Do higher IQs produce wealth, or does wealth produce higher IQs? This is the question that Ron Unz grapples with in his fascinating article, "Race, IQ, and Wealth: How Political Bias Distorts the Facts." Unz, publisher of The American Conservative, is taking on claims made in the 2002 book IQ and the Wealth of Nations that differences in national IQ account for the substantial variation in national per capita income.

The authors, emeritus University of Ulster psychologist Richard Lynn and emeritus University of Tampere political scientist Tatu Vanhanen, sought out IQ data they believe could plausibly measure the average IQs of the people of various nations and then correlated it with GDP per capita. Their conclusion is that countries populated with smarter people are the ones that become wealthier. Countries inhabited by stupid people remain mired in poverty. Lynn and Vanhanen further conclude that the connection between IQ and wealth is causal based on studies that show for individuals that "IQs measured in childhood are strong predictors of IQs in adolescence and these are strong predictors of earnings in adulthood." They then generalize, "From this it follows that groups with high IQs would have higher average incomes than groups with low IQs because groups are aggregates of individuals."

In his article, Unz uses the data collected by Lynn and Vanhanen and argues that they actually show the opposite—that rising wealth boosts intelligence. In order to avoid getting stuck in the quagmire of race, Unz looks only at the IQ data for European populations. All of the data are adjusted for the universal Flynn effect in which average IQ scores have been increasing in the modern age by 2 to 3 points per decade depending on which IQ measure is used. The data are standardized such that the average British IQ at any time is set at 100.

Let's look at Germany. Lynn and Vanhanen cited four studies that found that West German IQ scores ranged from 99 to 107, whereas East German IQs were as low as 90 back in 1967, and later studies pegged their scores at 97 to 99 points. Taking the extremes, these data imply a gap as big as 17 IQ points between West and East Germans. How to account for the rise East Germany in less than a generation of 7 to 9 points? After all, East and West Germans are not all that genetically different. Lynn's data now show an average German IQ of 102 points.

Similarly Lynn and Vanhanen report that average Greek IQs were 88 in 1961 rising to 95 in 1979. An increase of 7 IQ points in 18 years, as Unz points out, "is an absurdity from the genetic perspective." Some other data uncovered by Lynn and Vanhanen found that Croatians tested as low as 90; Bulgarians at 91; Romanians at 94; Poles at 92; and Southern Italians (Sicilians) at 89. Whereas Lynn and Vanhanen report that Northern Europeans—West Germans, British, Belgian, Dutch, Austrians, and Norwegians—tended to test at 100 points or above.

Consider the case of the Irish where Lynn and Vanhanen report a 1972 study that found the average IQ of Irish children was 87 points, the lowest figure anywhere in Europe. In fact, his realization that the Irish suffered from low intelligence appears to have been something of a eureka moment for Lynn. In a 2011 interview with the journal Personality and Individual Differences, Lynn said, "So I formulated the theory that the low IQ was likely a significant reason for the economic backwardness." He added, "The solution for this problem was obvious. What was needed was a set of eugenic policies that would raise the Irish IQ." However, Lynn forbore making his conclusions public because as he explained, "Virtually no-one supported eugenic programs any more and anyone who proposed doing so would be accused of being a Nazi." Seems likely.

As a check on the notion of genetically fixed national IQs, Unz takes a look at how well the descendants of various immigrant groups have done in the United States. The fear that Anglo-Saxon America was being overwhelmed by the wretched refuse of Europe motivated the publication of the classic 1922 anti-immigration screed by Saturday Evening Post correspondent Kenneth Roberts, Why Europe Leaves Home: A True Account of the Reasons which Cause Central Europeans to Overrun America. As Roberts explained, "After 1880 the Nordic immigration was overwhelmed by the backward, unassimilatable, undesirable immigration from Eastern and Southern Europe." Inspired in part by Roberts' book, Congress passed the highly restrictive 1924 Immigration Act. Unz points out that in his 1978 book, American Ethnic Groups, Stanford University economist Thomas Sowell summarized 1920s data on average IQ scores for various Eastern and Southern European groups. Slovaks scored an average of 85; Greeks 83; Poles 85; Spaniards 78; and Italian scores ranged between 78 and 85. It is unlikely that these immigrants were drawn from the IQ elites of their homelands.

Accepting that higher IQs and higher incomes go together, Unz notes, "Americans of Greek and South Slav origins are considerably above most other American whites in both family income and educational level." Similarly Americans who trace their ancestry back to Italy are very close to average in income and education. The descendants of the Catholic Irish immigrants, described by 19th century nativists as "low-browed and savage, groveling and bestial, lazy and wild, simian and sensual" have, as Unz observes, "within less than a century had become wealthier and better educated than the average white American, including those of 'Old Stock' ancestry." Old Stock means earlier British, German, and Dutch immigrants.

Unz points out that as countries in Europe have become wealthier since World War II, their average IQ scores have risen. The Organization for Economic Cooperation and Development under its Program for International Student Assessment (PISA) administers every three years a test to 15-year olds in developed and some undeveloped countries. On the 2009 data, the Irish now outscore the British on reading and are very close on math and science. The Poles outscore the British on reading and math and are very close on science. Croatian reading scores are how higher than Austrian scores and very close on math and science.

Income trends clearly track these increases in test scores in the European countries identified as having low average IQs by Lynn and Vanhanen. For example, since 1970 Irish real per capita incomes (2005 dollars) increased from $11,000 to $43,000. Polish incomes are up from $3,000 to nearly $10,000; Croatian incomes rose from $4,000 to $11,000. The genetic compositions of European populations do not change much in a generation, but clearly incomes do.

Unz goes on to parse the implications for the current American immigration debate, particularly focusing on nativist concerns about millions of recent Mexican immigrants. Lynn and Vanhanen estimate the average Mexican IQ at 87 points. Recall this is the same score that Lynn and Vanhanen reported for Irish children back in 1972. Unz observes, "Mexicans and Irish seem to have the same intellectual ability, and since the Irish have generally done well in American society, there seems no particular reason to assume that Mexicans will not."

In fact, using data from the Wordsum test in the General Social Survey (GSS) that correlates fairly well with IQ, Unz reports the IQ scores of second generation Mexican Americans have likely risen a full 10 points in the past 20 years. In addition, he notes that in 1975 only 6 percent of Hispanic students took the SAT; now 32 percent do. However, the difference between white and Hispanic scores did not widen. "Since the white/Hispanic gap remained unchanged during this tremendous broadening of the Hispanic testing pool rather than greatly widening, the only possible explanation would seem to be a huge rise in average Hispanic academic performance," concludes Unz. Mexican Americans will assimilate as completely into American society as earlier ethnic groups have done.

So why are IQ scores going up around the world? Certainly, better childhood nutrition, more schooling, and most intriguingly, fewer childhood diseases could account for the Flynn Effect, the recent steady 3 point per decade rise in IQ test scores. Unz further speculates that urbanization dramatically boosts intelligence. Earlier waves of immigrants to the United States chiefly became farmers but in the 20th century immigrants from largely rural areas of Europe moved to cities. Unz notes that Dutch-Americans, German-Americans, and Old Stock whites who no longer identify with any European country tend to be more rural. They also perform worse on the GSS Wordsum-IQ test than do Americans whose ancestors hail more recently from Ireland, Greece, the Balkans, and Italy. A big gap in performance on the Wordsum test continues to exist today between white Americans who grew up on farms and those who grew up in suburbs and cities. In 1900 only 14 percent of the world's population lived in cities; today 50 percent do and by 2100 projections estimate that 80 percent will. So if urbanization boosts IQ, that's good news for the world.

Unz acknowledges the possibility that different European ethnic groups might have small differences in innate intelligence, but "this residual genetic element would explain merely a small fraction of the huge 10-15 IQ disparities" seen in the Lynn and Vanhanen data.

The really interesting question is what is responsible for producing both wealth and higher IQs? One clue: Wealth and IQ correlate very nicely with the index of economic freedom. History teaches that economic freedom precedes the increase of both wealth and IQ. Even the data collected by Lynn and Vanhanen clearly show that when the dead hand of communism was lifted from Eastern Europe, both wealth and IQs began rising. Before the institutions of liberty arose in the late 18th century, every people and every nation lived in humanity's natural state of poverty and ignorance. The bottom line is that liberty makes people richer and smarter.

Disclosure: With reference to the urban/rural IQ issue, I grew up on a dairy farm in Southwestern Virginia.