IQ and redistribution

Bryan Caplan is one of my favourite bloggers. But I disagree with pretty much everything he says here:

IQ research [showing a positive correlation between IQ and earnings] seriously undermines the moral case for redistribution. One of our most basic moral intuitions is that people who succeed because of their personal ability deserve what they have. "He won because he was the best" has a lot more moral authority than "He won because he got lucky." Indeed, "He won because he was the best," is practically as compelling as "He won because he worked the hardest." IQ research confirms that capitalism is, as advertised, a meritocracy.
Think of it this way: Why does IQ research make leftists so angry? Well, the strongest argument for redistributing Olympic medals is that the winners cheated, and aren't really better athletes than the losers. Similarly, the strongest argument for redistributing wealth is that the winners cheated, and aren't really more economically productive than the losers. It isn't impossible to defend redistribution after you admit that people are rich because they are smart. But it is a lot harder.

My first gripe is that capitalism is only a meritocracy by accident. The price mechanism does not reward people for being intelligent. It rewards people whose skills are scarce. There is a difference, as Friedrich Hayek pointed out (Law Legislation and Liberty vol II p71-72):

[The function of the price system] is not so much to reward people for what they have done as to tell them what in their own as well as in general interest they ought to do. …To hold out a sufficient incentive for those movements which are required to maintain a market order, it will often be necessary that the return to people’s efforts do not correspond to recognizable merit…In a spontaneous order the question of whether or not someone has done the ‘right’ thing cannot always be a matter of merit.

Now, I'll grant that there's a positive  correlation between being intelligent and having a scarce skill and therefore high earnings. But there are millions of counter-examples to this; if the link between IQ and earnings were strong and monotonic, the drinks would be on Bryan.
To oppose redistribution because the rich have higher IQs merely gives leftists the easy job of pointing to rich people with low IQs.
What's more, I don't share Bryan's intuition that "He won because he was the best" has a lot more moral authority than "He won because he got lucky." (I'll leave aside the question of whether anyone's intuitions matter.)
For one thing, the distinction's too sharp; a man is lucky to have high natural intelligence.
Also, a lottery winner, for me, is a paradigm case of someone who is entitled to their winnings*. He won a fair contest by fair means in which everyone had a chance, and which people were free to enter or not. And he's not insulting anyone by pretending that his good fortune carries any moral superiority. The winners in capitalism often cannot say this.
Nor do I find Bryan's analogy with Olympic medallists convincing. There are (at least) three relevant differences:
1. Olympic winners emerge from reasonable equality of opportunity. Winners in capitalism don't.
2. Olympic success is only one form of success, one form of competition. Those who are no good at sports can easily pursue other activities. Capitalism, by contrast, is more totalitarian, in that those who are not good at it cannot escape the need to earn a living; for most people, the alternative of living on their own small-holding does not exist.
3. In the Olympics, there's an obvious  indisputable link between excellence and success. In capitalism, the link is weaker.  Many can, and do, make money by exploiting monopolies, using office politics, profiting from unpriced externalities, or by pandering to stupidity. High IQ might give someone high earnings merely by making them good rent-seekers.
So, I don't think libertarianism rests on capitalism being a meritocracy at all. For me, the strong libertarian argument (I leave aside the question of just how strong it is) is that a person's earnings are the product of a free agreement between him and others, and that the state has no business intefering.
As Mae West said: "goodness has nothing to do with it."
* Note: please distinguish between desert and entitlement.

Comments

[inactualfact]

I would dispute Caplan's assertion on the personal observation that although my measured IQ is very high, I'm earning bugger all.

On a more general point, yes, there probably is a correlation, but I'm not going to assume the non-elasticity of IQ as Caplan does, especially not over more than one generation. In studies of identical twins, seperated at birth (I really should find the reference for this, as I'm quoting from memory), nurture, diet, mental stimulation during the first five years of development can cause up to a ca. 20 point IQ difference by the age of twenty.
If we accept that people with a higher IQ are more succesful under capitalism, and can therefore provide/afford better care for their children can we really call it a meritocracy? Or is it generationally self-perpetuating (with a bit of genetic variation thrown in)?

[Jarndyce]

_IQ research [showing a positive correlation between IQ and earnings] seriously undermines the moral case for redistribution_

Uh? Even if IQ research showed a perfect correlation with earnings, the (liberal) case for redistribution is left untouched. How is the luck of being born clever different from the that of being born with other "unfair" advantages like being rich or next to a good school, or just plain old lottery-winner lucky? And how exactly does it effect, say, Dworkin's "insurance from behind a veil of ignorance" view of redistributive taxation? What Caplan's advocating is replacing the tyranny of privilege with a tyranny of meritocracy. At least the former comes with added noblesse oblige.

[guerby]

Jarndyce: "How is the luck of being born clever different from the that of being born with other "unfair" advantages like being rich or next to a good school, or just plain old lottery-winner lucky?"

Luck of being born rich can be moderated by social constructs: no inheritance, free education for non rich by the state, high level education available on merit not price, etc...

Luck of being born smart cannot be moderated by social constructs.

Lottery is just a collective redistribution contract with no obligation to play, so not very different than being an investor.

Laurent

[Mstanley]

"Luck of being born smart cannot be moderated by social constructs."

What? The *effects* of that luck can easily be moderated, for example by progressive taxation.

[dearieme]

How about an IQ tax? "They" measure your IQ at, say, 11 and you start paying the tax at, say, 30. You therefore spend your adolescence and early adulthood making bloody sure that you're going to earn heaps of money so that you can afford the tax. Consequence: every clever bugger makes huge contribution to economy, nation rich as Croesus, all live happily ever after. Just one prob: only the Left would approve, and the Left doesn't believe in IQ.

[David Wildgoose]

Ah, but the truly clever would deliberately flunk the IQ test.

Which would mean there would be attempts to identify this and penalise low scores, which in turn could well penalise those with naturally low IQ...

I'm not an economist, but even I know the first rule of economics:

(1) Incentives Matter.

[Curious]

I think emotional intelligence (EI) is better linked to higher earnings than IQ. Why? Because the richest people normally have better than average inter and intra-personal skills.They have learnt themselves and learnt others around them.

IQ just gauges ones academic brain capacity usage (not even intelligence).Why? Predetors, e.g.: lions, are very very intelligent. There is no doubting that, however, they are not capable of sitting an IQ test to solve some puzzles.

Why is IQ a big deal? Because humans need to standardise everything so that society can function. That is why those that are different/gifted (I don't mean dumb) find it hard in society. Consider Eistein.

See:
http://culturefusion.blogspot.com/2005/10/iq-or-ei.html

[Monjo]

I wouldn't pay any respect to anything Dworkin said.

I disagree with Chris's points 1-4:
1) Similar number of people have physical disadvantage as they do mental
2) True, but if we can't get a good legal job there's always crimes and the sex trade
3) 90 per cent perspiration, it is mostly hard work - the difference between Tesco and Tommy's Tomatoe's