How Your Nation’s IQ Matters by Dr. Garett Jones

Dr. Garett Jones joins Jason Hartman to talk about capitalism and democracy and how it works out in other countries. They explore intelligence as it relates to cooperation, delaying gratification, and laissez-faire. Jason and Garrett also discuss the Da Vinci Effect on nations, and how bank steals money.

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Jason Hartman 0:29
It’s my pleasure to welcome Dr. Garrett Jones to the show. He is a BB and T professor for the study of capitalism at the mercatus Center at George Mason University. He’s author of two books, including hive mind, how the nation’s IQ matters so much more than your own. I think we’d all agree with that sometimes good title. And then his newest book 10%. Less democracy, why you should trust the elites. And how a little more and a little less of the masses and the masses a little less. Sorry, I messed that up a little bit. But Garrett, welcome. How are you? Great, great. Thanks for having me on the show. Yeah, my pleasure. So the 10% less democracy concept. It feels like that would really while a lot of people would be upset by that idea. It seems like we live in a culture now where people think the elites are just screwing us all over. Do you sense that?

Dr. Garett Jones 1:26
Yes, I mean, so it turns out that democracy is an absolutely sacred value. The problem is people don’t quite know what they mean, when they get excited about democracy, to a lot of people. Democracy just means voting on things a lot. to other people. Democracy means things like having an independent judiciary, having judges who can protect your human rights. And judges are kept about as far away from voters as you can keep them. So I mean, some judges are appointed,

Jason Hartman 1:53
some are elected. So

Dr. Garett Jones 1:55
yes, and I discussed that in the book I looked at so across the US states, it turns out there are a lot of states where people elect their judges, and somewhere they appoint them. And when you try to compare them side by side, it looks like the elected judges are a little bit lazier on the job. The appointed judges tend to write cases they tend to write judgments that are cited more by other judges, they get recycled.

Jason Hartman 2:18
So the metric there is getting citations. That’s the sort of the metric for a good judge, if you will,

Dr. Garett Jones 2:25
that’s and that measure, it’s, that’s the measure that’s used in another cross country study. Turns out the countries that have independent judges just seem to have faster economic growth, even if you know quite a few other things about the country like whether it had common law, how Richard started off, whether it’s a democracy turns out, even if you know quite a bit about a country, countries that have independent judges, judges who are kept at least arm’s length from the voters seem to have better economic performance. Interesting.

Jason Hartman 2:54
I mean, it would be fair to say though, appointed judges are only appointed by people who are elected. So it’s one it’s like one step further removed. But actually, that’s true. It’s still democratic, though.

Dr. Garett Jones 3:05
This is the question right? Like, how, what do we mean when we talk about democracy? And I tend to think that I define democracy in a very flat fairly classic way, which is where the voters are kept in close contact with the government would say, frequent elections. That’s the way like political philosophers, democratic theorists have thought about democracy. So the House of Representatives, for instance, is the US is obviously most democratic branch of government terms. The founders chose that because they wanted the voters to be in close touch with the government. That was six year terms where I was a staffer long ago, that’s always been considered less democratic. And I’ve, as a former senate staffer, I can say that I saw that senators, on average behaved in a more politically cowardly way, right before an election, the last two years when they’re up for reelection, they really are paying attention to what’s going on back home.

Jason Hartman 3:55
Right. But isn’t that what you call cowardice? Good, it means they’re responding to their constituency? Isn’t that what we want? Or? No,

Dr. Garett Jones 4:05
it turns out, there’s a very nice study that looks at one particular topic, voting on free trade agreements. Turns out, senators are much more likely to vote for free trade agreements when they’re far away from reelection. And they’re 10 percentage points less likely to vote for right before reelection. So it turns out Hillary Clinton herself completely embodied this. She voted for every free trade free trade deal her first four years as a senator, and she voted against every free trade deal, or last two years as a senator when she was coming up for reelection.

Jason Hartman 4:35
I mean, there’s a lot of dynamics to play in that not just the election, right. I mean, you know, maybe maybe she realizes she made a mistake before and she’s changed her view or maybe the lobbyists, the lobbying dynamic changed. I mean, I don’t know right? There’s a lot to that. Maybe.

Dr. Garett Jones 4:53
That’s why that’s why I don’t draw on just individual anecdotes. Instead, I look at studies of dozens of senators. Voting across dozens of years. And so it would be kind of weird if it were just a weird coincidence every time that on average, Senators do this turns out, it turns out is true even when you compare the senator to him or herself. Just for the same Senator, this pattern seems to be repeated every six years. Interesting,

Jason Hartman 5:17
interesting. Do you know does this is this kind of somewhat in touch with the idea of the tragedy of the commons? Or the the tyranny of the masses, if you will, doesn’t have any relation to either of those concepts? It seems like we all would like the idea of more democracy. But you know, democracy is notoriously inefficient, too. So you’re leaning more toward the representative Republic idea of and purely democratic idea, right?

Dr. Garett Jones 5:47
I guess I am, that’s actually a good way to put it that, you know, the American founders, were definitely opposed to anything like pure democracy, like an ancient Athens, where 1000s of people would show up to work on legislation. And they always wanted at least representation, and maybe even a little bit more distance between the voters and the masses. I mean, between the voters and the government, and getting the balance, right has always been a challenge in every single so called democracy. And when we can compare side by side, it looks like for instance, appointed regulators are a little bit more laissez faire and a little bit more efficiencies seeking than elected regulators, central banks that are kept far from the elected politicians seem to do a better job focusing on low stable inflation than other central banks. And they get just an the economic growth they get is just as good. Interesting. Yeah. Interesting.

Jason Hartman 6:40
There’s definitely a lot at play here. No question about it. But but absolutely. That’s fascinating. Let’s switch gears and talk about hive mind. But you know, of course, if you want to bring it back to this feel free, you know, so the hive mind is a really interesting idea. And I don’t know that this has been studied much, if at all, that, you know, the IQ scores, the aggregate IQ score of a nation affects its its next economic cycle. Right. Tell us more about this. Yes.

Dr. Garett Jones 7:14
So the idea is that I’m drawing on your decades of research in psychology. And psychologists have found that intelligence scores or maths and science scores, if you care, to think of them are quite good predictors of individual life outcomes. When I and my psychologist co author took cross country IQ scores, and use those to try to predict national economic performance, we found the relationship was perhaps six times stronger across countries compared to within a country. So it really did look like being or being in a smart group of people was much more important for your prosperity than being smart yourself. So it’s a version of the Would you rather be a small fish in a big pond, right, vice versa. So it looks like intelligence, cognitive skills have really big positive spillovers. So being on a smart team really helps make you more productive.

Jason Hartman 8:10
It’s interesting. When you look at economics, though, I mean, economics is as much as we like to say, Well, you know, the pie is there’s enough for everybody to go around. Right? It is. And that’s true. Capitalism does expand the size of the pie. And that’s one of the wonderful things about it. Because new innovations and creative destruction, expand, it makes the pie bigger. And you know, I think we’d all agree with that. It’s wonderful. But it’s great. You know, in the short term, though, it is a competitive and relative game, too. So now, also, I mean, you know, the smartest people aren’t always the richest people and the richest people aren’t always. You know, there’s, there’s certainly some degree of luck. And I don’t know, just seizing an opportunity when it comes. And a lot of

Dr. Garett Jones 8:57
us in life isn’t smart. So sorry, say that, again. A lot of success in life isn’t smart. It’s what my dad called stick to itiveness.

Jason Hartman 9:04
Yeah, right. Right. Persistence phase. Yeah, no question about it. So but in the short term, it is a relative game where we’re actors inside an economy are competitive, right? Because when one person succeeds more than another, you know, for example, if the if the whole economy is stagnant, but one person is, you know, getting way ahead, the prices in the marketplace don’t really adjust and that one person getting ahead, their lifestyle expands a lot, because there hasn’t really been inflation because the overall economy is stagnant. You get the advantage of, you know, your increased buying power without seeing increased prices,

Dr. Garett Jones 9:45
right. So this is a point that I begin with, at the very beginning of the book, and it shows up in the introduction, that it looks like when you have pairs, and groups of smarter people, they’re more likely to be growing the pie Totally, I totally agree with you that smarter individuals on average, tend to do better for themselves as individuals. And so if the pie is fixed, yes, smarter people are probably shrewd or more Machiavellian about grabbing a big slice for themselves. But when you have a whole nation of smart people, for instance, my colleague, Brian Kaplan, in his book, The Myth of the rational voter, and in later work, he shown that people who are more educated or more intelligent, are more likely to see the invisible hand, they’re more likely to support laissez faire, both individually and politically. And so, you know, we know that capitalism, however we consider it moving more in the direction of markets and individual choice for market transactions is a pie growing as a pie growing choice? And how can I get that one way to do that is to have smarter voters around me. Probably one way to do that is have more market friendly education in K through 12. And in college as well, I

Jason Hartman 10:54
would agree with you there for sure. Absolutely. And there’s, there’s a there’s a terrible shortage of that out there. So are you saying that on the whole, then libertarians are smarter than liberals?

Dr. Garett Jones 11:08
I’ve never seen that formally tested. I can’t tell you that good work suggests that people who do better on IQ tests are both more market friendly, and more socially tolerant. So in the general, cliched version of libertarianism, yes, higher IQ people, on average, seem to be more libertarian, or as we would have said, in the 19th century more liberal,

Jason Hartman 11:29
you know, you’re making me think of, yeah, you know, the definition of liberal has definitely changed over the years. No question about that. So that’s a good point. But you’re making me think of, you know, these third world countries, and I, you know, I visited many of them myself, sorry, political credit people, developing countries. And, you know, you see, there’s, you know, that’s a banana republic type of concept, right, where you’ve got, you know, a few rich people, and then everybody else is, you know, oppressed, sadly. And those don’t look like good places to live, even if you are the rich one. Because, you know, you’re you’ve got like bodyguards and barbed wire. And I don’t want to live like that I’d rather just be a middle class guy in a safer country like the US, but

Dr. Garett Jones 12:14
oligarchs and low productivity countries do not have a life that I envy and I don’t think most of us who are middle class or above and the rich countries would envy it.

Jason Hartman 12:23
Yeah, I agree with you completely.

Dr. Garett Jones 12:25
If they could find a way to credibly make their countries more market friendly, more productive, they themselves would be better off on average. But the problem is, you know, there are a lot of reasons why that doesn’t happen. You have to imagine the most extreme version of this is North Korea, right? Where the only way to make things better off for 99% of North Koreans is to make things very bad for the Kim family. And so that desire of the elites to stay on top really can pull down the masses.

Jason Hartman 12:54
It just seems like if the Kim family were like, you know, nice people, which I don’t think they are, you know, they could just gradually loosen up and open up, but what will likely happen is what happened to Ceausescu, you know, eventually they’ll just be overthrown and executed.

Dr. Garett Jones 13:12
This is this, the lesson of many reformers who were autocrats who decide to open up and become more market oriented and more free, is that, to some degree, at least, Milton Friedman’s prophecy was right, which is that capitalism leads to democracy. And once a country starts getting richer, there’s this tendency that the Chinese elites have managed to suppress so far, but there’s this tendency for more openness in the society. And it’s hard, it’s hard to resist that.

Jason Hartman 13:40
Yeah, China’s a funny thing, it’s hard. It’s almost hard to classify China with the way they act. It’s, it’s kind of very capitalistic on one hand, and very totalitarian on another, feel free to comment on that. But

Dr. Garett Jones 13:54
it’s hard, it’s hard to tell whether that’s going to be a equilibrium that other countries want to follow over the next few decades. So the cliche and, and in some development circles has been that, for decades has been that, you know, Russia put the the liberal rights before the prosperity. And that that was bad for the elites in Russia, and they’ve certainly never forgotten that. So China did not make that. They got the order in reverse. They decided we’re gonna go with prosperity first and see where that goes. So they basically are trying to get the capitalism without the democracy that capitalism without the liberal human rights, and when which plans better by the way, Russia or China?

Jason Hartman 14:31
That’s a good comparison.

Dr. Garett Jones 14:32
This is a great question like so like, if you had to just pick one for the world as a whole, I mean, oh, this is terrible, right? Because the world as a whole, you have to wonder about what you really should wonder about is who is creating great ideas, great, great concepts, great inventions for the whole planet. China has been a leader in patenting for the last decade plus probably two decades, I haven’t looked back that far. Which, that’s a, that’s a gift for the world. I mean, they’re doing some kind of scientific innovation that helps all over US sure a lot of the manufactured goods that are very high tech are coming out of China, not out of Russia. So I just think crudely about the self interest of the rest of the world that they have to be people outside of those two countries should probably be rooting for the Chinese model.

Jason Hartman 15:16
Yeah, I would agree. I’d like to ask you about a couple of your chapter heads in the hive book. So you talked about the da Vinci effect for nations? Can you elaborate on that?

Dr. Garett Jones 15:26
Yes. So you know, Leonardo da Vinci was basically great at everything. And he was his expertise in one area was bundled together with expertise in other areas. And this turns out to be what’s true with across human cognitive traits. The most robust finding and all of intelligence research is that if you’re above average, in one area, you’re going to be above average in other areas, too. So skills predict skills. So the common sense idea that we may be heard from our parents or grandparents that if you’re strong in one area, that just means you’re weakened, and other and nature is fair, and it all balances out. total nonsense. Not true at all. And so this is why it’s false. When people say that IQ tests only tell whether you’re good at IQ tests, it turns out that one, if I know how well you do on a vocabulary test, if I know you’re way above average on a vocabulary test, I can guess that you’re probably above average at math, too, doesn’t mean you’re an expert at math just means probably above average, right? A lot of the expertise we need in entrepreneurship, or as voters or in our personal lives, or something like this to Vinci effect where you kind of want a little bit of everything. And getting a little bit of everything, a little bit of all the skills together can lead to a whole that’s much greater than the sum of the parts.

Jason Hartman 16:38
So then you would be in favor of being a generalist, it sounds like, well,

Dr. Garett Jones 16:43
it’s the thing is that we’re already generalists, right? People who were people who were above average, on whatever test score you’re looking at, tend to have a little bit of everything going right. Of course, it’s important to have experts on surgery or electrical engineering or thermonuclear physics. But it turns out that as a fact, there’s this common experience that we have as humans, which is people good in one area tend to be above average in other areas.

Jason Hartman 17:07
Yeah, good stuff, I think I think that might be a sign that they’re just more curious people. And they have more tools with which to think

Dr. Garett Jones 17:14
this is actually one one possibility that theorists have kicked around, it’s very hard to test. But it seems totally possible. Some IQ theorists who think that there’s sort of one common force inside of you, that they call it a G factor that kind of makes all of these traits move together. And other theorists say, Well, if you’re good in one area, that kind of just gives you a leg up at studying other stuff. So if you’re great at math, you’re probably good at memorizing things. And that’s going to help you in other areas.

Jason Hartman 17:40
So right, yeah, I could see that. I also think it’s just a question of having a large enough vocabulary to have tools with which to think you know, I think that helps expand your thinking skills. Really, you talk about our smart group smarter groups are more cooperative. And you alluded to that before. Can you elaborate on that, though?

Dr. Garett Jones 17:58
Yeah, this is something that’s actually my favorite discovery, I can’t claim to have uniquely just been the only person who discovered it, I sort of found that other people had had run laboratory experiments, these cooperation games, the most famous one is the prisoner’s dilemma. But it’s a it’s a game somebody plays for 10 to people play against each other for 10 rounds. And there’s always a short run incentive to trade the other person. But if you cooperate, you can grow something beautiful. So think of this as being like a team project that two people are working on for school and they have to get it done in a month. If I cooperate today and you decide to cooperate today, maybe we just follow that pattern on out. But if we try to shirk, the other person might decide to shirk, you know, sleep in, and then nothing happens. It turns out that smarter pairs of players, higher IQ pairs of players are more likely to be highly cooperative in that particular game. I’ve worked on some research with some of my gmu colleagues on this. And it turns out that it’s been replicated in research by professors that the professor at the University of Minnesota,

Jason Hartman 18:56
and by the way, for those who don’t know the prisoner’s dilemma, you can look it up. But it’s basically this, this game where two people are being prosecuted for a crime, I don’t know if they’re being prosecuted, but they’re being given a choice to, you know, get out of jail if they rat out their friend, or they could cooperate together, and they’ll both get less time right there. You know, I explained it too well, but, but that’s the concept. And, you know, I think a lot of that just sort of goes back to the concept of long term thinking, doesn’t it? Exactly. And

Dr. Garett Jones 19:28
I and others have placed weight on Yes, this bright idea that higher IQ people tend to be more patient and patients, as many, many virtues.

Jason Hartman 19:36
I think that’s a huge thing. The willingness to delay gratification is a sign of intelligence. I think that that’s true, and I very much believe it, but I wonder why it’s true. You know, any thoughts on that?

Dr. Garett Jones 19:51
Yes, I point to some research by some Yale scholars on this. And basically they’re just speculating but what they suspect Part of the reason smarter people are more patient is that making a decision about the future, whether to eat your potatoes today or eat it next week, is a decision that involves thinking of keeping four ideas in mind at once. You know the world with the potato now the world without the potato now, the world with the potato future in the future and without the potato in the future. And that’s a lot of comparing to do. And it turns out one of the best predictors of a high IQ is how many facts you can keep in your mind at once. So I don’t think that’s the only story. But I think it’s certainly part of it that basically, patients requires comparisons. And comparisons means keeping multiple ideas in your head doing, like basically juggling with ideas. Right, right. And many times those ideas are opposing, you know, I’d

Jason Hartman 20:45
rather have the reward today. But if I wait longer, I’m gonna get a bigger reward. So very, very good point. Anything you’d like to share with our listeners had a question that I didn’t ask you about either of the two books or your work in general.

Dr. Garett Jones 20:59
Yeah, on in 10%, less democracy in the wake of the Coronavirus and the way the world have been changed. People have asked me Well, the World Health Organization’s messed up, the Food and Drug Administration has made a lot of errors, the Centers for Disease Control have made a lot of mistakes. Isn’t this just, you know, just proving your case right there. And it turns out, as you won’t be surprised to learn that the World Health Organization is not at all an independent agency, it has to get annual budgets from us for a bunch of other rich countries. And it answers to those folks, the leaders have short terms, the head of the FDA and the Centers for Disease Control, both work at the pleasure of the president and have to go to Congress for money every year. And the Congress is especially cautious and conservative, about innovation at the Centers for Disease Control in Food and Drug Administration. They’ve been real barriers to innovation over the long term. Some of my gmu colleagues have shown in their work. So it’s no surprise to me that these agencies, which are not very independent at all, have made a lot of massive mistakes during the crisis. And then perhaps the most, perhaps the best performing US government agency has been the Federal Reserve, which has been super aggressive from the day one, and seems to have prevented a lot of bad financial consequences that people were predicting early on,

Jason Hartman 22:18
you know, when you when you talk about the central bank, or, you know, the banks in general or the Federal Reserve specifically, you know, what do you say to all the people who think that they’re, you know, stealing our money through inflation or savings are? Well, you know, it’s this, you know, private corporation that’s got all this mystery behind it. You know, Ron Paul wanted it audited, you know, that went over like a lead balloon? I don’t know, you know, in the short term, I agree, the central bank steps in and, you know, here comes the cavalry. But in the long run, you know, the dollar loses a lot of its value over time.

Dr. Garett Jones 22:54
Well, the Fed is totally owned and controlled by the US government, it can shut it down at any time, they can take all their money, anytime. And so it is a creature of our federal government, not a private company. And it’s

Jason Hartman 23:09
just so you know,

Dr. Garett Jones 23:10
I know, I understand. But over the long haul, it’s clear that countries with independent central banks that are kept far from the voters do tend to have lower inflation, and no worse economic growth. So if independent central banks if, if secret and Federal Reserve officials were actually bad for the country, we’d be able to do some kind of comparison and show that other countries have picked a better policy and much better outcomes. And there doesn’t seem in the last least since World War Two, to be some other country that found an alternative method. national banking that’s been a vast outperformance it might be a tie. I think the US US economic growth before the Fed was no worse. Its inflation, I would say was more volatile than we’ve had since then. But since World War Two, the central banks that are kept far from voters and that are where basically technocrats run things day in and day out, seem to get the best performance we’ve seen. I’m always open to innovation, more is open to somebody saying, hey, I’ve got something we knew we can try. But so far, it’s the best thing we’ve got going.

Jason Hartman 24:15
No good stuff. Okay. Well, give out your website and just wrap this up with any closing thought.

Dr. Garett Jones 24:22
Yes, yes. My website is Jones garrett.com. One rtts Jones, Garrett calm. And I very happy to talk in the future with you about my next project, which is going to be about how immigrants bring cultural traits to the countries they

Jason Hartman 24:37
moved to. Excellent, interesting. Good stuff. Well, Dr. Gary Jones, thanks for joining us. Thanks very much for having me.

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