WEBVTT - What the Industrial Revolution Teaches Us About the AI Revolution 0:00:15.356 --> 0:00:15.796 Pushkin. 0:00:20.476 --> 0:00:22.676 If you look back at the history of technology, there 0:00:22.756 --> 0:00:27.196 is this very very very long period of time, like 0:00:27.756 --> 0:00:32.796 thousands of years, where not much happened for humanity, at 0:00:32.876 --> 0:00:36.556 least not by modern standards. There were certainly some advances, 0:00:36.956 --> 0:00:41.036 there were periods of technological ferment here and there, Song 0:00:41.116 --> 0:00:44.956 Dynasty China as one famous example, But then those moments 0:00:44.996 --> 0:00:48.516 would pass, and things in terms of technology at least 0:00:48.676 --> 0:00:52.516 would go on largely as before people traveled. When they 0:00:52.516 --> 0:00:55.876 traveled at all, by foot or by animal or by 0:00:55.916 --> 0:00:59.556 sailing ship, and century after century, most of the people 0:00:59.596 --> 0:01:02.396 on earth worked as subsistence farmers, trying to grow enough 0:01:02.396 --> 0:01:08.276 food to survive. And then everything changed. It started in 0:01:08.316 --> 0:01:12.316 England about two hundred and fifty years ago. The steam engine, 0:01:12.476 --> 0:01:17.116 a modern factories all emerged in this moment, this moment 0:01:17.156 --> 0:01:20.956 that came to be called the Industrial Revolution, that was 0:01:21.436 --> 0:01:23.916 in many ways the beginning of the world we're living 0:01:23.916 --> 0:01:29.876 in today, This world where continuous technological breakthroughs, not just 0:01:29.996 --> 0:01:34.236 year after year, but generation after generation make workers more 0:01:34.316 --> 0:01:38.036 efficient and more productive. And this world where generation after 0:01:38.076 --> 0:01:43.076 generation the material conditions of humanity keep improving, the economic 0:01:43.116 --> 0:01:46.156 pie gets bigger. The changes that began with the industry 0:01:46.156 --> 0:01:49.196 of revolution are the reason that most people alive today 0:01:49.276 --> 0:01:53.396 are profoundly richer than their ancestors in the centuries since 0:01:53.396 --> 0:01:57.556 the industry of revolution. That link between new technologies and 0:01:57.836 --> 0:02:02.716 increasing broad based prosperity has been true for most people 0:02:02.916 --> 0:02:06.436 over the long run. But and this is a very 0:02:06.476 --> 0:02:10.116 important but this has not been true forever everybody. And 0:02:10.516 --> 0:02:14.916 sometimes that long run takes a very very long time. 0:02:15.396 --> 0:02:18.356 In other words, just because the pie gets bigger, it 0:02:18.396 --> 0:02:26.396 doesn't mean that everybody gets more pie. I'm Jacob Goldstein, 0:02:26.436 --> 0:02:28.836 and this is what's your problem. My guest today is 0:02:28.916 --> 0:02:32.676 Simon Johnson. He's an MIT economist and the co author 0:02:32.716 --> 0:02:36.396 of a new book called Power and Progress, Our thousand 0:02:36.516 --> 0:02:40.876 year Struggle over Technology and Prosperity. Simon's problem is this, 0:02:41.676 --> 0:02:44.676 how do you create the conditions for technological change to 0:02:44.716 --> 0:02:49.316 benefit everybody, or at least almost everybody, instead of only 0:02:49.356 --> 0:02:50.356 a powerful few. 0:02:52.076 --> 0:02:57.516 The basic argument is that it is wrong historically and 0:02:57.796 --> 0:03:03.436 also not sensible economics to assume that technological change always 0:03:03.476 --> 0:03:09.756 brings immediately and broadly shared prosperity. In fact, sometimes it 0:03:09.796 --> 0:03:12.716 does the opposite. Sometimes it helps just a few people, 0:03:13.156 --> 0:03:15.396 and sometimes it's really good for a lot of people. 0:03:15.396 --> 0:03:18.716 But the conditions under which you get a lot of 0:03:18.756 --> 0:03:22.116 benefits for a lot of people from technological change require 0:03:22.156 --> 0:03:26.396 some thought, and particularly thinking about today in America. Do 0:03:26.436 --> 0:03:29.996 we have the right conditions, for example, for an artificial 0:03:30.156 --> 0:03:32.556 intelligence revolution, if that's what we're facing, for that to 0:03:32.596 --> 0:03:35.836 really deliver lots of benefits lots of people, or is 0:03:35.876 --> 0:03:37.876 it going to be like some of those previous historical 0:03:37.876 --> 0:03:40.396 episodes where only a few people gain or hardly anybody gains, 0:03:40.516 --> 0:03:41.356 and a lot of people lose. 0:03:41.436 --> 0:03:43.996 Simon and I talked a lot about the development of 0:03:44.036 --> 0:03:47.636 AI and how to maximize the chances that AI delivers 0:03:47.716 --> 0:03:50.796 lots of benefits to lots of people. That's basically the 0:03:50.796 --> 0:03:53.516 second half of the interview. But I also really wanted 0:03:53.516 --> 0:03:56.636 to talk with him about the Industrial Revolution because I 0:03:56.716 --> 0:04:00.076 truly think it has deep lessons that are really useful 0:04:00.356 --> 0:04:03.956 in thinking about technology and the world today. And the 0:04:03.956 --> 0:04:08.996 Industrial Revolution, Simon said, really started with textiles, in particular, 0:04:09.316 --> 0:04:10.356 one kind of fabric. 0:04:11.516 --> 0:04:14.676 The real breakthrough, Jacob, is about cotton. So cotton is 0:04:14.956 --> 0:04:17.316 a material that the British did not invent. It's been 0:04:17.636 --> 0:04:19.556 in long use in many parts of the world. The 0:04:19.556 --> 0:04:23.756 Indian spinners were the leading spinners of cotton, and the 0:04:23.836 --> 0:04:27.436 export of spun cotton from India was a big deal. 0:04:27.556 --> 0:04:31.756 But the British figure that they can spin cotton and 0:04:31.796 --> 0:04:38.076 then subsequently weave cotton more efficiently than Indian artisans by 0:04:38.156 --> 0:04:42.436 applying machinery to this problem, and that became this cotton 0:04:42.516 --> 0:04:44.596 industry became the powerhouse of the English. 0:04:44.956 --> 0:04:48.876 So you have this the birth of technological innovation as 0:04:48.876 --> 0:04:51.356 we know it is happening right by the early eighteen hundreds. 0:04:51.396 --> 0:04:56.356 You're having these incredible productivity gains. This new technological era 0:04:56.916 --> 0:05:02.516 is just charging forward. Productivity is increasing. What's happening with 0:05:03.516 --> 0:05:07.676 wages for most workers in England at this point. 0:05:07.556 --> 0:05:10.196 In terms of what's happening in England's and what seemed 0:05:10.196 --> 0:05:12.316 to happen what seems to happen in terms of industrial 0:05:12.356 --> 0:05:15.996 wages as a whole, is they really don't progress. More 0:05:16.116 --> 0:05:18.996 so speaking quite broadly here anywhay near like what you 0:05:18.996 --> 0:05:21.636 would imagine given the pro tivy advances, and there is 0:05:21.676 --> 0:05:25.076 some of them, suggests broadly, not without its exceptions, but 0:05:25.156 --> 0:05:27.876 broadly there was wage stagnation in that early period, which 0:05:27.876 --> 0:05:31.196 is incredible and weird and pretty unsettling. Given how much 0:05:31.236 --> 0:05:34.716 productivity transformation, given how much technological change was underway, Well. 0:05:34.596 --> 0:05:35.716 That seems like. 0:05:37.436 --> 0:05:41.196 Sort of the key point from this period for the 0:05:41.276 --> 0:05:43.556 argument of your book to be a little. 0:05:43.436 --> 0:05:44.276 Reductive about it. 0:05:44.316 --> 0:05:49.596 And yes they're asterisks and caveats, but the big idea 0:05:49.756 --> 0:05:52.476 is you have this call it fifty this year period, 0:05:52.476 --> 0:05:55.316 the first half of the eighteen hundreds, where there's incredible 0:05:55.356 --> 0:06:00.476 productivity gains in England and overall workers don't seem to 0:06:00.516 --> 0:06:03.316 be capturing any of those gains, right, So what's going on? 0:06:03.556 --> 0:06:05.836 Why aren't workers' wages going up in this period? 0:06:07.116 --> 0:06:12.236 So the core issue Jacob in this moment, and it 0:06:12.316 --> 0:06:15.396 exists across all of technological transformation, but here we do 0:06:15.436 --> 0:06:18.396 see a nasty version here is that when you automate things, 0:06:18.436 --> 0:06:20.916 you obviously make some people more productive than the people 0:06:20.916 --> 0:06:24.276 who are run the machines, but you're also replacing other workers. Now, 0:06:24.516 --> 0:06:28.276 once we start to automate weaving, that's two hundred and 0:06:28.276 --> 0:06:31.276 fifty thousand weavers who are going to lose their jobs. 0:06:31.636 --> 0:06:34.916 About another fifty thousand people who are auxiliary service workers 0:06:34.956 --> 0:06:37.676 around that hand loom sector. So three to thousand people 0:06:37.916 --> 0:06:40.356 losing their jobs. Where are they going to work. 0:06:40.356 --> 0:06:42.516 Two stories that I feel like people have as kind 0:06:42.556 --> 0:06:44.876 of heuristics for this, right, as sort of toy models 0:06:44.876 --> 0:06:48.076 in their head. The sort of popular version is, oh, 0:06:48.276 --> 0:06:51.596 machines throw people out of work and we have technological unemployment. Right, 0:06:52.116 --> 0:06:54.436 everybody always says that, and yet here we are in 0:06:54.476 --> 0:06:57.796 twenty twenty three with an incredible amount of technology and 0:06:58.156 --> 0:07:01.516 unemployment at historic cloths right, So clearly that heuristic is 0:07:01.556 --> 0:07:04.476 not right. And then the other, the kind of economics 0:07:04.476 --> 0:07:08.756 heuristic is no, no, technological innovation makes things cheaper and 0:07:08.796 --> 0:07:11.396 so well, people can buy more stuff, and in buying 0:07:11.396 --> 0:07:14.076 more stuff goods and services, we create new jobs. But 0:07:14.236 --> 0:07:17.996 plainly that second one was not happening in the eighteen twenties. 0:07:18.036 --> 0:07:18.356 Why not. 0:07:19.596 --> 0:07:22.956 So there's a third possibility, actually, Jacob, which is people 0:07:22.996 --> 0:07:25.356 lose their jobs. They don't become unemployed because they can't 0:07:25.356 --> 0:07:27.836 afford to be unemployed. There's no uneployment assurance. They have 0:07:27.916 --> 0:07:29.996 to go to work at a very very low wage, 0:07:30.116 --> 0:07:33.436 and that wage may be you know, essentially at or 0:07:33.516 --> 0:07:36.156 slightly below subsistence. And I think that's also what we've 0:07:36.196 --> 0:07:38.396 experienced in the United States. To flash forward, which is 0:07:38.876 --> 0:07:42.756 since the digital transformation of the nineteen eighties, we've not 0:07:42.956 --> 0:07:45.956 had the technological unemployment that people were afraid of, but 0:07:45.996 --> 0:07:47.836 we have had a polarization of the job market. So 0:07:47.836 --> 0:07:49.636 some people have done well and a lot of people 0:07:50.036 --> 0:07:53.036 previous middle class, middle skill jobs have disappeared and people 0:07:53.076 --> 0:07:55.676 have got pushed down to low wage jobs. And that 0:07:55.716 --> 0:07:59.196 parallel I think we see in the early Industrial Revolution, Jacob, 0:07:59.516 --> 0:08:02.796 That's what I think absolutely happened to the weavers, for example. 0:08:03.116 --> 0:08:06.396 So, okay, that's the first half of the eighteen hundreds 0:08:06.396 --> 0:08:10.396 in England. In England, that changes in the second half. Right, 0:08:10.396 --> 0:08:12.916 in the latter part of the eighteen hundreds, we just 0:08:12.996 --> 0:08:15.996 do go up for ordinary people. These productivity gains that 0:08:15.996 --> 0:08:18.956 have been happening for decades and decades, they finally sort 0:08:18.956 --> 0:08:22.916 of pay off in a broader way. Right, Why what changes? 0:08:22.956 --> 0:08:23.716 Why does that happen? 0:08:23.756 --> 0:08:27.676 Then? So many of the frustrations of the first half 0:08:27.716 --> 0:08:30.316 of the nineteenth century, including the lack of representation for 0:08:30.556 --> 0:08:33.156 people living in these newly industrial areas that had bubbled 0:08:33.236 --> 0:08:36.316 up after the eighteen thirties, and there was much more 0:08:36.316 --> 0:08:41.236 awareness of anger and also very difficult living standards in 0:08:41.276 --> 0:08:44.796 these big industrial cities, and that leads to approcess of 0:08:44.876 --> 0:08:49.316 partial but ongoing democratization. So there's better rights for workers, 0:08:49.356 --> 0:08:51.956 including ultimately the right to form trade unions, and those 0:08:52.036 --> 0:08:55.396 trade unions are demanding higher wages by the eighteen eighties, 0:08:55.516 --> 0:08:58.396 and high wages in return to match the higher productivity. 0:08:58.876 --> 0:09:02.276 That's what starts to build much more broadly shared prosperity. 0:09:02.596 --> 0:09:06.676 So there's the political piece, trade unions being a notable 0:09:06.676 --> 0:09:08.716 piece of it that you have by the second half. 0:09:09.116 --> 0:09:13.356 You also in the book talk about a technological piece, 0:09:13.436 --> 0:09:17.076 how the nature of the technologies that are emerging and 0:09:17.236 --> 0:09:19.956 spreading more than emerging spreading by the second half of 0:09:19.956 --> 0:09:23.916 the eighteen hundreds, are also driving broader wage gains. 0:09:23.956 --> 0:09:27.076 Talk a little bit about that, right. 0:09:27.116 --> 0:09:30.156 So it's interesting that in the eighteen fifty one Great 0:09:30.196 --> 0:09:32.916 Exhibition that was held in London, there was almost no 0:09:33.196 --> 0:09:37.516 American technology on exhibit. The exceptions were some stuffed wild 0:09:37.516 --> 0:09:42.756 animals and some guns. Actually seems very American even today, 0:09:43.476 --> 0:09:45.996 but that was eighteen fifty one. By eighteen ninety, the 0:09:46.116 --> 0:09:48.716 US is the leading industrial power in the world. And 0:09:48.796 --> 0:09:51.956 that transformation was a lot about movement west. It was 0:09:51.996 --> 0:09:55.156 a lot about developing technology using agriculture. People were leaving 0:09:55.196 --> 0:09:58.516 farms in the Midwest to go to live in Chicago 0:09:58.596 --> 0:10:01.716 and work for McCormick Reaper's company to make equipment that 0:10:01.716 --> 0:10:05.036 would let more people leave the farms. And as these 0:10:05.036 --> 0:10:09.316 companies expanded, Singer Sewing Machine Company is another one, they 0:10:09.356 --> 0:10:12.436 look to European markets and they brought over their factories 0:10:12.476 --> 0:10:15.596 and their business models which were very or into making 0:10:15.876 --> 0:10:19.356 effective productive use of relatively unskilled labor. And when they 0:10:19.396 --> 0:10:22.596 brought that into Europe, that helped boost the demand for 0:10:22.716 --> 0:10:26.876 unskilled workers. And it was unskilled workers, make them highly productive, 0:10:26.996 --> 0:10:31.316 pay them a decent wage. That put the industrial development 0:10:31.316 --> 0:10:34.116 onto a different and we would argue much better try 0:10:34.196 --> 0:10:34.516 and they. 0:10:34.516 --> 0:10:35.596 Pay them a decent wage. 0:10:35.636 --> 0:10:35.836 Piece. 0:10:35.876 --> 0:10:38.156 I mean, it's that just a market dynamic. 0:10:38.276 --> 0:10:44.036 Because there are these new technologies like sewing machines, there 0:10:44.116 --> 0:10:47.756 is more demand for unskilled labor across the board, and 0:10:48.116 --> 0:10:51.476 therefore it's just a competitive equilibrium. Well, I got to 0:10:51.516 --> 0:10:53.596 hire somebody, and the guy at the factory nextdoor is 0:10:53.636 --> 0:10:55.356 going to hire this unskilled worker if I don't, so 0:10:55.396 --> 0:10:57.756 I have to offer them more money. Is it just that? 0:10:59.116 --> 0:10:59.316 Yeah? 0:10:59.316 --> 0:11:01.516 And I think it's it's part of that. It's the 0:11:01.556 --> 0:11:04.276 demand for labor. It's also the arrival of trade union. 0:11:04.316 --> 0:11:06.636 So the people I'm employing, I don't have a union 0:11:06.676 --> 0:11:09.116 in my factory, but two factories down they have a UNI, 0:11:09.556 --> 0:11:11.716 and my guys can and move down there and get 0:11:11.716 --> 0:11:13.436 the union wage if I don't pay them enough money. 0:11:13.756 --> 0:11:16.796 And I do think personally that railways were really important 0:11:16.836 --> 0:11:19.756 in this entire process, Jacob, because prior to railways it 0:11:19.836 --> 0:11:22.676 was very hard to move between places. It could take 0:11:22.676 --> 0:11:24.596 you two or three days on a stagecoach from London 0:11:24.636 --> 0:11:28.516 to Manchester, for example, very uncomfortable, quite expensive. Labor mobility 0:11:28.596 --> 0:11:31.076 was not very high in the sense of you know, 0:11:31.316 --> 0:11:32.916 are you going how far would you billing to move 0:11:32.916 --> 0:11:35.436 to get a better job. Once railways arrive, and once 0:11:35.476 --> 0:11:38.316 you have this unified market, there's a lot more possibility 0:11:38.316 --> 0:11:41.556 of moving to boom town's and a lot more understanding 0:11:41.636 --> 0:11:44.596 what's going on in you know, fifty miles away. And 0:11:44.636 --> 0:11:47.516 I think that was a very important part of critian 0:11:47.636 --> 0:11:51.036 national market and spreading ideas and boosting the demand for labor. 0:11:51.156 --> 0:11:54.116 I'm glad you mentioned railroads because in the book you 0:11:54.116 --> 0:11:57.716 write at some length about the rise of railroads, which 0:11:57.716 --> 0:12:00.116 is a little bit earlier than the period we're talking 0:12:00.116 --> 0:12:02.996 about here, right it's the first half of the eighteen hundreds, 0:12:03.476 --> 0:12:06.356 and in particular you write about this one guy named 0:12:06.436 --> 0:12:11.436 George Stephenson, who is sort of representative of this new 0:12:11.516 --> 0:12:14.956 kind of entrepreneur that's emerging around this time. Talk a 0:12:14.996 --> 0:12:16.316 little bit about George Stephenson. 0:12:16.356 --> 0:12:16.876 Who was he? 0:12:17.836 --> 0:12:21.676 So, George Stephens largely self educated. He was a mining engineer, 0:12:21.756 --> 0:12:23.996 but he didn't have any formal qualifications. He was just 0:12:24.036 --> 0:12:27.196 a chap who had worked in minds and helped solve 0:12:27.236 --> 0:12:29.276 problems with the design of the minds underground. 0:12:29.276 --> 0:12:32.436 Yourew not poor, right, He was not some like gentleman engineer. 0:12:33.916 --> 0:12:36.316 Absolutely, and in fact that's a common element to a 0:12:36.356 --> 0:12:39.276 lot of these people who become prominent innovators in the 0:12:39.356 --> 0:12:42.516 industrial ages. They come from quite modest backgrounds. Now there 0:12:42.516 --> 0:12:45.316 are gradations of poverty, of course, before the divosy. He's 0:12:45.356 --> 0:12:47.356 not in the poorest of the poor, but he's not 0:12:47.396 --> 0:12:49.876 middle class. He doesn't grow up in a nice house. 0:12:50.036 --> 0:12:53.476 He doesn't He can't read and write actually probably until 0:12:53.596 --> 0:12:56.716 he's an adult. So he figures stuff out by himself. 0:12:56.876 --> 0:12:59.516 And he's a tinkerer with machines, and his big breakthrough 0:12:59.516 --> 0:13:01.516 came when he went up to the coal mine one 0:13:01.596 --> 0:13:03.716 day and they were having trouble with a new fangled 0:13:03.756 --> 0:13:06.276 seam engine was pumping water out of the mine and 0:13:06.316 --> 0:13:07.676 he said, you know what, you know, give me a 0:13:07.676 --> 0:13:08.916 couple of days and some of my mates and we 0:13:08.956 --> 0:13:11.436 can fix this. And he did. And the people who 0:13:11.436 --> 0:13:14.436 owned the coal mine were you know, they were rich people. 0:13:14.876 --> 0:13:18.196 They were quite smart for people also, and they say, right, 0:13:18.236 --> 0:13:20.876 this Stevenson Chap is obviously you know a talent that 0:13:20.916 --> 0:13:22.556 we should and we should you know, back him and 0:13:22.876 --> 0:13:24.876 help him solve other problems. 0:13:25.196 --> 0:13:29.556 So how does Stevenson get from there to becoming a 0:13:29.636 --> 0:13:35.996 sort of great entrepreneur slash inventor engineer, Well. 0:13:35.796 --> 0:13:38.676 By solving problems really And then the main main problem 0:13:38.676 --> 0:13:40.156 he solved was how to move the coal. So there 0:13:40.156 --> 0:13:42.836 was a sort of a mechanical issue what's the best 0:13:42.836 --> 0:13:45.876 way to transport coal along the railways? But there was 0:13:45.876 --> 0:13:49.356 also an organization issue. So initially they ran their rails. 0:13:49.836 --> 0:13:52.396 This is in the northeast of England, near Newcastle. They 0:13:52.436 --> 0:13:54.396 ran them like we run roads today, which is, you know, 0:13:54.436 --> 0:13:56.516 somebody's in charge of the road, but anybody who's got 0:13:56.516 --> 0:13:58.836 a licensed car can put it on the road and 0:13:58.876 --> 0:14:01.196 drive somewhere and so there was an enormous amount of 0:14:01.236 --> 0:14:04.796 confusion and many hilarious stories, with some of them with 0:14:04.876 --> 0:14:07.596 quite tragic endings about people not giving way to each 0:14:07.596 --> 0:14:11.516 other on these limited railways. Stevenson had this vision, if 0:14:11.556 --> 0:14:13.476 you like, that there was a better way to do this, 0:14:13.556 --> 0:14:15.796 and that was to have one company owned the rail 0:14:16.116 --> 0:14:19.716 run the trains. People could provide freight, and of course 0:14:19.716 --> 0:14:22.036 passengers could step up or not to ride the trains, 0:14:22.156 --> 0:14:25.396 but you'd have an integrated control over this railway system. 0:14:25.716 --> 0:14:28.396 And that's what he persuaded some people to adopt for 0:14:28.476 --> 0:14:32.596 the Liverpool and Manchester Railway, and in what I think 0:14:32.636 --> 0:14:37.076 is one of the most amazing moments of human history 0:14:37.116 --> 0:14:41.476 of nginuity, certainly, he ran a combined Nobel Prize slash 0:14:41.516 --> 0:14:45.196 bakeoff show to determine who had the best railway engine 0:14:45.276 --> 0:14:47.956 to run on the rails that he designed and that 0:14:48.036 --> 0:14:51.036 he had planned. And he was also the winner of 0:14:51.076 --> 0:14:54.996 that competition. So there's some interesting conflicts of interest at 0:14:55.036 --> 0:14:57.116 the beginning of the Industrial Revolution, but his stuff worked. 0:14:57.316 --> 0:15:00.956 That was a huge event and it brought massive amount 0:15:00.996 --> 0:15:03.836 of attention to this industry and kicked off what became 0:15:03.876 --> 0:15:05.756 known as a railway mania, which was the building of 0:15:05.796 --> 0:15:08.276 railways and the development of the railway system across first 0:15:08.316 --> 0:15:09.636 England and then Europe and. 0:15:09.636 --> 0:15:10.156 Then the world. 0:15:11.156 --> 0:15:14.876 Mostly on this show I interview founders of tech companies 0:15:14.996 --> 0:15:17.676 more or less, and when I was reading about Stevenson, 0:15:17.716 --> 0:15:19.476 I was like, oh, this guy's like a like a 0:15:19.476 --> 0:15:20.836 tech founder, He's. 0:15:20.676 --> 0:15:22.756 Like people I interview on the show. I mean, do 0:15:22.796 --> 0:15:26.156 you think that's fair to some extent? Not fair? Like, 0:15:26.276 --> 0:15:27.036 am I just dreaming? 0:15:28.596 --> 0:15:30.796 I think no. I think this parallel. So here's a 0:15:30.836 --> 0:15:33.796 man with vision. He makes mistakes, he learns the hard way. 0:15:33.836 --> 0:15:35.236 A lot of these engines blew up, by the way, 0:15:35.356 --> 0:15:37.956 several of his relatives died in the in the in 0:15:37.996 --> 0:15:40.316 the shop where they were making engines because it was 0:15:40.356 --> 0:15:44.516 extremely dangerous business. So he figures stuff out, he learns 0:15:44.516 --> 0:15:47.076 by doing. He fails fast. I mean these are all 0:15:47.276 --> 0:15:50.036 buzzwords of today, of course I think there are. And 0:15:50.076 --> 0:15:51.876 he gets he gets people with money to back him 0:15:52.036 --> 0:15:54.396 and proves results and then gets more money and so on. 0:15:54.996 --> 0:15:58.476 I think the social gap between Stevenson and the elite 0:15:58.556 --> 0:16:02.316 was was enormous, and there was a famous hearing to 0:16:02.556 --> 0:16:04.636 review whether or not they could build this Liverpool and 0:16:04.676 --> 0:16:08.356 Manchester railway in which a top barrister who went on 0:16:08.356 --> 0:16:12.156 to become a prominent lawyer in the UK working for 0:16:12.156 --> 0:16:14.756 the government. This rarester just ripped into pieces and Stevenson 0:16:14.796 --> 0:16:17.556 was in articulate and he couldn't explain himself. And I 0:16:17.556 --> 0:16:21.116 think that social gap, that's the size of it. We 0:16:21.156 --> 0:16:22.796 don't see that today. I think most of the entrepreneurs 0:16:22.836 --> 0:16:25.156 we come across are well educated, they've gone to college, 0:16:25.196 --> 0:16:30.316 they're articulate people, and I don't see people rising up 0:16:30.716 --> 0:16:35.316 from essentially nowhere like Stevenson did to the same extent 0:16:35.436 --> 0:16:37.196 today as in the early industrial revolutionship. 0:16:37.236 --> 0:16:40.036 So, oh, okay, so we've done this story. It's like 0:16:40.156 --> 0:16:43.316 kind of a little more than one hundred years, right, 0:16:43.316 --> 0:16:45.356 starting in the seventeen hundreds, going up to the late 0:16:45.356 --> 0:16:46.276 eighteen hundreds. 0:16:46.556 --> 0:16:47.036 What are the. 0:16:47.036 --> 0:16:52.716 Lessons of this story about technological change, political power, and 0:16:53.516 --> 0:16:55.996 how economic gains are shared or not shared. 0:16:57.076 --> 0:16:59.516 So I think the main lesson is there's nothing automatic 0:16:59.556 --> 0:17:04.956 that links technological change, improvements in technology with better outcomes 0:17:04.956 --> 0:17:09.036 for workers. Certainly that linkage can develop, and it did 0:17:09.276 --> 0:17:11.956 up in the later nineteenth century. And you know, it 0:17:12.196 --> 0:17:16.236 was great that that happened, but that was a struggle 0:17:16.276 --> 0:17:18.156 that had to be one as opposed to something that 0:17:18.236 --> 0:17:21.916 happened just because technology, just because technology was changing. So 0:17:21.956 --> 0:17:24.196 I do think the political dimension of the second half 0:17:24.236 --> 0:17:28.036 of the nineteenth century, the spreader of democratization in Europe, 0:17:28.356 --> 0:17:31.596 the US becoming more democratic for example, in the progressive era, 0:17:31.916 --> 0:17:34.996 those were really important elements linking a technological change to 0:17:34.996 --> 0:17:38.516 better outcomes from people. And if that linkage that political 0:17:38.556 --> 0:17:41.236 language becomes weaker, which it has in the past forty 0:17:41.276 --> 0:17:45.076 fifty years, then you should be more concerned about what 0:17:45.116 --> 0:17:49.276 do you only get from potential future technological transformations. 0:17:52.796 --> 0:17:54.636 In a minute, Simon and I will talk about what's 0:17:54.636 --> 0:17:58.436 happening now, what may be coming, and what we can 0:17:58.476 --> 0:18:01.596 do to maximize the chances that AI will benefit lots 0:18:01.636 --> 0:18:10.276 of people instead of only a few. 0:18:15.316 --> 0:18:16.556 Now back to the show. 0:18:16.996 --> 0:18:20.156 By the end of the eighteen hundreds and into the 0:18:20.156 --> 0:18:23.276 twentieth century, at least in parts of the world, certainly 0:18:23.276 --> 0:18:26.716 in the United States and in England and in Western Europe, 0:18:26.836 --> 0:18:32.396 you do have this period when technological innovation, productivity gains 0:18:33.116 --> 0:18:38.596 are going along with broad based prosperity gains. Not everywhere, 0:18:38.676 --> 0:18:41.036 not all the time, but certainly, you know famously in 0:18:41.076 --> 0:18:44.196 the middle of the twentieth century in the US and 0:18:44.236 --> 0:18:48.156 in Europe at least, you have this era that is 0:18:48.596 --> 0:18:50.636 sort of the dream of like things are getting more 0:18:50.636 --> 0:18:54.516 efficient and workers are getting richer, and it's the version 0:18:54.556 --> 0:18:57.116 of technological progress that we like because it seems to 0:18:57.116 --> 0:19:00.236 be good for everybody, or at least very large groups 0:19:00.276 --> 0:19:04.116 of people. It is broadly shared prosperity. When, in your view, 0:19:04.156 --> 0:19:07.676 does that break down that link between technological progress and 0:19:07.796 --> 0:19:10.276 broadly shared you know, prosperity. 0:19:11.836 --> 0:19:14.236 Well, in retrospect, it came under a lot of pressure 0:19:14.236 --> 0:19:15.996 in the nineteen seventies, and I think it began to 0:19:16.036 --> 0:19:20.876 break down really seriously in the nineteen eightiest. Like a 0:19:20.876 --> 0:19:22.796 lot of these things, I don't think it became clear 0:19:22.796 --> 0:19:24.916 to people that there was a problem until the nineteen nineties, 0:19:24.996 --> 0:19:26.996 but by the nineteen nineties there were definitely there was 0:19:26.996 --> 0:19:30.916 a lot of analysis that said, you know, why approtaivity 0:19:30.916 --> 0:19:34.196 gain is not becoming higher wages like they used to, 0:19:34.756 --> 0:19:39.076 and what exactly is broken about this the form of innovation? 0:19:39.716 --> 0:19:41.596 And I think that's a problem we've grappled with for 0:19:41.596 --> 0:19:43.156 twenty five years and not yet found. 0:19:42.916 --> 0:19:43.516 A solution to. 0:19:44.396 --> 0:19:49.196 And you know, it feels like The answer to that 0:19:49.276 --> 0:19:53.236 is not entirely clear, but I know you make an 0:19:53.356 --> 0:19:54.916 argument about it in the book, like why do you 0:19:54.916 --> 0:19:55.636 think it happened? 0:19:57.636 --> 0:20:01.876 Well, a combination of factors where automation, the form of 0:20:01.876 --> 0:20:07.596 automation has become really is really important. Automation is being 0:20:07.676 --> 0:20:11.036 used primarily to replace people. At the same time, we're 0:20:11.076 --> 0:20:14.516 not generating a lot of new jobs, new opportunities in 0:20:14.556 --> 0:20:16.556 the way that we did in the early twentieth century, 0:20:16.596 --> 0:20:19.316 for example. So we've continued to automate, people have lost 0:20:19.356 --> 0:20:21.356 those jobs. We've not created a lot of new tasks. 0:20:21.636 --> 0:20:25.076 And that's partly about added UDEs of them and corporate leadership. 0:20:25.076 --> 0:20:28.196 It's partly about the way digital technology has been developed 0:20:28.196 --> 0:20:31.676 and deployed. It's also, unfortunately about globalization and the interaction 0:20:31.956 --> 0:20:35.956 between automation and how we've outsourced work to lower income 0:20:35.956 --> 0:20:36.436 country well. 0:20:36.476 --> 0:20:40.356 So globalization is an interesting piece, right because over that period, 0:20:41.116 --> 0:20:44.756 global inequality has fallen over the last several decades, right 0:20:45.076 --> 0:20:50.236 to some extent, globalization has led to great wage gains 0:20:50.276 --> 0:20:53.316 for people who who live in parts of the world 0:20:53.356 --> 0:20:55.796 that were formerly very, very very poor. 0:20:55.756 --> 0:20:56.956 You know, namely China. 0:20:57.716 --> 0:21:00.036 The media in person in China is now much richer 0:21:00.036 --> 0:21:01.196 than they were thirty years ago. 0:21:01.356 --> 0:21:03.196 Like that seems good. 0:21:04.596 --> 0:21:07.756 Yes, right, So the primary change is about China. There 0:21:07.796 --> 0:21:10.636 are many poor parts of the world that participated in this, 0:21:11.076 --> 0:21:13.436 And of course what's also happened in China is productivity 0:21:13.436 --> 0:21:16.796 gains of outstrip wage gains, so that that wedge has 0:21:17.036 --> 0:21:20.036 benefited some of the people in the Chinese system, not everybody, 0:21:20.156 --> 0:21:22.996 but I completely agree that wages have gone up and 0:21:23.076 --> 0:21:27.356 poverty has declined in China as part of this. So, yes, 0:21:27.676 --> 0:21:31.876 the Chinese and other countries have benefited from the global 0:21:31.876 --> 0:21:35.436 trading system, and that's good. But I think there are 0:21:35.516 --> 0:21:37.556 better ways to arrange that system, and better ways that 0:21:37.556 --> 0:21:40.196 would have more inclusion for more people, including the US. 0:21:40.476 --> 0:21:41.796 Let's talk more about the US. 0:21:42.196 --> 0:21:47.356 Well, what's your worry if things don't change, what do 0:21:47.356 --> 0:21:49.556 you think the US will be like in five years 0:21:49.636 --> 0:21:52.356 or ten years? Like, what's the sort of Yeah, what's 0:21:52.356 --> 0:21:54.836 your prediction if the status quo persists? 0:21:56.436 --> 0:21:59.436