We’ve written before about “Smart Fraction Theory” and how it affects a country’s standard of living. Here we have some more on the subject from Anatoly Karlin at Unz. It’s very important to realize that your standard of living really is dependent on the average IQ of the country in which you live, and if you import millions of low-IQ illegals you not only lower wages due to supply and demand issues that are realized right away, you also are robbing the nation of long-term growth and development that stagnates a society for the foreseeable future.
Advanced technological societies must have average IQs above a certain minimum threshold. Below that level, you lose your advanced economy and revert to a 3rd world status.
The classical definition of an economy is a system for the production and exchange of goods and services. However, I will argue that you can view it even more fundamentally as a system for generating and trading solutions to problems.
People with successful solutions acquire money, and in turn buy solutions for their own problems (which range from basic needs, such as food and shelter, to whims and fancies, such as a new Tesla). From this perspective, different systems of political economy are ultimately just different ways of organizing the problem-solving machine. For instance, under capitalism, everyone is largely free to buy and sell solutions, whereas under the central planning systems of the old socialist regimes, bureaucrats play the key role in deciding who works on which problem and who gets access to their solutions – and who doesn’t.
In this interpretation, loosening regulations should be generally good, since it effectively removes barriers to speedier exploration of any given problem space. But having people capable of such exploration in the first place is even more important.
Some of these problems, such as subsistence farming and trucking, are pretty simple and can be accomplished with reasonable efficiency even by relatively dull workers. This is because problems in this “Foolproof sector” (as Garett Jones calls it) require few steps and have only a minimal threshold difficulty, so production in this sector is governed by the standard Cobb-Douglas equation. More highly skilled workers are only modestly more productive, and are thus awarded with modestly higher salaries. Labor differs by productivity, but is substitutable – one experienced waiter is worth two novice ones.
