A topic I like to tub thump about is what to do with low IQ workers in a modern, technological society. For most of human history, there was a demand for most if not all of the low IQ population. Farming required a lot of labor. Maintaining buildings, roads and so forth required loads of guys willing to take direction. Into the 1960′s, manufacturing soaked up most of the low IQ workers. When the banks decided to sell off the manufacturing base, retail and services were seen as the cure for excess unskilled labor. We would have an economy based on selling one another insurance and doing each others laundry! Of course that could never work, but it worked for a while as easy credit allowed us to pull forward GDP. Now, it is not working.

The evidence, I think, suggests two things. One is the massive expansion of credit in the free money era far outpaced economic productivity. Anyone who has worked at a company realizing booming sales knows the phenomenon. You hire and spend in order to meet the demands of the customers. Even though it is clear that increasing efficiency is the wise policy, the easiest is to add resources. There’s a lag, though, and resources continue to accumulate after demand slows. There reaches a point when this shows up in profits. The business reacts by cutting staff and expenses. The watch word become “efficiency.” Sales stabilize, costs are cut and profits are increased by getting more done with fewer resources, mostly people.  That’s what has happened in the American economy. GDP growth has been flat, so business looked to efficiency for profit gains.

The other thing that I think we see is the lagging effect of technology. For 25 years technology raced ahead of what users could use. By the time of the Great Recession, we had an enormous amount of excess technology. The old joke in the 1990′s was that 90% of Microsoft Word users utilized 10% of the product. Few companies utilized 25% of their IT investments. They may have been sitting on all the tools to automate big parts of the business, but they never deployed the technology. Once the economy soured, they looked to those in-house tools to increase efficiency. Put another way, in 25 years we produced 100 years worth of automation tools. It is going to take some time to work through the excess.

This brings me back to the point of the post. We have a lot of people on some form of government assistance. In fact, the government claims that nearly half of all homes have at least one person on the dole. I think we can assume that a big chunk of that number is for retired people. Another big chunk is the poor and stupid. Simply putting them on welfare does not solve the problem. Unless we are willing to have large scale reservations for the low skilled, this economic problem will soon be a very serious social problem. Large number of idle dimwits is never a good outcome for a society. While elites can temporarily erect barriers to protect themselves, the end result is predictable.