Complexity Is Stifling Growth

It’s not the economically inactive that puts growth at risk. It’s having an economy with jobs that are skewed against the distribution of skills in the population.

The following argument is sketchy, and it uses IQ as a crude indicator of skill levels. Key points: population average is 100 points, standard deviation is 15 points, and inter-test variation is 5. Lots of other personal qualities affect someone’s life-chances, as do the circumstances of their upbringing. People with high IQ’s can be a**holes or decent people, as can people with lower IQ’s. Differences of 3 or 4 points are meaningless, differences of 10 or more are real. The sweet spot for a business manager is around 115 (+/- 5). As a very rough guide, under 85 has a hard time fitting into the economy, and over 120 starts to have a hard time fitting into the social world. Moral character is entirely independent of IQ. Okay?

15% of the UK population 16-64 who are economically active (total 32m) has an IQ of 85 or less, which means there are a very small number of jobs in an industrial / knowledge-work economy they can do. That’s 4.8m people who aren’t quite up to the job requirements, training or not.

No matter how good the economy, there’s always what the economists call frictional unemployment due to firms moving, going broke, having hiring freezes and other such stuff. That rate varies with the health of the economy: it’s around 1m now. Also there are some jobs for people under 85, but I’m going to pull a number of 1.5m from the air.

This should mean we unemployment of around 4.8m + 1m - 1.5m = 4.3m. (1)

Instead it is around 1.5m. Which means the economy has something like 2.8m jobs being done by people who aren’t quite up to it, or even are a long way off being up to it. That’s slightly over one in eleven workers, and it will be spread across the ability levels and personal temperaments.

That’s where the feeling you’re talking to someone who doesn’t quite catch on to whatever it is they should be catching on to.

So this economy is doing a fabulous job of employing people. It has generated so many jobs that employers have to hire down to a non-trivial extent.

But, we have grown the complexity of the products, services, processes, laws, supply chains, finance, and so on, past the point where we have enough people to handle that much complexity.

So the real challenge for the managers and law-makers of the future is to simplify everything so that regular people can handle it.

And to do so without embedding the complexity in computer systems that can be hacked or disabled, and which will be un-maintainable by regular people.

You’re welcome.



(1) Sure we could adapt the figures for immigration, but it would not make a big difference. The 3m immigrants from the EU are skewed to the right, but there are 4m from elsewhere who aren’t.