bad acting..

[janzman]

why do we say of someone who is a bad actor that he/she couldnt act their way out of a paper bag

[kira000]

The term is used for a variety of things, sing, fight, act etc, I believe it simply refers to the fact that paper bags are pretty flimsy and not very difficult to break through. Therefore, if you are unable to even do that, then you must be pretty poor.

[Clanad]

One authoritative source gives the following as etymology for the various renditions of your phrase, which parallels kira000's offering:

Etymology: Possibly from "he couldn't punch his way out of a paper bag."

(idiomatic, formulaic) A minimal level of competence or effectiveness, as used in phrases where one is unable to perform such.
"My boss is so clueless, he couldn't schedule his own way out of a paper bag".
"Junior varsity couldn't play their way out of a paper bag" in comparison.
Quotations: 1923, Asia, volume 23, American Asiatic Association, page 281
"The old chap did not look as though he could push his way out of a paper bag".
1924, Harry Charles Witwer, Love and Learn G. P. Putnam's sons, page 260
"Personally I don�t think this egg could punch his way out of a paper bag. He�s only been workin� in this trap two days"