What do they mean when they say "He can't find himself way out of paper bag?" Or "Couldn't manage himself out of paper bag?"
Also what is the history of this statement? What is the origin?
We've all watched a kitten emerge from a paper bag, yes? I believe the ease with which such a small animal can accomplish the task highlights the weakness of a person who can't.
Regardless of the particular version in question, it normally applies to weakness and inability to do something fairly routine. Note the difference between this and the variations on:
The phrases in this pattern relate to general stupidity.
My father used to say that someone "couldn't fight his way out of a wet paper bag" as a way to indicate physical smallness and weakness. I only started hearing generalizations of this (act his way, find his way, lie his way etc) in the last 10 or 15 years. The fight version is pretty obvious in meaning and hardly even a metaphor were it not for the fact a person can't fit in a paper bag. The rest are constructions from that one.
It's usually of the form "he can't fight [or punch] his way out of a paper bag".
It means you think the person is so inept they can't with all their effort even get out of a weak paper bag, if they were so enclosed. It originally meant you thought they were a weak or incompetent fighter and comes from boxing.
The OED has it from 1955, but it can be found at least as early as May 1916 in Our Navy, the Standard Publication of the U.S. Navy ("Athletics: Will We Ever Have a Navy Champion?" by "Heinie", page 50):
Here's a 30th July 1921 from Collier's, The National Weekly (v.68 1921 Jul-Dec., page 139, "The Lovers' Handy Man"):
And finally in a boxing report in The Garden Island (January 10, 1922, Page 5, Image 5):