Power and Progress

February 20, 2023
Artificial intelligence and other innovative technologies won’t guarantee a rising standard of living for workers, according to this lucid manifesto. MIT economists Acemoglu (coauthor, Why Nations Fail) and Johnson (coauthor, 13 Bankers) explore historical instances of new technology failing to pay off for workers: improved agricultural practices and equipment in medieval Europe conferred few benefits on peasants while lords and churchmen expropriated the increased output; the first century of the Industrial Revolution brought no income gain to laborers; recent advances in digital technology have yielded stagnant working-class wages while tech moguls make fortunes. But another path of broadly shared prosperity is possible, the authors contend, citing the post-WWII era when strong unions, government regulations, and relatively enlightened corporate management ensured that workplace automation, rather than deskilling and discarding workers, improved their marginal productivity and wages and created plenty of higher-skilled jobs. Acemoglu and Johnson give an incisive analysis of the economics of labor and technology, along with a trenchant critique of the “techno-optimism” of corporate visionaries, though their own ideas about what a truly worker-friendly artificial intelligence might look like remain hazy. Still, this is a stimulating call for social and political action to ensure the rising tide of innovation lifts all boats.

March 15, 2023
A sweeping historical examination of the promises and limitations of technological advances in relation to important economic and social issues. Complaints about the miseries of progress began well before the Industrial Revolution but mostly addressed miserable working conditions until well into the 20th century. Perhaps beginning with John Kenneth Galbraith's The Affluent Society (1958), activists have broadened their targets to include government and social institutions. In this insightful analysis, MIT economics professors Acemoglu and Johnson begin with a painful fact. Since 1980, Americans without a college education have seen their earnings decline, while graduates with no postgraduate degree have gained a little. Hypereducated professionals, scientists, engineers, and financiers are prospering in what is becoming a highly stratified society. Rewinding the clock, the authors emphasize that wealth produced by the Industrial Revolution mostly benefited entrepreneurs, skilled technicians, and those who already possessed wealth. Workers in the new factories were worse off than in the countryside, and cities were crowded, squalid, and disease-ridden. Matters changed when the general public began to exert influence. The rise of democracy encouraged the growth of countervailing power structures, including unions. Once legislators owed their jobs to a mass electorate, they began looking after their interests, outlawing profitable but cruel practices and creating safety nets such as unemployment insurance and national health care. Worker income rose through most of the last century, until it stalled around 1980. This was not inevitable but rather the result of choices made by the drivers of technological progress and propelled by worship of the free market. Since then, opposition to cutting labor costs has almost vanished, producing automated services that eliminate jobs without benefiting customers. Toward the end, the authors offer a range of reasonable remedies, including a move to "significantly reduce or even fully eliminate payroll taxes." Governments should redirect digital research away from their obsession with big data and surveillance toward green technology and machine usefulness rather than artificial intelligence. A convincing attack on today's dysfunctional economy plus admirable suggestions for correcting matters.

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