Thursday, November 16, 2017

Welcome to The Polymath

The Polymath will be a general weekly PDF magazine publishing analysis and commentary at the highest level of intellectual sophistication.
The Editorial Policy is simple.  We are non-partisan, placing rigorous analysis above ideology.  We aggressively guard against confirmation bias.  We publish articles whose conclusions are contrary to what is published in the more partisan publications, since there is little use in restating what has already been stated.
Of course, no publication can be completely free of ideological perspective.  However, we assert that within the Liberal and Conservative communities as well as outside of either, there are several visions that deserve to be manifested in sovereign communities.  Therefore, we favor none of them but favor the devolution of large Industrial Age nation states into many values based Microstates.
We believe that no person should be required to live under a body of laws, programs and policies that they consider fundamentally unjust.  Therefore, we believe the only universal ethical principle is the right to move freely to the community of their choice.

Wednesday, November 15, 2017

Enterprise Networks

An Enterprise Network is an opportunity rich and success prone productive environment that shares investment communities, technologies and customer base.  Over the next twenty years it will replace the more rigid and hierarchical corporation as the dominant enterprise structure of the Information Age.

As shown on the graph, Enterprise Network opportunities will place a layer of more entrepreneurial activities on top of the sharply declining supply of traditional jobs caused by the approaching wave of profound technological unemployment.

The news media will undoubtedly focus on the depressing and inexorable loss of traditional jobs, while more sophisticated media will emphasize the more moderate loss of participants in the economy.  If, however, one makes the shift to the entrepreneurial mindset the outlook is rosy to the point of exciting.

As GDP per capita explodes, people in traditional jobs will find their compensation determined by supply and demand.  Because of advancements in robotics and A.I., for decades it will be a hirer's market and employees will find that their compensation, in real terms, will remain flat and even decrease, in many cases dramatically.  Entrepreneurs' income, on the other hand, will explode right along with GDP per capita.

This very high characteristic income for Information Age careers is an important source of the increasing income and wealth disparities that are developing, especially in the U.S. where the Transformation is most advanced.

There is one serious problem, however.  The Industrial Age image of an entrepreneur is that of a monomanic, visionary, highly self-promotional and intensely goal oriented person.  
The Industrial Age entrepreneur was confronted with a series of obstacles to be overcome with high income coming with success, but also bankruptcy the result of failure.  Consequently, the rules of the entrepreneurial game have been constructed so that success does, indeed, require this personality type.  

However, most people don't fit the entrepreneurial personality type.  We see that, unavoidably, if the employer-employee relationship will comprise a relatively small minority of the workforce in the Information Age, a new, more encompassing, paradigm for the entrepreneur needs to be developed.  That new paradigm is expressed within an Enterprise Network which, rather than presenting obstacles, is a success prone environment. 

Unbiased analysis and commentary at the highest level of intellectual sophistication 
Subscribe to The Polymath.

First, let's get a visual picture of it.  The red rectangles are funding organizations that today might be called Venture Capital Funds. However, in the Enterprise Network, they will be informal communities of crowdfunders.  Some will have crowdfunding as their primary productive activitiy while most participants will be 'coming along for the ride' and engaged in a different primary productive activity themselves.

The light blue are corporate overhead service providers, which may include accounting, human resource, IT, legal services, etc. on a consultative basis.  In the Industrial Age corporation, corporate departments tell the operating units what to do.  In Enterprise Networks operating units procure counsel as needed, but are free to proceed as they choose.

The green circles are the individual, independently owned and operated, enterprises.  The enterprises will tend to be much smaller than Industrial Age enterprises.  First, consistent with The Age of Boutique Everything and The Cultures of Affluence, they will be providing niche products and services.  Second, consistent with The Income Explosion and Technological Unemployment, they will have highly automated operations.  Each enterprise may also have contractual or equity relationships with other enterprises within the network that may be the result of a vendor or customer relationship, or a strategic partnerships.  

Participate in the innovative  crowdfunding of The Polymath
  25,200% return is our goal.   Learn all about it

A few of these enterprises will provide the essential access to markets often on a cash flow positive, percent of sales basis.  What that means is that the enterprise will have the option to pay for access as a percent of their revenue and from the proceeds of sales.  In Internet marketing this is referred to as affiliate sales.  Historically, retail malls have done something similar with a base rent and then a percent of sales after the fact.

This is a significant part of what makes the Enterprise Network a success prone productive environment.  It substantially lowers start up equity requirements, allows for higher internally funded growth rates and greatly simplifies and accelerates profitability. 

The Death of Capitalism
As we explore in The Death of Capitalism, Information Age companies have a theoretical  return on book value of 67%.  In fact, by using more aggressive financing and organizational models, many young enterprises actually achieve results that significantly exceed this.  One study found that young Information Age enterprises can, and do, grow at 200% and many of them will be able to .

From this we can project the following for a startup with $500,000 initial funding:

Year                          Book Value
0                               $       500,000
1                                $   1,500,000
2                               $   4,500,000
3                               $ 13,500,000
There are many ways to estimate market value of an enterprise.  For Information Age enterprises, a 12:1 market to book value is conservative.  Which means that at the end of year three a conservative estimate of market value would be $13,500,000x12=$162,000,000.  If equity crowdfunders are given 20% equity, their year three market value will be $162,000,000x20%=$32,400,000 for an annual return of 300%.  A team of five will have an average net worth at the end of year three of $162,400,000x80%/5=$25,900,000.

In year 3, income will be $13,500,000x67%=$9,045,000 of which equity crowdfunders will earn $1,809,000 and the five team members will average $1,447,200.  Of course, active team members will also receive a salary as well.

While Industrial Age enterprises generally returned 5% to 10% of revenue (turnover in Europe), Information Age enterprises typically return 20% to 30%.  Consequently, total revenue in year three is estimated at $9,045,000/.25=$36,180,000.  While this provides substantial returns to a limited stockholder base and $1.5+ million per year income to the owner/operators, it is still a microcap enterprise with small caps usually defined as between 300 million and 2 billion USD.

In the Industrial Age, because returns on equity were relatively small, the objective of early round funding was to capitalize upon the market to book value premium (usually 2:1 to 3:1) that is created by a profitable enterprise.  Consequently, the 'exit strategy' was key to venture capital.  There are two reasons why this will change in the Information Age.

  1. An investment that has grown 64X in three years, upon exit, requires re-investment in 64 new enterprises.  This quickly becomes impractical.  This forces the venture capitalist to chase ever larger deals and larger positions within each deal.
  2. In the above example, if the position is not liquidated, annual income is 3.6X initial investment.  Each success, therefore creates the need to find three new investment opportunities per year every year.  Even this quickly becomes impractical and the portfolio, in addition to rapid growth also becomes cash flow positive.  Liquidation of positions would be counter-productive.
This means that equity crowdfunders will return to a portfolio management investment strategy where mature investments will produce positive cash flow which will be used to fund newer enterprises.

Scope of Opportunity  
Since Real GDP in the developed nations is going to increase at least ten-fold during the Transformation, 90% or more of the their 2040 GDP will need to be 'new business'. Additionally, what are currently considered to be 'developing nations', most notably Brazil, Russia, India and China, will likely 'catch up'  Overall, Gross World Product will likely increase more than forty fold.

Consequently, while the markets in publicly traded securities will be bearish for the foreseeable future, the business outlook is strongly bullish and that will translate into a strongly bullish privatestors and entrepreneurs of the Enterprise Networks will be the ones who get it.

There are several reasons why the Information Age Enterprise Networks will replace the traditional hierarchical corporations.

First, they will out compete them because they will be more responsive to changes in the marketplace.  As the Income Explosion, The Cultures of Affluence and The Age of Boutique Everything rapidly change society, culture, economies and markets, the centrally planned and controlled, hierarchical corporations will not be able to respond quickly enough to take advantage of the new opportunities and to avoid the repercussions of the new threats.

Second, large, often multinational, corporations are creatures of the global public equity markets.  Their rates of returns, their structured equity sections, their management relationship with markets and market analysts define them.  As the investment dollars are driven to the private equity markets, with smaller scales and higher risk adjusted rates of return, they will not be able to provide the equity instruments and structures that the new investor wants.  In response, large corporations will likely decentralize and offer shares in subsidiaries and business units for sale in an effort to become competitive with Enterprise Networks.  Some will succeed.  However, they will no longer be what they were.  They will have essentially converted themselves into an Enterprise Network.

Third, Enterprise Networks are free to make superior long term decisions while publicly traded multinationals are driven by the need to 'deliver' on the next quarter's results.  Over time, this superior decision making incentives will result in superior decisions.

On the other side of the coin, the best Knowledge Workers will prefer the relationship being offered by Enterprise Networks over what is offered in a traditional employer/employee relationship.  It is also far superior to the Contractor or Consultant relationship.  The astute reader has, perhaps, already caught that being an entrepreneur in an Enterprise Network does not require start-up capital.  It simply requires the ability to find a place in the structure.  Unlike the current entrepreneurial market, this will not require the participant to be a self-promoter or to possess a monomanic personality.  There are no dictates from on high; the local management team, advised by expert Network consultants, is in charge.

If you are interested in learning more about Polymathica Enterprise Network, please subscribe to The Polymath in the upper right hand corner.  Use the referral number given to you on referral or if you arrived from a search or other source, use 032950

Monday, March 16, 2015

Sorting Out Technological Unemployment

Recently there has been increased media coverage of technological unemployment. It likely began with President Obama's 2011 statement, "There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don't go to a bank teller, or you go to the airport and you're using a kiosk instead of checking in at the gate."  However, the high profile of Google's driverless cars and the well covered Jeopardy victory of IBM's Watson have probably contributed to a general awareness of the accelerating replacement of humans by advanced robots and artificial intelligence software.

There are more bank tellers today than there were when ATMs were introduced as was pointed out by The Economist. This resulted in President Obama's comment being ridiculed in many circles.  The criticism was improper; while there are more bank tellers today, there are substantially fewer than there would be if ATMs didn't offer an alternative to them. The introduction of ATMs did, indeed, eliminate jobs and cause new bank teller jobs to not be created.

Unbiased analysis and commentary at the highest level of intellectual sophistication 
Subscribe to The Polymath.
In 1930, John Maynard Keynes published an essay, 'Economic Possibilities for our Grandchildren'.  He summarized his thesis by stating, 'The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption; the improvement in the standard of life has been a little too quick...'  Though he didn't coin the term, Technological Unemployment, he was the first luminary of Economics to give it credence.

Keynes' statement properly frames the discussion as a phenomenon of two forces in dynamic equilibrium. Technology, in general, and automation, specifically, reduces the labor component of domestic product and thereby causes unemployment.  However, technological progress is also economically stimulative and the resulting growth in Gross Domestic Product creates jobs.  The problem is one of timing; technological unemployment is immediate but the economic growth takes place over several years.

Participate in the innovative  crowdfunding of The Polymath
  25,200% return is our goal.   Learn all about it
The specific mechanisms by which automation results in economic growth is as follows:

     *Enterprises only purchase productivity enhancing technology if the internal rate of return (IRR) substantially exceeds their cost of capital.  They generally establish a corporate 'hurdle rate' that establishes a minimum risk adjusted rate of return that all projects must meet if they are to be implemented.  Therefore, automation decreases labor, increases capital employed and increases profits even as a percentof capital employed.

     *Because the productivity enhancing technology is, subject to patent protection, available to all competitors, in a free marketplace, enterprises will lower their prices to their marginal return on capital in order to capture or defend market share.

     *The price reduction is economically stimulative because the money saved by the consume can then be used to purchase additional items which increases aggregate demand.

     *Research suggests that an inflation rate of 2% optimizes long term Real GDP growth.  Central banks today generally manage their money supply to that goal.  Therefore, generally falling prices results in an increase money supply, which is very stimulative.

However, and this is key, the unemployment is immediate, but the job creation from economic growth takes time.

The faster the rate of the technological progress, the larger the portion of the labor force that is in this transitional state. Also, when technology eliminates a whole job category there is often a period of education for the jobs that remain.  What is lost in much of the contemporary discourse is this ephemeral nature of technological unemployment.  Keynes did not condemn 'technical efficiency' but rather posited that it could happen too quickly.

Long before the term 'technological unemployment' was coined, the early nineteenth century Luddites protested the loss of jobs due to the partial automation of the textile industry.  Because their fear proved to be unfounded, the belief that technological unemployment leads to structural and persistent unemployment is referred to as the Luddite Fallacy.  Despite two centuries of evidence to the contrary there is a growing belief that the technological unemployment in our immediate future will result in a significant, permanent job shortage.  Even leading Economists who are fully aware of the Luddite Fallacy are expressing concern that this time technological unemployment might be permanent.

In the July 21, 2014 Washington Post, Vivek Wadhwa wrote, 'Within two decades, we will have almost unlimited energy, food, and clean water; advances in medicine will allow us to live longer and healthier lives; robots will drive our cars, manufacture our goods, and do our chores,  There won’t be much work for human beings'. What he predicts we will have in twenty years is becoming the consensus, however the permanence of the job destruction is still a matter of controversy.

To a degree the projected job destruction that is becoming the majority opinion scenario is based on a 2013 paper by Frey and Osborne that analyzed current jobs and concluded that 47% of them are at risk in the short term.  The controversy revolves around whether new job categories will arise to employ the displaced workers.  Marshall Brain, in 'Robotic Nation' probably most succinctly stated the neo-luddite position, 'This imaginary new category of employment does not hinge on technology -- it is going to employ people, after all, in massive numbers -- it is going to employ half of today's working population. Why don't we see any evidence of this new category of jobs today?'.

This expresses the fundamental error of the Luddite Fallacy. If half the jobs disappear and the GDP remains constant, it is true that the unemployment rate will increase to over 50%.  However, if the GDP doubles, the unemployment rate will remain unchanged.  This will happen without any fundamentally new job categories. Twice as many people will be doing the remaining 50% of the jobs.  Rather than 50% unemployment, we will see a doubling of standards of living. However, Brain is also incorrect about new job categories. Over time new job categories will emerge.

Between 1875 and 2000, the high industrial age, initiated by a explosion of higher technology inventions in the last few decades of the 19th Century, U.S. Real GDP per capita increased from $3,339.20 to $44,475.00 (2009USD).  This 13.3X increase in productivity was caused by automation and demonstrates that, in practice, automation doesn't result in massive unemployment but rather in GDP growth. Put simply, the historical evidence says that technological unemployment cures itself by increasing GDP and it can easily handle a 50% loss in jobs.

This is not just a theoretical exercise.   In fact, in a sense,, all current unemployment is technological unemployment.  We can demonstrate this with a simple set of calculations.  In 2013 in the U.S. 143.929 million workers created $15,710.3 billion of GDP for an average of $109,155 each.  There were 10.376 million unemployed for a labor force of 155.044 million.  In 2007 146.047 million workers created $14,873.7 billion of GDP for an average of $101,328.  If the GDP of 2013 was created with the GDP per worker of 2007, it would require 155.044 million workers or precisely the total labor force. ($15,710.3 billion÷$101,328)  In other words, all the unemployment of 2013 can be thought of as resulting from the increase in GDP per worker from 2007 to 2013.

Because over this time period GDP grew at 0.91% per year and GDP per worker grew at 1.25% per year, unemployment grew from 5% to 6.7%.  If GDP per worker had grown at 3% per year from 2007 to 2013 and GDP grew at the same 0.91%, unemployment would be 16.2%.  Over subsequent years GDP would grow more quickly, and lower unemployment. However, that would be scant solace to the unemployed workers of 2013.  This describes precisely what Keynes meant when he talked about growing too quickly.

While the amount of increase in GDP per capita that will result from the impending explosion in automation is highly speculative, many analyses suggest that it may be similar to that experienced during the High Industrial Age. If we assume a 10X increase, the median household income in the U.S. will be 600,000 2015USD.  Clearly such a household will have substantially different spending patterns and purchasing decision criteria than the average household of today.  These, in turn, will transform the labor markets over and above the changes wrought by technological progress.

In summary
Advanced robotics and artificial intelligence will devour corporate organization charts from the bottom up until only upper management remains. However, economic growth will result in little long term change in total employment.

Manufacturing jobs will nearly disappear as most fabrication will be 'black box' with no human intervention.  However, they will be replaced by an explosion in creative careers.

Virtually all menial service jobs will disappear, however, employment will remain relatively constant due to an explosive growth in more professional services.

A comprehensive treatment of this transformation in the workforce would exceed our reliable knowledge of futurity. However, here we will consider the overall structure of the Information Age labor market with sufficient specificity to support the conclusion that the impending burst in technological unemployment, like all events that preceded it, will not result in permanently high levels of unemployment.

Information Age Careers

In the Information Age differences in spending patterns will lead to different labor demands.  We can expect the current decrease in the energy and raw material components of GDP to continue as the economy becomes more information, knowledge and content intensive.  The durable goods component will likely decrease while the design component will increase.  Services will likely increase.  Whole new job categories may indeed arise as products and services not affordable by a sufficiently large market today become broadly affordable.

While the Information Age economy will be at least as complex as the Industrial Age economy, we can describe three broad classes of jobs that will dominate careers, 1) Owner/operators and Executives 2) Creatives and 3) Services.

Owner/Operators and Executives
Automation is eating corporate organizations from the bottom, up.  Since we know that computers play chess and Jeopardy better than humans and diagnose diseases better than doctors, it seems unlikely that technical expertise alone will save any corporate job.  However the computer consumption of the org chart will end before it is completely devoured.

In order to understand the process of transformation for corporate careers, we will use a stylized example of an enterprise that has one CEO, 5 VPs, 25 managers and 125 professionals.  In the first phase computers replace all professionals.  Those displaced professionals start four new enterprises, with, in total, 4 CEOs, 20 VPs and 100 managers.  In this stylized example, the remaining professional goes off to write the great American novel.  The corporate portion of GDP has grown 5X.

Next, computers replace all managers or 125 more workers. They create 20 enterprises with 20 CEOs and 100 VPs.  In order to balance the equation, we will assume that five start a Rock & Roll band.  The corporate portion of GDP increases 25X in total.

Now, the software salesman comes knocking with a new release that eliminates the VPs.  This time the CEO says no. He or she does so because enterprises are not just productive environments; they are also social environments.  The CEO does not want to come to work and be alone.  (S)he also realizes that the loss of diversity of perspectives would introduce significant risk.  In other words, even in an artificial intelligence future, there is an irreducible 3% to 5% of the workforce.

While computers will perform nearly all of the day to day, nuts and bolts operations, humans will remain the decision makers.  They will do so because humans don't want to turn the reigns over to computers.  Computers have neither the inclination nor the capability to contest the issue. Consequently, humans stay in charge.  They won't need to work very much because computers will be superb advisors and even better subordinates

Nearly all professionals enter the workforce with the aspiration to one day become VP or CEO.  Consequently this process of automation, over time, will be perceived as a positive event providing a vastly improved opportunity for promotion.  The primary challenge will be seasoning executives when the entry level jobs are at the vice president level.

The preceding example suggests that the percent of people employed in the operation of an enterprise will decrease by 96%.  If GDP grows by less than 25X the labor hours needed in office activities will decrease.  This can be ameliorated through shorter work weeks which will be consistent with automated decision support.  A 20 hour work week is not unreasonable and consistent with a 12X increase in GDP per capita.

However, we should learn a lesson from Keynes.  He predicted that 'our grandchildren' would work 30 hours week.  However, the average work week is actually 37 hours per week.  That is still down substantially from 1930, but not as low as he predicted.  Consequently, we should assume that the 20 hour work week will probably be missed as well.  This means that the percentage of the workforce engaged in corporate activities will likely decrease moderately.

The Creatives

Many, perhaps most, fabrication will take place in facilities that robotically receive raw materials delivered robotically, move materials within the facility robotically, robotically fabricate the product, move finished goods to warehousing with robotic forklifts, robotically move finished goods to robotic picking lines with orders moved robotically to robotic trucks to transport orders to the purchasers.  This 'black box' manufacturing will be the norm.

It is common to think that the 'middle class' of the Information Age will be small, highly educated and technically oriented.  This preception is what leads to much of the anxiety over a high, persistant unemployment.  This is a misapprehension resulting from the mistake of imagining the future to be 'like today only more so'.

While both the Owner/Operator and Middle Class will contain some scientists and technologists, most of the Middle class will create and manage design and brand value-added.

These jobs will not be lost to automation because the one thing computers can't do is be human and we humans want humans doing these jobs.  For example, we are willing to pay more for perfume by Taylor Swift or Beyonce than a perfume of equal quality without the endorsement.  Essentially, the simple process of a celebrity selecting one fragrance among several as their favorite adds substantial value to it.  This is a essentially human activity that cannot be automated; perfume by R2D2 or shoes by HAL simply will not command designer prices.

Today, only a small percent of consumers have suffcient financial resources to routinely purchase high design and brand content products.  However, when median household income reaches mid six figure 2015USD most people will be able to afford designer products.  All evidence indicates that they will buy them.  In other words, while the 600,000 2015USD income household of the Information Age will not be exactly like the 600,000 2015USD income household of today, over time their purchasing patterns will likely be similar. 

For example, the typical family spends 7% of their income on clothes.  For the average $60,000 per year family that is $4,200.  Clearly dad is not going to work in $3,000 Armani suits nor is mom wearing $3,000 St. John ensembles.  The $300 Men's Warehouse and Limited outfits that most dads and moms currently buy have relatively low design and brand components while Armani and St.John are dominated by these price components.  

As incomes increase 10X or more, clothing budgets will grow large enough to accommodate high design and brand value purchases.  For several reasons product category sales may actually increase by somewhat more that 10X.  However, the important point is that the clothes that are currently being purchased by most families may have no more than a 2%-3%, design and brand value component.  The designer clothes that will come to be the norm typically have a 20% to 30% design and brand value component.  Consequently, while budgets may increase 10X, the design and brand component will likely increase 100X.

According to the U.S. Bureau of Labor Statistics there are 22,300 fashion designers in the U.S. This could easily increase to 1,000,000.  The design process will likely rely heavily upon A.I. design assistance, but fashion designers will still make the final decisions and their names will be on the labels.

Second, many product categories that currently have very little design component will routinely be custom designed in the future.  3D printing, while not as cost effective as extrusion and injection fabrication meyhods in large runs, is much less expensive in short runs.  When combined with advanced robotics and advances in material science nearly all durable goods will become custom designed.

The largest absolute increase in design value added will likely be in cars.  A Rolls Royce Ghost costs about 15X more than a Toyota Camry.  The Ghost is larger, heavier and generally uses more costly materials.  However, most of its greater cost is in design and brand value.  While built individually, Rolls Royce and Bentley are still production automobiles.  However, Rolls Royce has its Bespoke program and Bentley has its Mulliner program where, as Rolls puts it, you commission rather than order your car.

In the U.S., alone, there may be 750,000 automotive designers as nearly everyone buys electric, self-driving, but bespoke automobiles.  In fact, the practice of commissioning a coach builder to place a custom designed body on a more standard chassis that was common in the early 20th century may return.

While most commercial real estate is individually designed, currently most residential housing is built from plans that are duplicated hundreds, even thousands, of times.  In the Information Age houses will be much larger and will almost always be custom designed.  Architectural design is already substantially computer assisted.  While that trend will undoubtedly continue, the number of U.S. architects will likely increase from 107,400 to over 500,000.

Today, households spend a surprisingly small amount on furniture and the interior design process.  That is a characteristic of 60,000 2015USD households and their prioritization of a very limited household budget.  600,000 2015USD households go through a very different process than a trip to the 'big box' furniture retailers or Sears.

Typically, they will retain and interior designer.  The designer will render a prospective design for a room that will include custom furniture with selected fabrics.  Window treatments, art, table clothes, bedding, etc. is carefully selected and often custom made.In other words, the room will be unique on a very fundamental level.

Typically, some designers have some furniture at their retail establishment but usually design from many large categories.  They do not charge a design fee but rather take the retailer share for their services.  While a room designed and executed by an interior designer is expensive, it is an inherently more efficient process.

Reflective of the relatively small budget that most households have for interior design services, there are only about 55,000 today.  However, because the percent of households utilizing interior designers will increase and the design content compared to 'big box' store furniture will also dramatically increase, the number of interior designers may increase to 500,000.

What is true for perfume, fashion, cars, houses and furniture will also be true for housewares, millwork, towels, sheets, electronics, etc.  This emergent Age of Boutique Everything could make Product Designer the single largest career category.

Writers are everywhere, already.  They inform us of the news, analyze it, tell us what to think about it.  They tell us how to use our phones, computers, microwaves, televisions, blow dryers, how to assemble toys, etc.  They write books and magazine articles to entertain and inform us.  Even when we watch TV or movies it all started with a writer.

A typical $25 hardbound book sold in a 'bricks and mortar' bookstore typically will pay the author less than $4 per sale.  An e-book costs about $10 and the author receives $7.  At the same dollar sales, this translates to four times more income for writers.  However, as incomes skyrocket and liesure time increases, both from shorter work weeks and more self-maintaining houses, the absolute number of books will likely skyrocket as well.  Consequently, book writers will likely increase tenfold as the prevailing income also increases substantially.

In America, we have gone from three commercial television networks, a public station and an independent station to the equivalent of over twenty networks today delivered by satellite or cable.  Internet television will expand that to well over 100 network equivalents.  This explosion of original programming is increasing the number of writers,  while simultaneously lowering compensation.  However, as incomes increase and viewers transition to episode and season purchases, at substantially higher revenue per viewer, incomes will increase as well.

Today the financially successful script writer is rare.  They will be far more common in the Information Age.  Today, computers check spelling and some elements of style.  In the future scripts may be computer checked in real time for conformity to the show and characters.  However, humans will still submit scripts with their names on them.

Magazines and newspapers are in trouble today while, if anything, via the Internet, people consume more print material than ever.  The delivery of this content, from a business viewpoint, is still in great disarray.  However, as it evolves and streamlines, it will provide higher income for more writers than magazines and newspapers did in their primer.

First, nearly all the value-added of Internet content is provided by the writer and editor.  There is no cost of printing or delivery.  Second, because Internet publication has such low entry and maintenance costs, it is capable of delivering smaller, more highly targeted audiences to advertisers.  If an advertiser is required to advertise to 1,000,000 people in order to reach 10,000 potential customers, he will not be able to pay a very high CPM.  However, if he only needs to advertise to 50,000 people to reach the same 10,000 potential customers, he can afford to pay a CPM twenty times higher.

With the emergent Age of Boutique Everything there will be an explosion of niche marketers looking to advertise in niche publications at very high CPM.  This means more writers will be needed to satisfy the explosion in niche publications and the very high CPM will pass on to the writers in the form of higher payments.

Fine Art
Today, the $60,000 income family buys a limited number of prints and cast resin statuary from general merchandise stores.  The $600,000 income family, on the other hand, buys original art from galleries.  In the Information Age, 50% of the households will earn $600,000 per year.  Today only about 0.5% do.  That suggests a 100X increase in expenditures for fine art.  With this explosion in demand, it is likely that semi automation of the artistic process will be welcomed by artist and consumer alike, and both the number and income of painters, sculptors, computere graphic artists, etc. will increase dramatically.  Yes, AI will likely be able to create fine art.  However, it will still pass through artists that can sign the work and created the value added of human emotion.

Today, other than support for public television, only a small percentage of the population could be considered 'patrons of the arts'.  As incomes explode, perhaps as much as 20% of families will participate in programmatic patronage.  This may range from a commitment to purchase all books published by an author up to endowing a chair in their local symphony or loaning art to the local museum.  This increased penchant for patronage in combination with the greater purchases in the arts means that we will experience a renaissance in the arts and a concomitant explosion of professional artists.

Music Creatives
Kevin Kelly published a well known article entitled '1,000 True Fans' in which he suggested that many artists could make a livable income by getting $100 per year from 1,000 people.  It resonated with its audience because today the industry has a very small number of people who make enormous income, a somewhat larger but still small number of musicians who make a middle class income and a very large population who would like to be full time musicians but are unable to earn enough.

Undoubtedly, an orchestra of robots could play Beethoven's Fifth Symphony credibly.  However, even if they could play it better than a human orchestra, people might go to see the performance out of curiosity, but they won't buy a season ticket.  A night at the symphony is a social event as well as a musical event.  If the performance is not done by people, one may as well stay home and listen to a CD.

While there are and will continue to be a relatively small number of mega-stars, most musicians will engage in 1) local performances 'in concert', 2) peformance in restaurants, clubs and some retail establishments, 3) performance for parties, wedding receptions, etc., 4) music instruction, and 5) street performance.  As incomes explode, the demand for most of these categories will increase as will the prevailing compensation.

Today there are 167,400 musicians in the U.S. That could easily increase to 1,500,000 which will probably stretch the available market of sufficiently talented people.

Video Entertainment
In addition to the writers mentioned earlier, the production of video entertainment employs many Creatives.  These include actors, directors, wardrobe and set designers, soundtrack composers, etc.  While 'extras' will likely be computer generated in the future the main characters will remain human because we want them to be.  

A typical ad supported one hour television show will earn about $.75 per viewer.  The typical season pass for a series purchased for download is about $1.67 or more than twice as much.  However, that will increase over time as incomes increase and people are willing to pay more for more targeted programming.  As the total industry revenue increases in an industry already characterized by high salaries, the number of workers will continue to increase.

Computer Games
Computer games, both for download and MMORPGs, have exploded and now have total annual revenue of about $25 billion in the U.S. and $125 billion worldwide.  The design content on computer games is massive and is consequently fueling growth in Designer roles.  It is already a highly compensated job and A.I. is likely to substantially increase productivity and, thus, income in the next 10 to 20 years.

As large as the industry already is, it is still dominated by younger people with 40% of the population not involved.  The average person who owns a video game owns two.  In other words, this is an industry that will continue to grow at a fast rate for quite some time.  However, because it will likely automate, the number of jobs may actually decrease while the annual income explodes to some of the highest in the whole economy.

The Fashion Consultant
In the high fashion centers such as Rodeo Drive in Beverly Hills, Michigan Ave in Chicago or Bal Harbour Shops in Miami, the purchasing process is very different from the Mall.  First, people don't work with the sales clerk who happens to be on duty when they walk in; they have a fashion consultant with extensive notes on the customer, their preferences and their previous purchases.  They frequenly will call the customer with something like, 'We just got something in that is just YOU.  The second I saw it, I knew you have to see it.  Can you come in sometime over the next couple of days?  I will set it aside in your size with a few other selections that I think you will like.'

When the customer arrives she is greeted by her fashion consultant who will talk with her about the outfits, suggest purses, shoes, etc.  When a dress costs $2,500, it can be and is a high touch, high attention purchase experience.  This is what people in the 600,000 2015USD income range are accustomed to and for those who are entering that income level, after a short period of adjustment, it is usually an easy thing to which to become accustomed.

Because clothing is one of the largest discretionary budget items in most households, this retail consulting job will be one of the largest job categories, comprising, perhaps, as much as 5% of the labor market.  Because fashion consultants can generate several thousand dollars per hour in sales, these will not be low income jobs.

Restaraunts and Pubs
Families who earn today's median income allocate their resources with a keen eye toward the bottom two levels of Maslow''s Hierarchy.  However, families at the future median of 600,000 2015USD will have different priorities. In the Information Age people will have domestic robots and will not visit restaurants solely to avoid cooking and cleaning.  When they go to a restaurant it will be because they want to 'get out and do something'.  It is inherently a social event.

All jobs in restaurants and pubs that don't enhance the social experience will be automated. The busboy and dishwasher will be robots.  In the lower priced restaurants, food preparation will be totally automated but in mid to high priced restaurants, there will be a master chef and, perhaps, a pastry chef.  These chefs, though in a service industry, are actually creatives.  Most people will choose their restaurant partially to experiece the culinary genius of the chef.

The guests will be ushered to their table by a personal attendant who will advise as to the menu and appear to take their order.  In reality the attendent is wearing a microphone with a speech recognition AI program that plans and, as sous chef, executes the order.  The meal will typically arrive on a robot cart a few seconds after the attendent arrives at the table to serve it.

Science Fiction is replete with robot bartenders and cocktail waitresses.. They will go the way of flying cars.  There is absolutely no reason to visit a pub save as a social experience. Bartenders and cocktail waitresses have been and will continue to be an important element of the milieu..  Both bartenders and waitresses will wear microphones attached to drink preparing robots. They are not there to take, prepare and deliver drink orders; they are there to assure a minimum level of social interaction.

Service Professionals
Virtually all service professionals will be negatively affected by automation.  IBM's Dr. Watson is already a better diagnostician than any human doctor.  In the not too distant future, it will query patients for symptoms, order tests and deliver DX and Rx to the physician.  The doctor's role will be reduced to explaining it to the patient and dealing with the emotional issues.  Watson could do that, too, but few patients will want it over a human.  Educational requirements and compensation will fall relative to other professions.

Attorneys, in the future, will have AI that does legal research, writes contracts and briefs, prepares discovery and interrogatories.  However, few people would be happy with a legal system that gives no room for humanity.  Consequently, attorneys will interact with clients, judges and juries. Judges will be advised by expert systems on precedents, related appeal reversals, etc.  Income will likely not keep pace on a percentile basis but will still will be above 50%'ile.  Demand for legal professionals will almost surely decrease substantially.

Realtors, Insurance Agents, Personal Bankers and Investment Advisors will change very little save that, due to substantially greater client income and wealth, their numbers and income will be substantially higher.  As with other service professioals, they will be substantially advised by A.I.  In upper income communities, concierge services that provide a single source for these professional services are becoming popular and may be the face of the future.

Personal Trainers, Advisors and Coaches
The upper income households today commonly have personal trainers, nutritionists, yoga instructors, massage therapists, etc.  When the median household income is $600,000 many, perhaps most, people will retain several such trainers, advisors and coaches.  Robots can do most of these jobs, but in truth, these are social events and that the social leader is human is critical.  Will some lower income people register for robot led Pilate's?  Probably.  But it will be the exception.

Synthesis and Conclusion
While we are almost surely facing high technological unemployment prior to 2020, it will resolve within a decade as the stimulative effects of the resultant deflationary forces take hold.  By 2040, GDP per capita will exceed 500,000 2015 USD over most of the world and median household income will exceed 600,000 2015USD.

AI and expert systems are likely to completely automate the office within ten to fifteen years, the process will stop at the upper management level.  Gains in Real GDP, however, will increase sufficiently to keep the number of office workers close to current levels

An explosion in creative jobs will replace the nearly complete loss of manufacturing jobs and small decrease in office jobs.  The Creatives will be dominated by product designers followed by writers, composers, musicians, actors, painters and sculptors.

Like Owner/Operators the incomes of Creatives will cover a wide range from local entertainers to top level fashion designers, top musicians, etc.  The median will likely be 40% or so below Owner/Operators.

Menial service jobs such as drivers, bus boys, window washers, hotel housekeepers, fast food workers, gardeners, retail stockers, etc. will disappear entirely. Most of the remaining service jobs will require professional skill sets and will be viewed more as performance art or consultancy than servitude.

'Economic Possibilities for our Grandchildren'
John Maynard Keynes

'Obama, ATMs and Rage Against the Rise of Machines'
Matt Kibbe
Forbes 6/21/2011

'We're Heading Into a Jobless Future No Matter What the Government Does'
Vivek Wadhwa
Washington Post July 21, 2014

'Robots and Robber Barons'
Paul Krugman
New York Times December 10, 2012

'Are ATMs Stealing Jobs'
The Economist June 15, 2011

'Robotic Nation'
Marshall Brain

'Lights in the Tunnel'
Martin Ford

Carl Benedikt Frey and Michael A. Osborne

Historical GDP and CPI for U.S. and U.K.

Labor statistics are from

'Labor Day 2028'
Robert Reich
September 1, 2015

MONETARY POLICY at the ZERO LOWER BOUND Putting Theory into Practice
John C. Williams Federal Reserve Bank of San Francisco January 16, 2014

What Is the Optimal Inflation Rate?
By Roberto M. Billi and George A. Kahn

Can a Machine Build a Better Hamburger?

David Kover Oct 11, 2012

How Uber’s Autonomous Cars Will Destroy 10 Million Jobs And Reshape The Economy by 2025
Zack Kanter January 27, 2015

'1,000 True Fans'
Kevin Kelly
The Technium

CPMs Highest Among TV Broadcast Nets, Online Video Limited

Essential Facts About the Computer and Video Game Industry

Thursday, January 22, 2015

The Inappropriately Excluded

by Michael W. Ferguson

The probability of entering and remaining in an intellectually elite profession such as Physician, Judge, Professor, Scientist, Corporate Executive, etc. increases with IQ to about 133.  It then falls by about 1/3 at 140.  By 150 IQ the probability has fallen from its peak by 97%!  In other words, a significant percentage of people with IQs over 140 are being systematically and, most likely inappropriately, excluded from the population that addresses the biggest problems of our time or who are responsible for assuring the efficient operation of social, scientific, political and economic institutions.  This benefits neither the excluded group nor society in general. For society, it is a horrendous waste of a very valuable resource.  For the high IQ person it is a personal tragedy, commonly resulting in unrealized social, educational and productive potential.  The above statistics are the result of dividing the Gaussian distribution of 126 with a standard deviation of 6.7 by the IQ distribution of the total population.

The very limited research that has been done on this phenomenon has focused on possible flaws in high IQ people that might explain the exclusion.  In order to be explanatory, the flaw would need to increase with IQ.  However, the evidence that exists suggests that it is not the result of a compensatory flaw, but rather the result of inappropriate educational and productive environments within which the high IQ person must strive to succeed. Consequently, remediation should focus on creating more appropriate environments.

The Exclusion
In the popular culture, IQ has become a point of contention.  Many people credulously accept that the eminent have very high IQs and that people of ordinary accomplishment have ordinary IQs.  For example, it was widely reported that Garry Kasparov has an IQ of 190.  In truth, his IQ is verified to be 135. Others, often based on Steven J. Gould's book, 'The Mismeasure of Man' subscribe to the assertion that IQ is a useless oversimplification that primarily measures how well a person takes IQ tests.

The science does not support either assertion.  A  very large body of scientific evidence shows that IQ tests measure a polygenetic trait, g, that exhibits moderate phenotypic variation.  It is directly correlated, over most of its range, with positive life outcomes and inversely correlated with negative ones.  It has also been shown to accurately measure what people mean when they use the words 'intelligent' or 'smart'.

However, because of the moderate r values of its correlates, IQ is primarily of value in understanding the characteristics and interactions of large populations.  Save as a diagnostic tool for very high IQ individuals, it is not sufficiently predictive to be reliably used on an individual case basis.  Furthermore, in adulthood, actual life outcomes are generally known and, consequently, a predictive tool is of limited value.

When IQ tests first came out, the various intellectual elites were willing, even eager, to take them.  The results, however, while good, were not great, so today they generally are not so willing to have themselves tested.  Still, while most of the evidence is old, the results are still very likely to be valid. The only significant recent work is that of Robert Hauser and it suggests that, if anything, the mean IQ of the intellectually elite professions has fallen.  That, however, is almost surely an artifact of the methodology.

Over an extensive range of studies and with remarkable consistency, from Physicians to Professors to CEOs, the mean IQ of intellectually elite professions is about 125 and the standard deviationn is about 6.5.  For example, Gibson and Light found that 148 members of the Cambridge University faculty had a mean IQ of 126 with a standard deviation of 6.3.  The highest score was 139.  J.D. Matarazzo and S.G. Goldstein found that the mean IQ of 80 medical students was 125 with a standard deviation of about 6.7.  There was one outlier at 149, but the next highest score was 138.  This means that 95% of people in intellectually elite professions have IQs between 112 and 138   99.98% have IQs between 99 and 151.

By dividing the distribution function of the elite professions' IQ by that of the general population, we can calculate the relative probability that a person of any given IQ will enter and remain in an intellectually elite profession.  We find that the probability increases to about 133 and then begins to fall.  By 140 it has fallen by about 1/3 and by 150 it has fallen by about 97%.  In other words, for some reason, the 140s are really tough on one's prospects for joining an intellectually elite profession.  It seems that people with IQs over 140 are being systematically, and likely inappropriately, excluded.  With the conservative assumption that, absent the exclusionary processes, IQs above 133 neither help nor hinder the achievement of elite profession membership, the excluded population is distributed as shown above.  If we assume that the positive correlation seen below 133 IQ continues above 133, the excluded population would be larger and the exclusion more complete.

Inappropriately excluded?  Remediation is possible! 
Subscribe to The Polymath.
Grady Towers, in his article, 'The Empty Promise' concludes that IQs over 140 add nothing to the academic or career performance of the individual.  However, the result herein described is a stronger statement in that it actually appears to support an inverse correlation.  It is not an entirely new revelation.  Robert Sternberg and others have mentioned an inverse correlation by observing the absence of very high IQ individuals in intellectual settings.  However, the observation has not led to any deep investigation.  Typically, it is mentioned with an implication that very high IQ people routinely possess some compensating negative trait that eliminates their intellectual advantage.  An example is the assertion that very high IQ people lack 'common sense'. Dressed up, this is Sternberg's hypothesis.  Another explanation is that decreasing 'emotional intelligence' nullifies the advantage of higher IQ. Little research has actually been done on the exclusion and what little that has does not support either of these explanations.  Linda Gottfredson has argued energentically against the Sternberg model.

While increasing IQ, especially over 140, is inversely correlated with elite membership, 140-150 IQ is also characteristic of eminence (Nobelists, Fields Medalists, etc.).  While there are a number of anecdotal and inferential citations, the most definitive study was that of Dr. Anne Roe (1952) in which she gave 64 of America's (U.S. born) most eminent scientists an IQ test that ETS had created for that purpose.  As best as can be determined (there were methodological problems) the test rendered a 15 point ratio IQ and the average IQ of the group was 152.  This corresponds to a modern deviation IQ of 144 which agrees with the anecdotal and inferential evidence.

                         Low.      Median  High
Verbal              121            166       177
Spatial              123            137      164
Math                128            154   194
Averages          124           152       178

What this suggests is that while an IQ over 140 will decrease the probability of entrance into an elite profession, if the impediment can be overcome, performance within the elite is likely to be superior. Of the 64, the highest D15IQ was 158, which is close to the statistically expected highest IQ of any scientist.  In other words, by 160 D15IQ, the exclusion is nearly complete and by this study of the most eminent, the statistical prediction is corroborated.  However, in total, this higher IQ characteristic of eminence strongly supports the conclusion that the exclusion is inappropriate and if these extremely high IQ individuals were allowed to work on the hardest problems, the result would be eminence.

Participate in the innovative  crowdfunding of The Polymath
  25,200% return is our goal.   Learn all about it
As will be discussed later, Mathematics and Theoretical Physics contain many problems that are difficult to solve but relatively easy to verify.  As such, they may be exceptions to this exclusion.  The reason that the Roe study doesn't reflect this is because the Physicists and Mathematicians were not given the math portion which we can assume lowered their average score.

So, if your IQ is 140 something, the above should serve as a warning that you may be facing related career challenges.  If your IQ is over 150, it is a clarion call; without direct intervention, your career prospects are very poor.  If you are the parent of a child with a D15IQ over 150, immediate and dramatic action is required.  At present, realistic options for individual remediation are severely limited.

To provide perspective for readers, one in 261 people have IQs over 140 and one in 2,331 have IQs over 150.  While the high IQ exclusion does not directly affect a large percentage of the population, the people it does affect, it affects profoundly.  Because of the large population of western civiliztion, the absolute number in this group is not small.  There are approximately 6.5 million people with an IQ over 140 and 729,000 people with an IQ over 150.

Why is This Happening?
Because of the dearth of objective evidence, the cause of the exclusion cannot be determined directly.  Garth Zietsman has said, referring to people with D15IQs over 152, 'A common experience with people in this category or higher is that they are not wanted - the masses (including the professional classes) find them an affront of some sort.'  While true, it is more likely a symptom than a cause of the exclusion.  We need to understand why they are an affront.

From a theoretical standpoint, democratic meritocracies should evolve five IQ defined 'castes', The Leaders, The Advisors, The Followers, The Clueless and The Excluded. These castes are natural in that they are the result of how people of different intellectual abilities relate to one another.  This is based on research done by Leta Hollingworth in the 1930's and the more recent work of D.K. Simonton.

Before we begin, we need to digress for a moment into a discussion of deviation and ratio IQs. Because few people understand the difference, there has been significant confusion over the meaning of various IQ scores.  IQ was originally designed for children and was defined as ((mental age)/(chronological age))X100.  In other words, an eight year old with a 150 IQ scored about the same as the average twelve year old.

It was found very quickly that there were far more very high IQ children than what the standard, Gaussian distribution predicts.  So, today, IQ tests have their raw scores adjusted to force the results to fit a standard bell curve distribution and are referred to as deviation IQs. While this practice has benefits, it tends to depress the IQs of the very highest scorers and, thereby, understate the intellectual distance between them and more normal IQs.  For example, a person with a 170 IQ today would have a 200 IQ in the ratio IQ era.

Leta Hollingworth studied profoundly gifted children.  She reported them as having IQs of 180+, which was a R16 score.  As such, on today's tests this equates to 159+.  Her conclusion was that when IQ differences are greater than 30 points, leader/follower relationships will break down or will not form.  It establishes an absolute limit to the intellectual gulf between leader and followers.  She also concluded that there was an D15IQ 'sweet spot' of best outcomes from 123 to 144.

We have no reason to conclude that this upper limit on IQ differences changes in adulthood and, consequently, an elite with a mean R16IQ of 128 will have no leaders with R16IQs over 158 (149 D15IQ).  This is consistent with the conclusion that there are no appropriate roles for >150 D15IQs and approximately corroborates Hollingworth's 'sweet spot'.

Much more recently, D.K. Simonton found that persuasiveness is at its maximum when the IQ differential between speaker and audience is about 20 points.  While he has not studied this effect among those with very high IQs, it is assumed that it follows ratio IQs at the high end.  This has been corroborated with empirical studies of manager and leader success, which peaks between a 1.0 and 1.2 standard deviation differential.

We are going to use ratio IQs to perform our calculations, as they are probably a more accurate measure of intellectual distance at the high end.  However, for clarity, we will restate our answers to the modern standard of 15 point deviation IQs.

We already know that elites have an average IQ of about 125 (R16 128) which implies that the audience that is to be convinced by the elites has a mean R16IQ of 108 (D15IQ is about the same under 120 IQ).  People with R16IQs below 98, after Hollingworth, are not effective followers and in a modern meritocracy are essentially disenfranchised and in the public discourse, essentially 'The Clueless'.  It means that the 'The Followers' in the public discourse have a R16IQ mode of 108 R16IQ and 'The Leaders' have a R16IQ mode of 128 (125 D15IQ).  These calculations provide us with a theoretical understanding of why the intellectually elite professions so consistently have mean D15IQs of 125.

In free markets people choose to whom they listen.  In other words, in audiences dominated by high school graduates, who average around 105 IQ, the successful leaders will have an average IQ of 105+20=125.  Speakers with R16IQs over 105+30=135 (D15IQ130) will be cancelled from radio, fired from TV and print or not elected because they confuse rather than enlighten their audience.  A college educated audience (115 IQ) will be most convinced by a R16IQ of 115+20=135 and confused by a 115+30=145 R16IQ (140 D15IQ).

Effective leaders recognize that they need the counsel of those smarter than themselves.  They will be most convinced by advisors with R16IQs of 128+20=148 (D15IQ 139).  We also see that the compressed standard deviation is predicted as a result of persuasive needs of the overall organizational structure.  A Leader needs to be persuasive within the community of Leaders which limits the R16IQ to 128+20=148 which is the same as the mode for Advisors.  However, the 148 R16IQ Leader becomes incomprehensible to most Followers, which limits their effectiveness and encourages them to become an Advisor. Because Leaders become ineffective above an R16IQ of 148, Advisors won't find clients if their R16IQ is over 148+20=168=155 D15IQ.

So we see that these parameters of maximum persuasiveness of 20 R16 points and maximum leader/follower differential of 30 R16 points, create a natural trifurcation of enfranchised people into 'The Advisors' (128-168 R16IQ; 125-155 D15IQ), Leaders (115-141 R16IQ; 112-138 D15IQ) and Followers (98-128 R16IQ; 98-125 D15IQ)  'The Clueless' with D15 IQs below 98 are effectively lost to the process.  They cannot really understand the public discourse and will often not follow discussions in productive environments.

People with D15IQs over 150 are effectively 'The Excluded', routinely finding their thoughts to be unconvincing in the public discourse and in productive environments.  If placed in a leadership position, they will not succeed.

So, while Sternberg et alia search for personal flaws to explain professional and social failings for people with D15IQs>150, the simple fact is that it is an artifact of a culture that fails to provide them with audience or followers.  They are not a natural fit as advisors because the leaders are not persuaded and often won't even understand the advice.

Inappropriate Educational Options
The exclusion really begins in primary school with the failure of the educational process to provide an appropriate learning environment.  The grading process, which should be a reliable assessment of knowledge learned and skills acquired, becomes nothing more than a measure of the child's willingness to bend to the will of the teachers' demand that he or she acquiesce to a profoundly inappropriate curriculum and learning process.

Leta Hollingworth noted that, if mainstreamed, children with R16IQs over 150 (D15IQ 141) check out and do not excel.  Miraca Gross has done a long-term longitudinal study of 60, 160+ D15IQ Australian children. 17 of the children were radically accelerated, 10 were accelerated one or two years and the remaining 33 were mainstreamed.  The results were astonishing with every radically accelerated student reported as educationally and professionally successful and emotionally and socially satisfied.  The group that was not accelerated she characterizes as follows: 'With few exceptions, they have very jaded views of their education. Two dropped out of high school and a number have dropped out of university. Several more have had ongoing difficulties at university, not because of a lack of ability but because they have found it difficult to commit to undergraduate study that is less than stimulating'. These children have IQs similar to Leonardo da Vinci, Galileo, etc., so the loss from unrealized potential is enormous.

Gross also did a wonderful comparative case study of a 133 D15IQ girl who had great educational success and a 169 D15IQ boy who was completely destroyed by an uncaring school system.  It provides some enlightening examples of precisely how the educational system thwarts children in the 140+ D15IQ range.

The problem stems from the misconception among educators that the intellectual gulf between moderately and highly gifted children is not that great.  In fact, depending upon the conceptual content, Professor Gross suggests that the exceptionally gifted children and above may learn 4-5 times faster than the midrange students.  Therefore, a reasonable, in fact conservative, expectation of educational progress is the ratio of the highly gifted student's ratio IQ and the ratio IQ for which the curriculum is normed.

So, a 150 D15IQ child would be expected to progress through a K-12 public school curriculum geared to the 100 IQ student in 12/1.6=7.5 years.  They would graduate from high school at 13. Some children may be physically and emotionally prepared for full time school a year early and would finish high school at 12. When we hear about a child who finishes high school at 12 or 13, we think of a 'one in a million' prodigy and we suspect that the child was pushed to his or her detriment.  Yet, with an enabling educational environment, it is actually a reasonable expectation for about one in 200 children.  The true 'one in a million' child is doing college level learning at 7 or 8.

These children can be expected to complete their six years of college, which is geared to a 120 IQ, in about 6/(160/120)=4.5 years.  So, we would expect the 150 D15IQ person to receive their first advanced degree at age 17 or 18 if the educational system didn't actively retard them.  This will provide them with another five or six years of education, during which they can acquire another four advanced degrees or equivalent.

It is often stated that gifted children become bored in mainstream classes.  However, that is too passive a description.  Often they are frustrated and even angered by the slow pace.  Garth Zietsman states that people with IQs over 124 'don't require assistance to learn. They can find the information and master the methods themselves'. It is probably the case that for most 140+ D15IQ people, autodidactic or self paced learning is preferred.  It is also likely that they prefer the polymathic 'question first' approach to learning, as well.

Because of all the above, many, perhaps most, 150+ D15IQ children reach college age with a bad grade transcript and even worse attitude.  Even if they manage to perform near their potential in their educational careers, it will likely not matter since adult society is not structured for them, anyway.

Social Isolation
What applies to productive environments also applies to social environments and even personal relationships.  Theoretically, after Hollingworth, a person's social relationships should be limited to people with R16IQs within 30 points of their own.  For the 100 IQ person, this will include about 94% of the population and consequently it is not an issue.  However, for the 150 R16IQ (140 D15IQ), social relationships are limited to 120-180 R16IQ people which represents just a little over 10% of the population.  The 165 R16IQ (150D15IQ) person will be limited to people with 135+ R16IQs (130 D15IQ).  This comprises just 2% of the population.   By 182 R16IQ (160 D15IQ) the problem becomes critical with social relationships limited to those with R16IQs over 152 (142 D15IQ) which comprises just 0.25% of the population.

The +/- 30 R16IQ range of Leta Hollingworth is also a good estimated limit on lasting social relationships.  However, they are not equal relationships but rather will necessarily have a strong leader/follower quality to them.  Also, the degree of mutual understanding will almost surely be insuffient to reach and sustain emotional intimacy.  Relationships based upon approximate intellectual parity probably cannot have more than 0.75 standard deviation (~12 points).  For the 140 D15IQ person, the limit for intellectual parity relationships is about 128, or about 2.5% of the population.  For the Hollingsworth children, 180 R16IQ (159 D15IQ), the limit for an intellectual parity relationship is a hopeless 168+ R16IQ or 152+ D15IQ.  This is only 0.0263% of the population.

Members of high IQ societies, especially those that require D15IQs above 145, often comment that around this IQ, qualitatively different thinking emerges.  By this they mean that the 145+ D15IQ person doesn't just do the same things, intellectually, as a lower IQ person, just faster and more accurately, but actually engages in fundamentally different intellectual processes.  David Wechsler, D. K. Simonton, et alia, have observed the same thing.

Since intimate social relationships are predicated upon mutual understanding, this draws a kind of 'line in the sand' at 140-150 D15IQ that appears to separate humans into two distinct groups.  This may truncate the 30 point limit for those between 150 and 160 D15IQ people. Even when 150+ D15IQ people learn to function in the mainstream society, they will always be considered, and will feel, in some way 'different'.  Grady Towers explored this in depth in his article, 'The Outsiders'.  This is of mild interest to the group within which the 150+ D15IQ person is embedded but it is moderately to profoundly important to the high IQ individual who will feel an often profound sense of isolation.

It has often been observed that 150+ D15IQ people are loners.  Also, Loius Termann found that children at this IQ level were emotionally maladjusted in about 40% of the cases.  However from the above one cannot help but wonder if this results from the children being constantly thrust into 'no-win' social situations and never given the opportunity to hone their social skills among their intellectual peers.

Assortative mating, in humans includes a strong tendency to choose a spouse who is in the same IQ range.  At a maximum, IQ difference cannot exceed Hollingworth's 30 points and preferentially should be within Simonton's 20 points.  For the 100 IQ person 80-120 IQ contains about 80% of the population and not much thought about intelligence is neccesary when choosing a mate.  However, the 150 D15IQ percent will find that less than 0.4% of prospective mates are in the proper intellectual range.  Because of this, IQ becomes a significant limitation on mate selection.

These factors probably explain the positive correlation between higher IQ and emotional maladjustment found by Terman, et alia.  It is not an inherent trait of high intelligence but rather a consequence of extreme social isolation.

As D15IQ increases above 140, people become progressively more excluded from educational, productive and social opportunities until by 160 D15IQ the exclusion is nearly complete.

Individuals with D15IQs of more than 160 are rare, comprising just 0.0032% of the population. They possess at least one trait in common with many of the greatest minds in history.  Yet only a vanishingly small percentage will find a proper environment within which they may thrive intellectually, socially and productively.

This is harmful for the individuals but it is also an unfortunate circumstance for society as well. What if intellectual giants like Einstein, da Vinci, J.S. Mill, etc. were ten times more common? Almost certainly progress would be much greater.  It is because of this that the exclusion should be of significant concern to everyone.

The Polymathic Institute and Polymathica
Many people with D15IQs between 140 and 150 and nearly all people with IQs over 150 face enormous challenges and require new social and productive environments if they are to reach their potential.  The Polymathic Institute promotes polymathic research, education, careers and lifestyles

Polymathica is targeted at the upper 5% of the population in intellectual sophistication.  This is approximately equivalent to D15IQs above 125.  Leaders will, characteristically, have R16IQs over 148 (D15IQ 147) and up to 178 R16IQ (166 D15IQ).  Advisors will have D15IQs of 161+.

Clearly, few of the people of working age with D15IQs over 150 have appropriate outlets.  The only probable exceptions are Mathematics and Theoretical Physics where the range of comprehensibility is probably closer to 60 R16IQ points than to the 30 R16IQ point Hollingsworth limit.  However, the careers are only appropriate, with regard to interest and disposition, for a small percentage of the 150+ D15IQ population.  The vast majority have no appropriate career options.

The Inappropriately Excluded, if given a chance, can bring superior solutions to societal problems.  But, there must be proper avenues of communications that currently do not exist.  Please distribute this article, then read and distribute 'Medicare Advantage for All', a superior healthcare solution.

Over time, The Polymathic Institute may attract as much as 25% of those with a 150+ D15IQ. If they comprise about 1% of Polymathica, Polymathica will reach about 12 million in membership. That is about 15% of the top 5% and consistent with current evidence.

In other words, we can, if we succeed, enable a significant portion of those currently inapropriately excluded from participating in the hardest problems and the most intellectually demanding projects.  Those who are interested in participating in either Polymathica or The Polymathic Institute should subscribe to the Institute's newsletter, The Polymath.  To do so, just provide an e-mail address, name (optional) and referral code.  If you were not referred, enter 999999.

A Nation Deceived How Schools Hold Back America’s Brightest Students
Edited by Nicholas Colangelo, Susan G. Assouline and Miraca U. M. Gross

Understanding and Being Understood The Impact of Intelligence and Dispositional Valuations on Social Relationships
Jacobus J. A. Denissen,

Intelligence Among University Students
Gibson, J., and P. Light
Nature 213: 441–443.

Exceptionally Gifted Children
Miraca UM Gross

Exceptionally and Profoundly Gifted Students:
An Underserved Population
Miraca UM Gross

Exceptionally Gifted Children:  Long-Term Outcomes of Academic Acceleration and Nonacceleration
Miraca U. M. Gross

The intellectual caliber of medical students
J.D. Matarazzo, S.G. Goldstein
Journal of Medical Education, Volume 47, Issue 2, 1972, pp. 102–111

Meritocracy, cognitive ability, and the sources of occupational success
Robert M. Hauser

Children Above 180 IQ Standford-Binet
Leta Stetter Hollingsworth

The Making of a Scientist
Roe, Anne

Intelligence and personal influence in groups: Four nonlinear models.
Simonton, D. K. (1985).
Psychological Review, 92, 532-547.

The Outsiders
Towers, Grady

The Empty Promise
Towers, Grady
Sadly, currently not available