to be in those courses because they either are interested in the subject, or they think they'll get a more stable job, or have an easier time finding a job.

Now, just because rich people are ambitious doesn't mean everyone with ambition will get rich. There are plenty of other factors at work (such as opportunity, upbringing, etc.)

Unfortunately, my google fu isn't strong today; I can't find any convenient links to these studies.

So what does this mean for the economy? Probably not much. Does it really matter if the rich people are intelligent, ambitious, or dullards? Not really.
What matters, in economic terms, is that people follow patterns. Those patterns can be discovered and modelled, and economic outcomes can be predicted. Predicting economic outcomes allows changes to the system (such as by raising or lowering interest rates) which can speed up or slow the economic growth or decline. Rich or poor, smart or stupid, people will respond to those changes.

So what will control the future economic growth will be your policy makers. Whoever runs your reserve bank, the politicians pushing for new laws. The DMCAA, the google books settlement, etc. - if American laws and conditions encourage innovation, then innovative people will flock there, and the economy will benefit. If the laws encourage monopolies, then monopolies will thrive (and there are benefits that monopolies do provide, as well as disadvantages...)

An example of that would be Nikola Tesla, who was born in Croatia, but moved to America. He was instrumental in making commercial electricity, radios (and radio control), fluro lights, the AC motor (about 80% more efficient than the DC motor), robotics, nuclear physics, etc. - a completely amazing man. Although Thomas Edison gets most of the credit for electricity, he and Tesla were competing to roll out their versions (DC vs AC) to the different cities and towns. It is Tesla's AC that we use.

These inventions helped Europe move into the second industrial revolution. Have a chart to see how countries benefited.

Obviously, the second industrial revolution wasn't the work of just one man, but even so, individuals can make a huge impact (which is why western technology tends to move in jumps.)

So my prediction is that future economic success will be more based on who the decision makers are, and what their decisions are. I don't think intelligence and wealth consolidation will make any real difference. Policies encouraging or discouraging wealth consolidation, on the other hand, will.

(And that's why it bugs me when elections are won or lost based on the candidates haircut, rather than based on their social or economic policies. How many voters even know their preferred parties economic policies?)
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