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Assume for a moment that America fully embraces free trade, and it works exactly as planned: we offshore all our low-margin production to developing countries, and this indeed frees-up our population to work in lucrative industries like product design, finance, management etc. While this may make America richer (in the short term), it will not necessarily make Americans richer. Why? Not everyone can be an engineer, investment banker, or lawyer—most people just aren’t smart enough, and many more don’t have the personality for it. It’s harsh, but true.
Charles Murray explains in his seminal book The Bell Curve that human intelligence, as measured by IQ, conforms to a normal distribution. That is, most people are of roughly average intelligence (68.2 percent fall within one standard deviation of the mean), while a minority are significantly more or less intelligent than average (15.9 percent are one or more standard deviations above or below the mean respectively). Importantly, half of all Americans are smarter than average—and half are, well, below the average. This has big economic consequences which Kessler ignores.
For example, America’s average IQ is 100, while the average IQ of engineers is about one standard deviation higher. This means that the average engineer is more intelligent than some 85 percent of the general population. Further, the data implies that an “IQ threshold” exists near 105 IQ points, below which the odds of someone becoming an engineer are infinitesimally small. This suggests that 62 percent of Americans are simply not bright enough to be engineers—no matter how hard they try. Biology limits us, whether we accept it or not.
People not only differ in cognitive ability, they also differ in personality. According to the five factor model, people’s personalities are rooted in five basic psychological predilections: openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism. These personality foundations impact everything about us, and have important economic consequences.
Consider the trait “conscientiousness.” Conscientious people tend to be organized and dependable, disciplined: they show up for work on time, stay focused on their task, and rarely call in sick. In short, they’re model employees. For this reason, a conscientious personality is the best single predictor of an individual’s economic success in life (after their IQ score, that is). For our purposes, another important trait is openness: people who are open to new experiences and ideas are more creative on average.
But being open isn’t enough. Productive creativity is driven by people who are predisposed towards openness and conscientiousness—they not only have new ideas, but they are willing to put in the work. This combination is rare, and it partly explains why there are relatively few creative engineers (like Steve Jobs) and disciplined artists (like Michelangelo). In any case, my point here is that different people have different personalities, and that being an engineer or designer isn’t for everyone.