Speaker 1: Pushkin.
Speaker 2: If you look back at the history of technology, there
Speaker 2: is this very very very long period of time, like
Speaker 2: thousands of years, where not much happened for humanity, at
Speaker 2: least not by modern standards. There were certainly some advances,
Speaker 2: there were periods of technological ferment here and there, Song
Speaker 2: Dynasty China as one famous example, But then those moments
Speaker 2: would pass, and things in terms of technology at least
Speaker 2: would go on largely as before people traveled. When they
Speaker 2: traveled at all, by foot or by animal or by
Speaker 2: sailing ship, and century after century, most of the people
Speaker 2: on earth worked as subsistence farmers, trying to grow enough
Speaker 2: food to survive. And then everything changed. It started in
Speaker 2: England about two hundred and fifty years ago. The steam engine,
Speaker 2: a modern factories all emerged in this moment, this moment
Speaker 2: that came to be called the Industrial Revolution, that was
Speaker 2: in many ways the beginning of the world we're living
Speaker 2: in today, This world where continuous technological breakthroughs, not just
Speaker 2: year after year, but generation after generation make workers more
Speaker 2: efficient and more productive. And this world where generation after
Speaker 2: generation the material conditions of humanity keep improving, the economic
Speaker 2: pie gets bigger. The changes that began with the industry
Speaker 2: of revolution are the reason that most people alive today
Speaker 2: are profoundly richer than their ancestors in the centuries since
Speaker 2: the industry of revolution. That link between new technologies and
Speaker 2: increasing broad based prosperity has been true for most people
Speaker 2: over the long run. But and this is a very
Speaker 2: important but this has not been true forever everybody. And
Speaker 2: sometimes that long run takes a very very long time.
Speaker 2: In other words, just because the pie gets bigger, it
Speaker 2: doesn't mean that everybody gets more pie. I'm Jacob Goldstein,
Speaker 2: and this is what's your problem. My guest today is
Speaker 2: Simon Johnson. He's an MIT economist and the co author
Speaker 2: of a new book called Power and Progress, Our thousand
Speaker 2: year Struggle over Technology and Prosperity. Simon's problem is this,
Speaker 2: how do you create the conditions for technological change to
Speaker 2: benefit everybody, or at least almost everybody, instead of only
Speaker 2: a powerful few.
Speaker 3: The basic argument is that it is wrong historically and
Speaker 3: also not sensible economics to assume that technological change always
Speaker 3: brings immediately and broadly shared prosperity. In fact, sometimes it
Speaker 3: does the opposite. Sometimes it helps just a few people,
Speaker 3: and sometimes it's really good for a lot of people.
Speaker 3: But the conditions under which you get a lot of
Speaker 3: benefits for a lot of people from technological change require
Speaker 3: some thought, and particularly thinking about today in America. Do
Speaker 3: we have the right conditions, for example, for an artificial
Speaker 3: intelligence revolution, if that's what we're facing, for that to
Speaker 3: really deliver lots of benefits lots of people, or is
Speaker 3: it going to be like some of those previous historical
Speaker 3: episodes where only a few people gain or hardly anybody gains,
Speaker 3: and a lot of people lose.
Speaker 2: Simon and I talked a lot about the development of
Speaker 2: AI and how to maximize the chances that AI delivers
Speaker 2: lots of benefits to lots of people. That's basically the
Speaker 2: second half of the interview. But I also really wanted
Speaker 2: to talk with him about the Industrial Revolution because I
Speaker 2: truly think it has deep lessons that are really useful
Speaker 2: in thinking about technology and the world today. And the
Speaker 2: Industrial Revolution, Simon said, really started with textiles, in particular,
Speaker 2: one kind of fabric.
Speaker 3: The real breakthrough, Jacob, is about cotton. So cotton is
Speaker 3: a material that the British did not invent. It's been
Speaker 3: in long use in many parts of the world. The
Speaker 3: Indian spinners were the leading spinners of cotton, and the
Speaker 3: export of spun cotton from India was a big deal.
Speaker 3: But the British figure that they can spin cotton and
Speaker 3: then subsequently weave cotton more efficiently than Indian artisans by
Speaker 3: applying machinery to this problem, and that became this cotton
Speaker 3: industry became the powerhouse of the English.
Speaker 2: So you have this the birth of technological innovation as
Speaker 2: we know it is happening right by the early eighteen hundreds.
Speaker 2: You're having these incredible productivity gains. This new technological era
Speaker 2: is just charging forward. Productivity is increasing. What's happening with
Speaker 2: wages for most workers in England at this point.
Speaker 3: In terms of what's happening in England's and what seemed
Speaker 3: to happen what seems to happen in terms of industrial
Speaker 3: wages as a whole, is they really don't progress. More
Speaker 3: so speaking quite broadly here anywhay near like what you
Speaker 3: would imagine given the pro tivy advances, and there is
Speaker 3: some of them, suggests broadly, not without its exceptions, but
Speaker 3: broadly there was wage stagnation in that early period, which
Speaker 3: is incredible and weird and pretty unsettling. Given how much
Speaker 3: productivity transformation, given how much technological change was underway, Well.
Speaker 1: That seems like.
Speaker 2: Sort of the key point from this period for the
Speaker 2: argument of your book to be a little.
Speaker 1: Reductive about it.
Speaker 2: And yes they're asterisks and caveats, but the big idea
Speaker 2: is you have this call it fifty this year period,
Speaker 2: the first half of the eighteen hundreds, where there's incredible
Speaker 2: productivity gains in England and overall workers don't seem to
Speaker 2: be capturing any of those gains, right, So what's going on?
Speaker 1: Why aren't workers' wages going up in this period?
Speaker 3: So the core issue Jacob in this moment, and it
Speaker 3: exists across all of technological transformation, but here we do
Speaker 3: see a nasty version here is that when you automate things,
Speaker 3: you obviously make some people more productive than the people
Speaker 3: who are run the machines, but you're also replacing other workers. Now,
Speaker 3: once we start to automate weaving, that's two hundred and
Speaker 3: fifty thousand weavers who are going to lose their jobs.
Speaker 3: About another fifty thousand people who are auxiliary service workers
Speaker 3: around that hand loom sector. So three to thousand people
Speaker 3: losing their jobs. Where are they going to work.
Speaker 2: Two stories that I feel like people have as kind
Speaker 2: of heuristics for this, right, as sort of toy models
Speaker 2: in their head. The sort of popular version is, oh,
Speaker 2: machines throw people out of work and we have technological unemployment. Right,
Speaker 2: everybody always says that, and yet here we are in
Speaker 2: twenty twenty three with an incredible amount of technology and
Speaker 2: unemployment at historic cloths right, So clearly that heuristic is
Speaker 2: not right. And then the other, the kind of economics
Speaker 2: heuristic is no, no, technological innovation makes things cheaper and
Speaker 2: so well, people can buy more stuff, and in buying
Speaker 2: more stuff goods and services, we create new jobs. But
Speaker 2: plainly that second one was not happening in the eighteen twenties.
Speaker 1: Why not.
Speaker 3: So there's a third possibility, actually, Jacob, which is people
Speaker 3: lose their jobs. They don't become unemployed because they can't
Speaker 3: afford to be unemployed. There's no uneployment assurance. They have
Speaker 3: to go to work at a very very low wage,
Speaker 3: and that wage may be you know, essentially at or
Speaker 3: slightly below subsistence. And I think that's also what we've
Speaker 3: experienced in the United States. To flash forward, which is
Speaker 3: since the digital transformation of the nineteen eighties, we've not
Speaker 3: had the technological unemployment that people were afraid of, but
Speaker 3: we have had a polarization of the job market. So
Speaker 3: some people have done well and a lot of people
Speaker 3: previous middle class, middle skill jobs have disappeared and people
Speaker 3: have got pushed down to low wage jobs. And that
Speaker 3: parallel I think we see in the early Industrial Revolution, Jacob,
Speaker 3: That's what I think absolutely happened to the weavers, for example.
Speaker 2: So, okay, that's the first half of the eighteen hundreds
Speaker 2: in England. In England, that changes in the second half. Right,
Speaker 2: in the latter part of the eighteen hundreds, we just
Speaker 2: do go up for ordinary people. These productivity gains that
Speaker 2: have been happening for decades and decades, they finally sort
Speaker 2: of pay off in a broader way. Right, Why what changes?
Speaker 2: Why does that happen?
Speaker 3: Then? So many of the frustrations of the first half
Speaker 3: of the nineteenth century, including the lack of representation for
Speaker 3: people living in these newly industrial areas that had bubbled
Speaker 3: up after the eighteen thirties, and there was much more
Speaker 3: awareness of anger and also very difficult living standards in
Speaker 3: these big industrial cities, and that leads to approcess of
Speaker 3: partial but ongoing democratization. So there's better rights for workers,
Speaker 3: including ultimately the right to form trade unions, and those
Speaker 3: trade unions are demanding higher wages by the eighteen eighties,
Speaker 3: and high wages in return to match the higher productivity.
Speaker 3: That's what starts to build much more broadly shared prosperity.
Speaker 2: So there's the political piece, trade unions being a notable
Speaker 2: piece of it that you have by the second half.
Speaker 2: You also in the book talk about a technological piece,
Speaker 2: how the nature of the technologies that are emerging and
Speaker 2: spreading more than emerging spreading by the second half of
Speaker 2: the eighteen hundreds, are also driving broader wage gains.
Speaker 1: Talk a little bit about that, right.
Speaker 3: So it's interesting that in the eighteen fifty one Great
Speaker 3: Exhibition that was held in London, there was almost no
Speaker 3: American technology on exhibit. The exceptions were some stuffed wild
Speaker 3: animals and some guns. Actually seems very American even today,
Speaker 3: but that was eighteen fifty one. By eighteen ninety, the
Speaker 3: US is the leading industrial power in the world. And
Speaker 3: that transformation was a lot about movement west. It was
Speaker 3: a lot about developing technology using agriculture. People were leaving
Speaker 3: farms in the Midwest to go to live in Chicago
Speaker 3: and work for McCormick Reaper's company to make equipment that
Speaker 3: would let more people leave the farms. And as these
Speaker 3: companies expanded, Singer Sewing Machine Company is another one, they
Speaker 3: look to European markets and they brought over their factories
Speaker 3: and their business models which were very or into making
Speaker 3: effective productive use of relatively unskilled labor. And when they
Speaker 3: brought that into Europe, that helped boost the demand for
Speaker 3: unskilled workers. And it was unskilled workers, make them highly productive,
Speaker 3: pay them a decent wage. That put the industrial development
Speaker 3: onto a different and we would argue much better try
Speaker 3: and they.
Speaker 1: Pay them a decent wage.
Speaker 3: Piece.
Speaker 1: I mean, it's that just a market dynamic.
Speaker 2: Because there are these new technologies like sewing machines, there
Speaker 2: is more demand for unskilled labor across the board, and
Speaker 2: therefore it's just a competitive equilibrium. Well, I got to
Speaker 2: hire somebody, and the guy at the factory nextdoor is
Speaker 2: going to hire this unskilled worker if I don't, so
Speaker 2: I have to offer them more money. Is it just that?
Speaker 1: Yeah?
Speaker 3: And I think it's it's part of that. It's the
Speaker 3: demand for labor. It's also the arrival of trade union.
Speaker 3: So the people I'm employing, I don't have a union
Speaker 3: in my factory, but two factories down they have a UNI,
Speaker 3: and my guys can and move down there and get
Speaker 3: the union wage if I don't pay them enough money.
Speaker 3: And I do think personally that railways were really important
Speaker 3: in this entire process, Jacob, because prior to railways it
Speaker 3: was very hard to move between places. It could take
Speaker 3: you two or three days on a stagecoach from London
Speaker 3: to Manchester, for example, very uncomfortable, quite expensive. Labor mobility
Speaker 3: was not very high in the sense of you know,
Speaker 3: are you going how far would you billing to move
Speaker 3: to get a better job. Once railways arrive, and once
Speaker 3: you have this unified market, there's a lot more possibility
Speaker 3: of moving to boom town's and a lot more understanding
Speaker 3: what's going on in you know, fifty miles away. And
Speaker 3: I think that was a very important part of critian
Speaker 3: national market and spreading ideas and boosting the demand for labor.
Speaker 2: I'm glad you mentioned railroads because in the book you
Speaker 2: write at some length about the rise of railroads, which
Speaker 2: is a little bit earlier than the period we're talking
Speaker 2: about here, right it's the first half of the eighteen hundreds,
Speaker 2: and in particular you write about this one guy named
Speaker 2: George Stephenson, who is sort of representative of this new
Speaker 2: kind of entrepreneur that's emerging around this time. Talk a
Speaker 2: little bit about George Stephenson.
Speaker 1: Who was he?
Speaker 3: So, George Stephens largely self educated. He was a mining engineer,
Speaker 3: but he didn't have any formal qualifications. He was just
Speaker 3: a chap who had worked in minds and helped solve
Speaker 3: problems with the design of the minds underground.
Speaker 2: Yourew not poor, right, He was not some like gentleman engineer.
Speaker 3: Absolutely, and in fact that's a common element to a
Speaker 3: lot of these people who become prominent innovators in the
Speaker 3: industrial ages. They come from quite modest backgrounds. Now there
Speaker 3: are gradations of poverty, of course, before the divosy. He's
Speaker 3: not in the poorest of the poor, but he's not
Speaker 3: middle class. He doesn't grow up in a nice house.
Speaker 3: He doesn't He can't read and write actually probably until
Speaker 3: he's an adult. So he figures stuff out by himself.
Speaker 3: And he's a tinkerer with machines, and his big breakthrough
Speaker 3: came when he went up to the coal mine one
Speaker 3: day and they were having trouble with a new fangled
Speaker 3: seam engine was pumping water out of the mine and
Speaker 3: he said, you know what, you know, give me a
Speaker 3: couple of days and some of my mates and we
Speaker 3: can fix this. And he did. And the people who
Speaker 3: owned the coal mine were you know, they were rich people.
Speaker 3: They were quite smart for people also, and they say, right,
Speaker 3: this Stevenson Chap is obviously you know a talent that
Speaker 3: we should and we should you know, back him and
Speaker 3: help him solve other problems.
Speaker 2: So how does Stevenson get from there to becoming a
Speaker 2: sort of great entrepreneur slash inventor engineer, Well.
Speaker 3: By solving problems really And then the main main problem
Speaker 3: he solved was how to move the coal. So there
Speaker 3: was a sort of a mechanical issue what's the best
Speaker 3: way to transport coal along the railways? But there was
Speaker 3: also an organization issue. So initially they ran their rails.
Speaker 3: This is in the northeast of England, near Newcastle. They
Speaker 3: ran them like we run roads today, which is, you know,
Speaker 3: somebody's in charge of the road, but anybody who's got
Speaker 3: a licensed car can put it on the road and
Speaker 3: drive somewhere and so there was an enormous amount of
Speaker 3: confusion and many hilarious stories, with some of them with
Speaker 3: quite tragic endings about people not giving way to each
Speaker 3: other on these limited railways. Stevenson had this vision, if
Speaker 3: you like, that there was a better way to do this,
Speaker 3: and that was to have one company owned the rail
Speaker 3: run the trains. People could provide freight, and of course
Speaker 3: passengers could step up or not to ride the trains,
Speaker 3: but you'd have an integrated control over this railway system.
Speaker 3: And that's what he persuaded some people to adopt for
Speaker 3: the Liverpool and Manchester Railway, and in what I think
Speaker 3: is one of the most amazing moments of human history
Speaker 3: of nginuity, certainly, he ran a combined Nobel Prize slash
Speaker 3: bakeoff show to determine who had the best railway engine
Speaker 3: to run on the rails that he designed and that
Speaker 3: he had planned. And he was also the winner of
Speaker 3: that competition. So there's some interesting conflicts of interest at
Speaker 3: the beginning of the Industrial Revolution, but his stuff worked.
Speaker 3: That was a huge event and it brought massive amount
Speaker 3: of attention to this industry and kicked off what became
Speaker 3: known as a railway mania, which was the building of
Speaker 3: railways and the development of the railway system across first
Speaker 3: England and then Europe and.
Speaker 1: Then the world.
Speaker 2: Mostly on this show I interview founders of tech companies
Speaker 2: more or less, and when I was reading about Stevenson,
Speaker 2: I was like, oh, this guy's like a like a
Speaker 2: tech founder, He's.
Speaker 1: Like people I interview on the show. I mean, do
Speaker 1: you think that's fair to some extent? Not fair? Like,
Speaker 1: am I just dreaming?
Speaker 3: I think no. I think this parallel. So here's a
Speaker 3: man with vision. He makes mistakes, he learns the hard way.
Speaker 3: A lot of these engines blew up, by the way,
Speaker 3: several of his relatives died in the in the in
Speaker 3: the shop where they were making engines because it was
Speaker 3: extremely dangerous business. So he figures stuff out, he learns
Speaker 3: by doing. He fails fast. I mean these are all
Speaker 3: buzzwords of today, of course I think there are. And
Speaker 3: he gets he gets people with money to back him
Speaker 3: and proves results and then gets more money and so on.
Speaker 3: I think the social gap between Stevenson and the elite
Speaker 3: was was enormous, and there was a famous hearing to
Speaker 3: review whether or not they could build this Liverpool and
Speaker 3: Manchester railway in which a top barrister who went on
Speaker 3: to become a prominent lawyer in the UK working for
Speaker 3: the government. This rarester just ripped into pieces and Stevenson
Speaker 3: was in articulate and he couldn't explain himself. And I
Speaker 3: think that social gap, that's the size of it. We
Speaker 3: don't see that today. I think most of the entrepreneurs
Speaker 3: we come across are well educated, they've gone to college,
Speaker 3: they're articulate people, and I don't see people rising up
Speaker 3: from essentially nowhere like Stevenson did to the same extent
Speaker 3: today as in the early industrial revolutionship.
Speaker 2: So, oh, okay, so we've done this story. It's like
Speaker 2: kind of a little more than one hundred years, right,
Speaker 2: starting in the seventeen hundreds, going up to the late
Speaker 2: eighteen hundreds.
Speaker 1: What are the.
Speaker 2: Lessons of this story about technological change, political power, and
Speaker 2: how economic gains are shared or not shared.
Speaker 3: So I think the main lesson is there's nothing automatic
Speaker 3: that links technological change, improvements in technology with better outcomes
Speaker 3: for workers. Certainly that linkage can develop, and it did
Speaker 3: up in the later nineteenth century. And you know, it
Speaker 3: was great that that happened, but that was a struggle
Speaker 3: that had to be one as opposed to something that
Speaker 3: happened just because technology, just because technology was changing. So
Speaker 3: I do think the political dimension of the second half
Speaker 3: of the nineteenth century, the spreader of democratization in Europe,
Speaker 3: the US becoming more democratic for example, in the progressive era,
Speaker 3: those were really important elements linking a technological change to
Speaker 3: better outcomes from people. And if that linkage that political
Speaker 3: language becomes weaker, which it has in the past forty
Speaker 3: fifty years, then you should be more concerned about what
Speaker 3: do you only get from potential future technological transformations.
Speaker 2: In a minute, Simon and I will talk about what's
Speaker 2: happening now, what may be coming, and what we can
Speaker 2: do to maximize the chances that AI will benefit lots
Speaker 2: of people instead of only a few.
Speaker 1: Now back to the show.
Speaker 2: By the end of the eighteen hundreds and into the
Speaker 2: twentieth century, at least in parts of the world, certainly
Speaker 2: in the United States and in England and in Western Europe,
Speaker 2: you do have this period when technological innovation, productivity gains
Speaker 2: are going along with broad based prosperity gains. Not everywhere,
Speaker 2: not all the time, but certainly, you know famously in
Speaker 2: the middle of the twentieth century in the US and
Speaker 2: in Europe at least, you have this era that is
Speaker 2: sort of the dream of like things are getting more
Speaker 2: efficient and workers are getting richer, and it's the version
Speaker 2: of technological progress that we like because it seems to
Speaker 2: be good for everybody, or at least very large groups
Speaker 2: of people. It is broadly shared prosperity. When, in your view,
Speaker 2: does that break down that link between technological progress and
Speaker 2: broadly shared you know, prosperity.
Speaker 3: Well, in retrospect, it came under a lot of pressure
Speaker 3: in the nineteen seventies, and I think it began to
Speaker 3: break down really seriously in the nineteen eightiest. Like a
Speaker 3: lot of these things, I don't think it became clear
Speaker 3: to people that there was a problem until the nineteen nineties,
Speaker 3: but by the nineteen nineties there were definitely there was
Speaker 3: a lot of analysis that said, you know, why approtaivity
Speaker 3: gain is not becoming higher wages like they used to,
Speaker 3: and what exactly is broken about this the form of innovation?
Speaker 3: And I think that's a problem we've grappled with for
Speaker 3: twenty five years and not yet found.
Speaker 1: A solution to.
Speaker 2: And you know, it feels like The answer to that
Speaker 2: is not entirely clear, but I know you make an
Speaker 2: argument about it in the book, like why do you
Speaker 2: think it happened?
Speaker 3: Well, a combination of factors where automation, the form of
Speaker 3: automation has become really is really important. Automation is being
Speaker 3: used primarily to replace people. At the same time, we're
Speaker 3: not generating a lot of new jobs, new opportunities in
Speaker 3: the way that we did in the early twentieth century,
Speaker 3: for example. So we've continued to automate, people have lost
Speaker 3: those jobs. We've not created a lot of new tasks.
Speaker 3: And that's partly about added UDEs of them and corporate leadership.
Speaker 3: It's partly about the way digital technology has been developed
Speaker 3: and deployed. It's also, unfortunately about globalization and the interaction
Speaker 3: between automation and how we've outsourced work to lower income
Speaker 3: country well.
Speaker 2: So globalization is an interesting piece, right because over that period,
Speaker 2: global inequality has fallen over the last several decades, right
Speaker 2: to some extent, globalization has led to great wage gains
Speaker 2: for people who who live in parts of the world
Speaker 2: that were formerly very, very very poor.
Speaker 1: You know, namely China.
Speaker 2: The media in person in China is now much richer
Speaker 2: than they were thirty years ago.
Speaker 1: Like that seems good.
Speaker 3: Yes, right, So the primary change is about China. There
Speaker 3: are many poor parts of the world that participated in this,
Speaker 3: And of course what's also happened in China is productivity
Speaker 3: gains of outstrip wage gains, so that that wedge has
Speaker 3: benefited some of the people in the Chinese system, not everybody,
Speaker 3: but I completely agree that wages have gone up and
Speaker 3: poverty has declined in China as part of this. So, yes,
Speaker 3: the Chinese and other countries have benefited from the global
Speaker 3: trading system, and that's good. But I think there are
Speaker 3: better ways to arrange that system, and better ways that
Speaker 3: would have more inclusion for more people, including the US.
Speaker 1: Let's talk more about the US.
Speaker 2: Well, what's your worry if things don't change, what do
Speaker 2: you think the US will be like in five years
Speaker 2: or ten years? Like, what's the sort of Yeah, what's
Speaker 2: your prediction if the status quo persists?
Speaker 3: So Vonnegut wrote, I think it's his first novel, play
Speaker 3: a Piano, which he, as I understand it, really wrote
Speaker 3: and developed in the late nineteen forties. Well, and he
Speaker 3: imagined a society in which there are a few eats
Speaker 3: people who have high status who run the machinery, and
Speaker 3: a lot of people who have make work projects at
Speaker 3: relatively low wages, low stand living, no prospects, And I
Speaker 3: think that that inequality of status, inequality of opportunity, inequality.
Speaker 3: The people on the public works projects, by the way,
Speaker 3: are not starving, they are provided for, but that they
Speaker 3: don't have any future. That stark and rather rigid system,
Speaker 3: I think is a real possibility in this country. And
Speaker 3: I think we already have some elements of that, and
Speaker 3: I think it's problematic and maybe even least to worse
Speaker 3: social outcomes than Vonnegut you imagined.
Speaker 1: And so how do we change that?
Speaker 3: So our argument is that artificial intelligence could be beneficial
Speaker 3: to more people, that it could be empowering, that we
Speaker 3: could look to waste emphasise more ways to enhance human capabilities.
Speaker 3: This is not our understanding of the current technological priority
Speaker 3: from the people who have the dominant visions, people running
Speaker 3: Google and Microsoft, for example, but we absolutely talk to
Speaker 3: them and urge them to move in this direction. We'd
Speaker 3: like to have more competition for ideas in that market
Speaker 3: for the same reason, and look for ways to use
Speaker 3: technology to help humans as opposed to continuing down the
Speaker 3: road where we've become a little bit too obsessed with
Speaker 3: how many workers can I fire this quarter by hiring
Speaker 3: new machines on new algorithms. That I think is a
Speaker 3: bad dynamic for society.
Speaker 2: I mean, unemployment is that is still below four percent.
Speaker 2: Wages have been going up. They've been going up more
Speaker 2: rapidly in the past few years, for workers at the
Speaker 2: lower end of the income distribution, right, I mean, the
Speaker 2: facts don't seem exactly like you're describing at this moment.
Speaker 3: Well, we definitely had a bump up from COVID. Now,
Speaker 3: COVID was not.
Speaker 1: Something before COVID.
Speaker 2: Right by the late twenty teens, we were essentially at
Speaker 2: full employment. Wages were rising across the income distribution. I mean,
Speaker 2: it's clearly true that it took too long to get
Speaker 2: to full employment after the financial crisis, but whatever, that's
Speaker 2: like a fiscal policy story that we don't need to
Speaker 2: get into here. In terms of technology and labor demand,
Speaker 2: it feels like there is robust labor demand now, even
Speaker 2: for relatively unskilled workers.
Speaker 3: Labor demand is stronger now than it has been in
Speaker 3: some recent periods. I absolutely agree. But if you look
Speaker 3: at that the divergence in incomes of the higher earning
Speaker 3: and the lower earning. Over the past forty years, twenty
Speaker 3: percent of that gap has been closed, perhaps a little
Speaker 3: bit more with the COVID bump, but it's not clear
Speaker 3: and that look, if the problem solved. Jacob Gray happy
Speaker 3: to have been a little too worried. But I think
Speaker 3: the concern is that the underlying dynamics of technological adoption
Speaker 3: and what we're doing with technology hasn't changed much. But
Speaker 3: our view is that the dynamic of deployment of AI
Speaker 3: and what companies are talking about using AI to do
Speaker 3: replace customer service, replace workers in various customer facing roles,
Speaker 3: replace workers in back office, that is going to can
Speaker 3: continue that previous divergence of real incomes.
Speaker 2: So, I mean, you sort of alluded to a few
Speaker 2: possible responses before, but maybe you could pick a few
Speaker 2: to talk about in a little more depth. So there
Speaker 2: are these potential bad outcomes from AI for sort of
Speaker 2: workers in the middle of the distribution or for lesser
Speaker 2: skilled workers. What do we do to help those people?
Speaker 2: How do we reduce those risks? Like what are a
Speaker 2: few specific things?
Speaker 3: So the thing that people talk about all the time
Speaker 3: and the way you framed it that, Jacob, I think
Speaker 3: pools that direction. You say, well, people have less skill,
Speaker 3: let's give them more skill, right, so more education. We're
Speaker 3: not opposed to that, but we also are trying in
Speaker 3: this book to talk about the direction of technological change.
Speaker 3: Who has the visions, who invents things? So this says
Speaker 3: back to your sort of your your interest in George Stephenson.
Speaker 3: Who was George Stevenson? Where did he come from? How
Speaker 3: did he get this opportunity? Right? And I think what
Speaker 3: we'd like to encourage is more use of all new
Speaker 3: technolog including AI, to bring out more George Stephenson's to
Speaker 3: create more new tasks, to try and become more innovative
Speaker 3: with this technology in a way that creates opportunity and job.
Speaker 2: Nobody's going to be opposed to that, Like sure, everybody,
Speaker 2: When you say that, I'll say sure, But how do
Speaker 2: you do that? Like, what is a concrete thing in
Speaker 2: the world that could cause that to happen?
Speaker 3: Well, for example, almost all of the research and development
Speaker 3: around AI right now, it takes place in a few
Speaker 3: big companies. There's a very little takes place in any
Speaker 3: government institute or actually the universities are losing a lot
Speaker 3: of talent into those companies. What is the priority of
Speaker 3: those companies It is to make money. What is an
Speaker 3: alternative set of priorities is to generate new tasks, new opportunities,
Speaker 3: breakthroughs in technology that we haven't yet.
Speaker 1: Money have to happen.
Speaker 2: For a more public spirited development of AI to happen,
Speaker 2: is it public funding for AI development?
Speaker 3: Public funding would be important and it has been important
Speaker 3: in many previous technologies, including development of computer chips and
Speaker 3: the Internet and modern pharmaceuticals. Often the government does very
Speaker 3: well when it provides a market of It says we're
Speaker 3: going to buy things from you if you develop them right.
Speaker 3: That's what we do with COVID vaccines, for example. So
Speaker 3: there are various ways that you can put public resources
Speaker 3: to work. And in the current conversation in Washington, the
Speaker 3: good news is those possibilities are not off the table.
Speaker 3: But I go to some of these conversations take and
Speaker 3: I wouldn't say it's the top item. It probably struggles
Speaker 3: to get into the top five. Mostly it's large private
Speaker 3: sector companies saying, hey, don't get in our way, don't
Speaker 3: put a lot of rules on us. If you do,
Speaker 3: then China will take over the world. And that is
Speaker 3: unfortunately the thrust of that technological conversation right now, whereas
Speaker 3: we would suggest you start much more. Okay, what are
Speaker 3: you trying to invent here? What do we not have?
Speaker 3: What is the private sector not going to come up with?
Speaker 3: And then what's the system of carents? Various kinds of
Speaker 3: carrots probably no stakes, various kinds of carrots that's going
Speaker 3: to pull innovative people into this better direction where I agree,
Speaker 3: you know, it may be a little cloudy exactly what
Speaker 3: better means, but generally speaking, creating new tasks for people
Speaker 3: and creating new tasks that the people were previously not
Speaker 3: highly skilled can do productively, that's a smart way forward.
Speaker 2: What is an example of the thing you were just
Speaker 2: saying of a carrot from the government that would you know,
Speaker 2: induce people, provide an incentive for people to come up
Speaker 2: with a direction for AI that would benefit you know,
Speaker 2: broadly benefit workers, right, this is what we're looking for.
Speaker 1: What's an example of that?
Speaker 3: Make workers in electrical power grid companies, electrical disputors, make
Speaker 3: them more make them safeer, make them more productive, to
Speaker 3: help healthcare workers become more productive and better able to
Speaker 3: diagnose problems and so on, So a smarter expert advisory
Speaker 3: system that a nurse practitioner can have. And the really
Speaker 3: big one, Jacob, which is this one I think is
Speaker 3: probably worth a bounty, is to actually really finally use
Speaker 3: AI and education to help again kids with less advantage
Speaker 3: and less family resources. And these things have been imagined,
Speaker 3: but they've not been ever developed at scale so that
Speaker 3: teachers can actually help students learn better in more tailored
Speaker 3: fashion using AI type tools, and then get those systems
Speaker 3: deployed and adopted across public education. None of these are,
Speaker 3: of course, are easy problems. That's why they're problems. But education,
Speaker 3: healthcare workers in critical sectors, including around electricity, clean energy,
Speaker 3: those would seem to be sensible priorities.
Speaker 2: What else are there things you want to talk about
Speaker 2: that we didn't talk about?
Speaker 3: What's very interesting, Jacob, is you dug deeper into the
Speaker 3: Industrial Revolution pieces of it than many people have, including
Speaker 3: HA been on lots of good podcasts. But I think
Speaker 3: that you're absolutely right that it's sort of to understand
Speaker 3: the sequence of history, to understand these the episodes, and
Speaker 3: then to think, okay, we're obviously living history people going
Speaker 3: to look back and say, Okay, this was an episode,
Speaker 3: but what is this episode? Is this like a continuation
Speaker 3: of the nineteen eighties? Is it something brand you? I
Speaker 3: think that we often exaggerate the moment in which we
Speaker 3: live because that's the moment in which we're living. Yeah, right,
Speaker 3: So I always tend to think but but sometimes the
Speaker 3: crisis of two thousand and eight was different. For example,
Speaker 3: nine to eleven was different. There are these departures, there
Speaker 3: are these forks.
Speaker 2: The question right now I feel like, is are we
Speaker 2: just sort of persisting in the same universe we've been in,
Speaker 2: or is what's happening with AI creating.
Speaker 1: An inflection point? To use an overused term.
Speaker 2: Right like, is something really new happening with AI right now?
Speaker 1: Or are is it going to be more of the same?
Speaker 3: So I don't know how big is AI going to be? Unclear?
Speaker 3: But have we is this a process that is likely
Speaker 3: to develop deliver big shared benefits? I think a bit
Speaker 3: worried about that.
Speaker 2: You're a bit worried that all the benefits are going
Speaker 2: to go to a small number of people, and some
Speaker 2: large number of people will be not helped and potentially harmed.
Speaker 3: Right, And you know we have seen episodes in history
Speaker 3: where the harm can be substantial, it can be widespread,
Speaker 3: so let's not kid ourselves about that.
Speaker 2: We'll be back in a minute with the lightning round.
Speaker 2: M back to the show before we go, I want
Speaker 2: to do a lightning round. I want to ask you
Speaker 2: some fun, somewhat silly questions.
Speaker 3: I use a lightning round in my classes, Jacob. I
Speaker 3: don't forget if I got it from Planetmoni or someone else,
Speaker 3: but I think the lightning round is a great thing.
Speaker 3: Just fire fire away, fire away.
Speaker 1: Okay.
Speaker 2: You are a tennis player, a recreational tennis player. As
Speaker 2: a tennis player, what is your view of pickleball?
Speaker 3: That is a really sensitive question among tennis players. I
Speaker 3: enjoy pickaball, the whole family can play its barriers to entry.
Speaker 3: But I understand that some of my tennis playing friends
Speaker 3: may not be tennis may not want to be my
Speaker 3: friends anymore.
Speaker 2: After I said that, on a slightly less important topic,
Speaker 2: you used to be the chief economist at the IMF,
Speaker 2: the International Monetary Fund.
Speaker 1: It's the IMF overrated or underrated?
Speaker 3: Oh, this sounds like the pickaball question in a different guys.
Speaker 2: Equally slightly less controversial than the pickleball question.
Speaker 3: The IMF is a very important organization that exists. Almost
Speaker 3: the entire life of the IMF exists just to the
Speaker 3: side of the front page of the New York Times,
Speaker 3: by which I mean you very rarely read anything about
Speaker 3: all the important things that happened at the IMF, because
Speaker 3: you know, it's just a little too boring. As far
Speaker 3: as the New York Times editor is a concern. And
Speaker 3: that's good because they can get a lot of things done.
Speaker 3: They can be constructive, and it's enabled by that particular
Speaker 3: by the way in which they were positioned relative to
Speaker 3: the US political system. But they do exist. That they
Speaker 3: exist just slightly. You know how there's something in your
Speaker 3: perple vision you can't ever quite focus on. That's where
Speaker 3: they are with pickball.
Speaker 2: Pickleball's right in the middle, man. Pickleball is front and center.
Speaker 2: What's your favorite novel?
Speaker 3: Oh, snow Crash, Neil Stevenson. That's very easy. I reread
Speaker 3: that every every year or so. So this is a
Speaker 3: book written came out in the early nineteen nineties, and
Speaker 3: I originally read it because Paul Kruman said, an economist,
Speaker 3: if you want to understand the future don't read any
Speaker 3: futurologists read Neil Stevenson, and in terms of globalization, in
Speaker 3: terms of technology, in terms of social impact. It's including
Speaker 3: the metaverse. It's remarkable.
Speaker 1: And Crypto, you know, it's funny.
Speaker 3: I've thought it was a different book. Actually that was
Speaker 3: a different series. Crypto was less just as a new author, right,
Speaker 3: same author. Oh yeah, yeah, just as a Neil Stevenson
Speaker 3: groupie to be clear that that was the Crypto, the
Speaker 3: Crypto series, the Money series.
Speaker 2: This is the second time in this interview I've thought
Speaker 2: of sal Khan. I didn't mention it last, but I
Speaker 2: just interviewed Sel Con of the Con Academy, which you
Speaker 2: might know of, and I thought of him when you
Speaker 2: were talking about education, because they are developing AI an
Speaker 2: AI tutor basically that at the moment is not free,
Speaker 2: but we'll be free, I suspect quite soon. Also, he
Speaker 2: loves Neil Stevenson. There's some Neil Stevenson book set. I
Speaker 2: believe in China where there's like a tablet that has
Speaker 2: education and like the masses get the tablet education. We've
Speaker 2: been trying to book Neil Stevenson, but he doesn't do interviews.
Speaker 2: So if you ever see.
Speaker 1: Him, tell him to call.
Speaker 3: We'll do.
Speaker 2: Simon Johnson is a professor at MIT. His new book
Speaker 2: is Power and Progress. Today's show was produced by Edith Russello.
Speaker 2: It was edited by Sarah Nix and engineered by Amanda K.
Speaker 1: Wong.
Speaker 2: You can email us at problem at Pushkin dot fm.
Speaker 2: You can find me on Twitter at Jacob Goldstein. I'm
Speaker 2: Jacob Goldstein and we'll be back next week with another
Speaker 2: episode of What's Your Problem.
Speaker 1: M