291 - Daron Acemoglu: AI Is Destroying American Democracy

29:52but my real fear is forward-looking let me start from my real fear and then we'll come back to the current issues. My real fear, this might, you know, sound something that is a little science fiction, but I don't think it is entirely science fiction, is that we are converging, or we could converge, towards a two-tier society in which a large fraction of the population, 60%, 70%, I don't know, become completely dispensable. Their labor isn't essential. They don't have a very clear contribution to at least how we judge contribution today, which is economic. And then some smaller fraction, 5%, 10%, are essential for AI models, for their engineering, for their design, for their application maintenance and business decisions.

30:50The latter group becomes much richer, much more socially influential, much higher status. As a result, they start intermarrying and interacting less with the remaining group. Such a two-tier society, I think, is the most dystopian thing that I can imagine. It would make democracy, of course, impossible. Democracy requires that we, all of us, can look each other in the eye. one person, one vote isn't just a slogan. It is the essence of democracy. We're all equal when it comes to our voice. Of course, some people will be more influential, more charismatic, but we all endowed with one vote for some fundamental reason.

31:34And I think that would all become a mockery in a world that becomes very two-tier. And in case you think that's too far-fetched, Well, we've taken some baby steps towards that in what I call the transition from industrial to post-industrial economy. There is much less intermixing of people in the United States and in Europe by education. People who are college graduates have very different social circles, marry them among themselves. They live in their separate neighborhoods. They work in their separate firms, and they have very different values today already. So imagine now supercharging that with AI.

32:13And that's what I think is so dangerous for democracy. We're not there yet because we're not even seeing huge money being made from AI yet, huge investments and some money. We're not seeing huge productivity effects. The spread of AI as chatbot is very powerful, but agentic AI is still in its infancy. And very critically, AI model capabilities are still not there that they can sideline millions of workers. But on our current path, we could get there. We could get there in five years, we could get there in 10 years, or perhaps 15 years. But I care about democracy in 20 years' time too. But we are seeing other effects from AI.

32:55First of all, social media has already been very damaging, in my opinion, for mental health, but also for the way that we communicate with each other. And AI could deepen that. We're seeing the effects of AI in the education system that are very problematic. A lot of students are relying on AI, but in a way then that doesn't allow them to form a deep understanding of the subject and their performance is getting worse and worse. And I think most importantly, and this is why in my book, community plays a very important role. Everything we do, exchange of information, our formation of our values, our sense of being part of a human society.

33:41They all start from community. And that requires exchange of ideas, information, and interaction with people. We have much less interaction with people due to social media. People today report many, many fewer close friends than they did 20, 25 years ago. And with AI and us turning to chatbots rather than to our social networks for many things, I think that's going to get deeper as well. And given where we are today, do you see us at a critical point where are we nearing a point of no return or is this a place in time where we still have some leeway in terms of picking a direction in which to go?

34:26How crucial are the upcoming elections to the AI trajectory for our economy? Oh, I think the upcoming elections are very important. I don't think the Trump administration is going to have any meaningful agenda for improving our situation. But I also don't think that there is a threshold beyond which we should throw in the towel. The sooner we act, the better. And there are two reasons for that. Both of them are very major. One is that AI models are getting better and better. And right now, they're not really going in the direction of being more pro-human, pro-worker, pro-democracy. But second, our democracy is getting weaker and weaker.

35:18That's why I wrote this book. I'm kept up at night, sometimes by the failure of AI, by a future shaped by AI, but often also because of the state of our liberal democracy. But liberal democracy is not just important as a general value for us. It's also our only way of reining in the dangerous directions of AI. So the weaker democracy gets, the harder that becomes. So that's why we have to act sooner. That's why also midterms are very important. And broadly speaking to you, for you, voting left is voting more in favor of democracy and voting toward the right is more in favor of authoritarianism and less control over the future of AI?

36:10Well, in general, no. I think in general, people should be able to...

36:19The liberal tent is a big one. You can support the center-right or the center-left. In Europe, for a long time, Christian democratic parties were very central to building a welfare state and supporting shared prosperity and individual freedoms. But right now in the United States, because of Trump's takeover of the Republican Party, the Republican Party has become an entire establishment and more authoritarian. And therefore, at this juncture, yes, I think it is really the hope is that Democrats are going to rein in some of that. And I think also the agenda of passing better laws for creating a framework for AI would benefit from a Democrat government or the party from the Democratic government.

37:13I'm using the word democratic in two different senses. I'm trying to avoid that. That's not to say that there aren't Republican lawmakers who are also very much worried about the same issues. So I've testified a number of times and there are many senators from the Republicans who have concerns that are valid and they would actually be part of a coalition to perhaps write better laws, but not at the moment, not with Trump in power in the White House. This is the last question that I'll ask about AI because there are plenty of other topics for us to cover. But are there any other economists or political thinkers whose work you really respect who have a very different opinion on the trajectory of AI from you and believe that even following the current trajectory, they have an optimistic outlook?

38:18Yes, absolutely. Okay. So one thing I emphasize all the time, and sorry, I didn't do it as much this time, because we started from my book on liberal democracy. But whenever there is a conversation about AI, I say, there's so much we don't know. and you really have to recognize that uncertainty. So here are three ways in which what I've said could be wrong. One is that what I'm calling pro-worker AI is impossible. And whatever I say, whatever policy we do, we're going to go to AGI that will replace humans. That's a possibility. I can't rule that out. I don't believe it's the modal scenario, but it's a possibility.

39:01Second, it is also possible that the question that you asked at the beginning, that the current direction somehow will create more jobs that I'm allowing. Again, I cannot rule that out. I really think it's unlikely. That one's even more unlikely because if really it's AGI, meaning that models can do everything, including social relations and understanding the theory of the mind as good as humans, that's a very, very important part of the skill. If you don't do that, you cannot really perform many of the occupations that are so central to the economy. If they start doing that, then it's hard to imagine that even new tasks and new things would create big advantages for humans.

39:49But it's possible. A third possibility is more interesting and intriguing, which is that I've also gotten the pushback from some people in tech that, yes, you're right, we do need pro-worker AI. But the best way of getting there is first develop the best foundation models, and then we'll use the foundation models for building pro-worker AI. So in that telling, the current direction isn't cementing the automation imperative. That decision is going to be done later once we reach higher levels of intelligence in the artificial intelligence models. Again, I don't find that as compelling, but it's possible.

40:41I really appreciate how careful you are and that you're considering all the sides of things and not just only looking in one direction. I'm trying. I'm trying. What are the other key policy choices and inflection points that we're facing right now in these elections as far as the future of liberal democracy is concerned, other than AI? My book, in my mind, is an effort to invite the reader and other people to start dreaming of and constructing a new governing philosophy for the center left. Working class liberalism? Working class liberalism is the idea I give to it, but I don't care about labels and I don't care about being right.

41:32if I'm wrong and there's a different governing philosophy that's going to be effective, sign me up for it. But I think we do need that governing philosophy. So a big battle has to be within the hearts of Democrats in the United States or labor in the UK, et cetera. And this debate between sometimes what are called progressives and moderates or progressives and centrists is actually very important and very interesting. And unfortunately, I think it's slightly confusing. Because I think a neat division of the issues between centrists and progressives doesn't capture the challenges we're facing. Progressives are right that we need radical policies, especially on the economic front.

42:25But they are not sufficiently attuned or attentive to forming a big, broad coalition, bringing back the working class back into the fold of the Democratic Party, which is very important. And then the other issue is that it's not enough to emphasize these questions, but you need to have a workable plan such that you can actually deliver on the promises when you come to power. I think, for example, Mamdani captures that dilemma quite well. I think he's a brilliant politician. I'm very impressed by him. And he's talking about some of the very important issues like affordability. On the other hand, if you look at his solutions, I think they're not up to the task.

43:12You're not going to solve the affordability problem, which I think is just a code word for the inequality and the collapse of shared prosperity, living standards and opportunities for people in New York and beyond. You're not going to solve that by having subsidized transport and sit around grocery stores. You need something much more comprehensive. And if you promise to solve these problems with such simple solutions and they don't work, that's going to tarnish the agenda of really trying to do something more radical. And I think that's where we really need to come up with the right philosophy that can bring people around.

43:49And I think the most important thing I would say there is that liberalism, at least as I see, never has the answers. You shouldn't turn to liberalism, liberal ideas, or whatever philosophy that we like as having the answers to complex questions. If any philosophy claims to do so, I think it's as good as the dustbin. What we should hope for is that our philosophy provides a framework within which we come together around shared values and we will reach some compromise or communication and dialogue. I think that's the way I want working class liberalism to be perceived. Push your limits. Train with precision.

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45:28just as a parenthetical question i'm curious uh well actually i the other day i interviewed an evolutionary psychologist uh from cambridge and and and then the other day i interviewed an evolutionary biologist from harvard and it was interesting to think about just how you're an economist i'm i'm studying philosophy here at stanford but what's more interesting to us than anything else is social dynamics and people. And you said that Mamdani is a brilliant politician. And I'm just curious why you feel that way about him. Not that I disagree, but I'm just curious. Because he's got charisma, he has zeroed in on important problems and he can communicate those problems and empathize with people.

46:21I think those are very, very important qualities. Now, I'm not saying that a politician who doesn't have those qualities cannot be successful. But those are very helpful, especially at a time when we need to rebuild community. And I'm really glad you're saying evolutionary biology, evolutionary psychology, and philosophy in one breath, because those are some of my inspirations in this book. I draw a lot on philosophical ideas. I disagree with some of these existing philosophical lines. But I also get a lot of inspiration from evolutionary biology, evolutionary anthropology about the role of communication and ID sharing and social learning in society, which are very important parts of the foundations I offer for liberal ideas success.

47:13I'm glad that you appreciated that. But also, I find it a very interesting distinction to draw between being a good politician and someone who can offer practical solutions. And that Mamdani is a great politician because of his charisma and how he connects with and inspires people and builds community. But that doesn't necessarily mean that he's capable one way or the other of But you have to be. I think, look, I tell you somebody else who is a great communicator, has great empathy and some amount of charisma. Nigel Farage. Go and watch him. And you'll see he's very good at talking to many ordinary folk.

47:59he comes across as sincere and he zeroes in on some problems. And obviously, the solutions he offers to the problems in the UK are horrible. They'll make the problems much worse. And he's responsible partly for the Brexit fiasco. So just having that charisma and being a good politician in terms of appealing to people isn't enough. Trump, I still don't understand why he has charisma, but obviously he does. And he's been such a destructive force in US politics. When you say that you don't understand why Trump has charisma, do you mean that he doesn't appeal to you or you don't understand how he can appeal to anyone, but you accept that he does?

48:45No, no, he appeals. I understand why he appeals to people and I understand he's talking to people's grievances, but I never thought that he was charismatic. as opposed to Nigel Farage who I see as charismatic in his own way or Mamdani who is definitely charismatic right he smiles it makes you want to smile exactly no no Trump doesn't smile exactly Nigel Farage smiles a lot but perhaps I like people smiling so perhaps I'm just too much influenced by that and it goes back maybe to some evolutionary biology and psychology that when Mamdani smiles we want to smile That's one reason we like him. Now, you characterize this inflection point as a sort of debate between progressives and centrists on the left, because this is an argument that you said will take place within the hearts of Democrats.

49:42And what that makes me wonder then is why these elections in a couple of months are so important when it seems like actually the primaries in the Democratic Party were where it was very important. You're right. You're right. But primaries are always in the shadow of the election. And that's actually a lesson that Democrats learn and forget, you know, and Republicans too. elect people who are going to be electable. In this primary, you have to nominate people who are going to be electable. And I think that's very important. A lot of the mistakes that I think progressive have made is because they were talking to their base.

50:32Like, for example, if you wanted to have a much more constructive debate on immigration, which would bring people from left and right together. You wouldn't start with open borders. You would start with, you know, sort of how can we make immigration work both for the American people in line with their priorities and also deal with where we need labor, for example, in some high-skill areas and also issues of humanitarianism, authoritarianism like refugees, but you would find a frame that would appeal to the right as well as the left. Same thing with the primaries. If you think the primaries are just about your party, you're going to go wrong.

51:26And each time I've tried to sum up and make a generalization, I've been wrong so far in our conversation. Am I right? I'm probably not to ask whether you think that on balance, the more centrist rather than progressive candidates on the left have the more practical solutions to the problems, even if the politicians farther on the left are very charismatic in certain instances? Yes, I think the left is more charismatic because they're coming up with radical solutions. And I think they've been better at identifying the problems. But the centrists, I think, have a better chance of finding a path to appeal to voters on the basis of some of those promises, except for the most left-leaning places, and also create a governing coalition around it.

52:31So the hope is that there will be a mixture or a synthesis of progressive ideas and some of the centrist positions. But centrist have also tarnished themselves over the years by not acting, not accepting the inequalities and all of the problems. So that's why it really isn't just siding either with the centrists or the progressives. Okay, just to clarify something, what it sounded like was the centrists have a better chance of winning an election against somebody on the right. And that makes them, in a certain sense, much more practical than the progressive candidates. Correct. But are you also saying that the solutions proposed by the centrist candidates, assuming that both were elected, or assuming like looking at two different worlds, one in which the progressive is elected, one in which the centrist is elected, the centrist solutions are much more likely to succeed?

53:35No, not at the moment. I think centrists in the best of worlds, centrists would find a coalition that includes people from the right as well that would support workable solutions. And I think that has to rely on some of the ideas from progressives. Like, for example, minimum wages. I think it's very straightforward. Minimum wages can work. They have worked. They are not going to be a solution to our problems, but they would work much better and would be much more durable if there is a coalition that supports minimum wages, both from the right and the left. And in fact, if you look at people who are, quote unquote, working class, lower education than college and working in manual or office jobs, there is pretty widespread support on minimum wages.

54:33So, you know, that's the kind of coalition we need to make work. Now, if Mamdani can do that, I love it. But when you come with too much baggage from the left, I think it's easier than for the other side to paint you as an extremist and those coalitions may be harder. So that's the one consideration you have to bear in mind. Real politic may be complex. But I think some of those can be bridged. But I think the important issue, and again, this is the historical part of my book, when you go back, successes of liberal democracy are much more likely to be found in places where liberal democratic ideas were supported by a broad coalition, both from the left and the right.

55:30We haven't really spoken that much, but now we have a little bit of time before we finish, about more broadly what working class liberalism is. And as a political philosophy, what are its key tenets and why do you think that they're vital moving forward for a healthy left? So before I describe that, let me say that what I'm trying to do is think of a governing philosophy that is appropriate for our post-industrial economy and the conflicts in the diverse society that we live in. within that context i think working class liberalism prioritizes bringing the working class back into the liberal coalition but does so while remaining faithful to the most important principles of liberalism it starts with shared prosperity so jobs and wage growth and opportunities is critical.

56:36Second, it creates a broad enough tent that the working classes that often have more, you know, lower education communities, that often in the United States have more conservative values can be brought back into that tent. But it remains very committed to the freedom of speech and protecting the individual. And this is the part about finding the right balance between community and freedom. Community is essential for our values, for our existence, for our social networks, for our ability to do self-government, starting at the local level, for our associations, including labor organizations. On the other hand, communities can often, do often restrict freedoms of individuals.

57:25So you have to balance that. And that's where the liberalism part of working class liberalism is key. You have to protect the individual's right to speech and belief and association and also right to exit those communities. So that's why it's a work in progress. I don't think there is a formula, especially not a formula that will apply in the kinds of society that we live in right now that has high levels of polarization, very complex levels of cross-cutting differences. On the other hand, we have managed to do that in many instances, even in the recent past. State-level referendums on gay marriage were an excellent illustration of how you build consensus that was bipartisan in some sense.

58:14the Irish citizen assemblies in the context of abortion, the topic that everybody thought would destroy Irish society, and Ireland came out of it stronger, was another example, was based on dialogue, understanding the other side's perspective, building on shared values. So I think that's the kind of thing that working class liberalism has to appeal, so that the working class is back and part of the coalition supporting liberal ideas and shared prosperity. And as an economist, you seem to be the right person to ask this. Other than setting, again, our discussions about automation and AI aside, what are the policies that liberals endorsing this platform or this philosophy would enact or could enact to improve jobs and wage growth?

59:09Well, first of all, I think labor organization and labor voice is critical. Trade unions may not be the main form for this because the way that they develop was much more around blue color workers. And we need now solidarity among workers in much more diverse situations. Building that solidarity isn't easy. So we need new kinds of labor organizations. Those labor organizations have to be much more attuned to issues of AI, but we also need legislation. In the United States, current legislation, for example, doesn't allow industry-level bargains, and that may be very necessary for new kinds of labor organizations.

59:53Taxation is another big issue. We have a very high level of public debt, and we have huge levels of inequality. and one of the things we do when we look at our tax code is we don't tax capital income. Capital gains are taxed at a much lower rate. A lot of capital income completely remains untaxed. That's both a problem of inequity but it's also inefficient. I explain in the book based on some of the research I've done is how this asymmetric distorted tax code actually encourages excessive automation not just inequality. There's another thing that we need to have policy. And I think, again, there could be bipartisan support for policies like that.

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1:01:17And, well, I'm glad that I asked that just because people often ask me or expect me to voice stronger political opinions on the show or just with my friends or in conversation. But the fact is that I don't feel that I understand economics enough to really have a really well-defended... And of course, ask three economists and you're going to get four answers on some of these questions. Right, exactly. A similar question. What are the policies or directions in which the left should be going to find this or strike this appropriate balance between community versus freedom? I think we have to respect community more.

1:02:04If you go back to the forming stages of liberal ideas, community was very important. And somehow we have sidelined it. And I think community is critical if you want self-government because people have to start exercising their voice and their ability to shape their lives starting at the local level. But this is where a commitment to a core set of individual values becomes very important. You cannot allow communities to take people's right of exit. If you're not happy in that community, if you don't share their values or you think they're restricting you, you should be able to leave. And that is a, I think, founding principle for liberal ideas.

1:02:55Well, with this last minute or so that we have left, there are a lot of elections going on in November. Each one has different issues. But are there any sort of key thoughts that you think voters should have in mind when they go in to place their vote? So yeah, I think this is a very important election. And if I think about it myself, the most important thing for me is defending democracy. And democracy is one of the greatest achievements of humanity. Think of our ancestors and the ways they lived, the ways they dealt with conflict. the hierarchy, the violence, and we've built much more peaceful societies that respect individual rights, individual freedoms, are consensual in many important ways.

1:03:56We talk to each other, even with the crisis of liberal democracy. That's just an amazing achievement. So we have to defend that. Well, Darren, it's been a pleasure speaking with you today. Thanks so much for joining me. Thank you, Robinson. It was wonderful.

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