Daron Acemoglu, Economist: Liberal democracy is in crisis

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1:27Paddy O'Connell:For this episode, I speak to Nobel Prize-winning economist Darren Essamoglu about his latest book, What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity. Darren argues that liberal democracy worked because people were given a say in how they were governed and benefited from economic prosperity. But globalisation and automation have reshaped economies, while governments have made major decisions on issues like immigration without first building public agreement. He says that together these changes have left many working people feeling that politicians no longer listen to them, helping to fuel the rise of populism.

2:09Paddy O'Connell:Now, Darren warns that the way artificial intelligence is being developed in news could make it all much worse, widening inequality and pushing those pesky human workers aside. What's going to happen to all these people who lose their jobs? It's not just that they're not going to be able to buy houses. It's that they will have to find new jobs, often things for which they weren't trained, things that are going to pay even lower wages. And the young people are going to have a new and harder time getting into occupations and careers.

2:43Paddy O'Connell:Welcome to the interview from the BBC World Service with Darren Asimoglu. You can say that liberal democracy went from success to crisis. And if you want to rebuild better democratic institutions for the future, we have to understand the success, which is about shared prosperity and providing voice and self-government to people, and the crisis which comes with what I call the post-industrial age, an age defined by digital technologies, globalization, and new coalitions in society. Liberal democracy needs a new governing philosophy. What I mean by that is that we need to inspire people to support liberal ideas and democratic participation and shared prosperity and form a broad coalition from different groups around that objective.

3:46And part of that objective is dealing with technology. Part of that objective is creating bridges in society so that we're not as polarized, we're not as conflictual anymore. And none of that is easy, but that's what a governing philosophy does. If you look at what liberalism did in its heyday, it really created a huge number of aspirations that people a century before could not have even dreamed of. And people came around to supporting those aspirations and the democratic institutions that would deliver on them. That's what we need to do. We need to understand that the current situation in the UK, in the US, is really one that has built up over half a century.

4:35And it's not just simple incompetence or neoliberal policies. Look at it from one angle. We had a recipe for creating shared prosperity, which was through companies investing in new technologies, trying to reach new markets, and in the process, hiring more workers and paying them higher wages. That doesn't work anymore because many of these companies are now using automated technology, So they don't actually demand workers, especially they don't demand blue-collar workers that were the heart of the middle class or the lower middle class and the supporters of the working class interests throughout the first half of the 20th, the first seven decades of the 20th century.

5:17Paddy O'Connell:because you pose a question which is quite chilling in the book, which is, has liberalism failed because it succeeded? And that gave me thought of 100 years of my father's, my mother's generation doing their bit to build a society and build a country, fighting fascism, fighting communism. Liberalism did really well at that. Now we doubt ourselves. 100%. And one of the reasons why... 100%. One of the reasons why we doubt ourselves is that in the question of immigration, capitalism needed the labor, but the political system didn't ask the people how much immigration it wanted. So it was it was a perfect example of capitalism running things, running the show.

6:03100 percent. I mean, I wouldn't say it's the capitalism per se. I think it's a more complicated set of ideas and sort of groups supporting immigration. And I don't think there is anything wrong about immigration per se, especially in societies in Europe and many other parts of the world where aging is going to reduce the labor force. There are also humanitarian reasons for allowing refugees. But the problem is exactly what you put your finger on. We did these policies without asking people, without building a consensus around them. So it became a symbol of elites versus working class communities.

6:46The latter not wanting it, having more culturally conservative values and more suspicious attitudes towards immigrants. And it started becoming another wedge issue, polarizing society. Democracy works if you actually ask people. Democracy is about voice and self-government. The failure was we did not create the right type of information ecosystem so that people understood what were the tradeoffs. and we did not communicate and we were left to the whims of demagogues and false information and a polarized society. There's nothing wrong in asking people. And I think it's very important that we make that commitment, that we do not, as the more educated segments of society, as the politicians, impose our values without consulting, without asking people.

7:32Paddy O'Connell:You say voice, voice is important. So I wonder if I can just accelerate our discussion. Artificial intelligence. Well, no, but just to get to one of the important sort of zeitgeist concerns about artificial intelligence. Is it clear that we are being consulted? Is it clear who is pushing the maximum use of artificial intelligence? Do we know who they are? If we want to have accountability, who do I ring? If I want a discussion, you know, who do I go to? That's a great question. Well, I think let's start where the issue is easiest. AI is going to transform every aspect of our lives, and absolutely, absolutely, 100%, we're not being asked.

8:20We have no say in how AI is going to shape our society. And by we here, I mean people in the UK, people in the US. Even worse, for 7 billion people who are outside of, or 6 billion people who are outside of the US, UK, China, their lives are going to be completely reshaped by AI as well, and they have zero say whatsoever. So this is one of the most non-democratic technologies, and the way it's being developed is completely top-down. And we got just given loose assurances by AI leaders and by their media supporters that everything's going to be so great. AI is wonderful. We're all going to be so prosperous, so much better off, and any criticism of AI is just the worst kind of luddism.

9:08That's just an incredible situation, given that AI is probably going to make shared prosperity much harder. It's going to sideline a lot of people. And it's one of the most important social and economic changes that you can ever imagine.

9:25Paddy O'Connell:I wonder if you'd said this at the start of the boom of the Internet, if you would have been proved wrong, in the sense that the productivity bonuses of technology have improved people's lifestyles, their homes, they've improved their health outcomes. Do you think it can change forever the way that economies are run and you're worried about that? Absolutely, 100%. Well, first of all, I am not an AI pessimist. I believe that there is a tremendous promise of AI, but it depends on how you develop it and it depends on how you use it. This idea that somehow technology in and of itself by its nature is always good, or it always has an inevitable path that's going to lift us all, that's just crazy.

10:13Look at the British Industrial Revolution. The first 100 years of it were extremely difficult, created huge inequalities, terrible hardships. Life expectancy at birth in cities, newly industrializing cities like Birmingham, Liverpool, Manchester fell below 30 years. It was just a very, very difficult time. Look at robots. I think robots, industrial robots, are the best guide of the types of technologies that automated work in the production process. And if you look at their impact in the United States, my research documents that in the communities where they were adopted very rapidly, wages fell, employment fell, that went on for 30, 40 years, inequality increased massively.

11:00And again, with robots, which are a much simpler technology than AI, there were very different ways of using them. If you look at Japanese or German companies, they used the robots differently. They retrained the workers, and the gains were more widely shared. So I think there are a lot of lessons to learn from the history about AI, even though AI is a very different technology. And I have always welcomed the Internet. I think Internet was a fantastic platform, and we've got a lot of returns from the Internet. But if you look at the Internet's impact, some of them have turned out to be negative.

11:34Online communication turned out to be much more of a quagmire than anybody had anticipated.

11:41Paddy O'Connell:And you get to this. You have a section on how algorithms have affected our democratic debate. Do you think there could be a contract made now between society and the tech bros that can be made in advance of a crisis? I think 20 years from now would probably be too late. If you let AI follow the dreams of a handful of people, especially those centered on AGI, artificial general intelligence, which has very much within it the idea that humans are going to be sidelined because these models are going to reach human capabilities, exceed them and then reach super intelligence. I think we are going to be going towards a society that's really out of control.

12:26The social media experience shows that as well. All of those effects that you're describing are now very, very difficult to reverse because we did not take precautions at the time. The way that we approached social media is very similar to the way that we are approaching AI. We have a very reactive way of thinking about regulation. We let these most powerful corporations that history has ever seen do whatever they want. And then if in five, ten years' time some problems emerge and they are severe enough, we try to set some guardrails and it takes another 10, 15 years for them to actually be instituted.

13:06That is definitely not up to the task of dealing with AI.

13:14Paddy O'Connell:You're listening to The Interview from the BBC World Service with me, Paddy O 'Connell.

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14:11Paddy O'Connell:So I didn't meet Darren S. Moglu in person. He was on a connection, a remote connection, so I never got to shake the hand of a Nobel Prize winner. I always think it's an amazing thing to be in a room with a Nobel Prize winner. I'm someone who's a sucker for the history of that prize. But what's interesting is that although he is very esteemed, he's involved in a row, a spat with the magazine called The Economist, which sort of basically queried some of what he was saying at the moment. And it's a reminder for me about kind of that is what liberal democracy is. It's the ability for us to disagree and to annoy people at the top of their field.

14:56Paddy O'Connell:So I'm not taking a side here. I'm just saying that in the countries of the world where there is a lively debate about influential people, that's probably a better sign for our democracies than in the countries where you can't have a go at people. And that's one of the major things I think in journalism and when you're choosing to listen to BBC World Service, we're trying to be the place where ideas are challenged and you decide what you like about what you hear. So anyway, that's a bit prizeman, and I hope you enjoy listening to him rather than me explain the whole thing. Anyway, let's return to my conversation with Darren Asimoglu.

15:41Paddy O'Connell:The example from automation was, I can get a robot that can build a car and sack the workers, or I can build a better car by training the worker how to use the robot. And I think that's what you're saying is a way to use But I'm just going to have to be a doom master for you. Which regulatory system is going to do this? Because if, say, Brussels moves quicker to regulate AI than America and China, the money will flow to America and China to get to the AI outcome quicker than where we live in the Europe zone, with Britain and the EU looking for their own regulation. We need to start with an idea of what we want to achieve.

16:23That's what I call the governing philosophy. and get people around that objective. And so what I suggest in the book is that we need, in the production process, we need pro-worker AI, meaning AI that's going to also contribute to productivity, but it's going to do that by not sidelining workers, by not throwing them out of jobs, but making them more productive, enabling them to do new things, new tasks, new innovations, new expertise for the workers. And I provide a lot of examples for why that's actually both feasible and socially much more desirable than our current path.

16:57Paddy O'Connell:If you look at the use of x-ray analysis in medicine, AI can detect from thousands of x-rays trends and cases which a human radiologist can then analyse. This is seen, I've been told, by very senior doctors in the UK, seen as a very good use of AI. If I then talk to my young friends who are training as accountants, their jobs can be replaced by AI software that will do the accounts of a medium-level firm. So this is the sort of example. What would your prescription do for young accountants to get them safe from AI as opposed to made redundant by AI? There will still be things that humans can do.

17:41Chief among them is social skills communication. So accountants can still work with AI models, but they will be the ones that actually explain the services that they provide and understand what are the needs of the customers. Innovation. I think AI models are amazingly good at pattern recognition in large corpus of data. That's why when you give them x-rays, they can see things, they can recognize patterns better than trained humans. But that does not automatically translate into innovation. We live in an age where everything is in turbulence. Climate change, aging, geopolitical balance is changing, a very large number of young people in Africa, in Asia, coming into the middle classes, so they're going to demand lots of new goods and services.

18:35We need a tremendous amount of innovation. The human element is very important in recognizing those needs, thinking out of the box, coming up with new ways of meeting those needs. Use them together with AI rather than trying to sideline human talent.

18:51Paddy O'Connell:What is the risk at the moment from not course correcting in the big democracies? In your book, you quote a major study in the U.S. that younger people now in the vast majority think they'll be worse off than their parents. So what do you think is the... 100%. I think housing is not the main... I mean, it's the icing on the cake. I think if people start being displaced from their core occupations, that's going to create a lot of economic hardship. But it's also going to threaten social peace. Take, for example, customer service representatives. There are three and a half million or so customer service representatives in the United States.

19:36they're going to be the first line of attack for AI models once they reach a little bit higher capabilities and the relevant applications are developed. What's going to happen to all these people who lose their jobs? It's not just that they're not going to be able to buy houses, it's that they will have to find new jobs, often things for which they weren't trained, things that are going to pay even lower wages, and the young people are going to have an even a harder time getting into occupations and careers. It's a very, very challenging situation, and I am genuinely afraid that once we create that level of disruption, liberal democracy may become impossible as well.

20:17Liberal democracy really requires people to look each other in the eye as if they are equals, even if there are some income differences, even if there are some status differences. But if you create a two-tier society with the overlords of AI and a small group of engineers supporting AI and all the rest of society. That is not consistent with democracy.

20:39Paddy O'Connell:And Donald Trump came to power because he argued he was the outsider and he could take on the beltway, the system that ran itself for itself. Do you think he's a consequential president? You believe them? Well, I know he divides opinion and he's not liked by academics, but he is going to be one of the most consequential presidents. He's more consequential than Joe Biden. Absolutely. That's right. I mean, because he's consequential, because A, he has damaged institutions. B, he has increased polarization. C, he has completely changed the norms of democratic discourse, norms of corruption control and self-dealing within government.

21:23But what I've always said, and I've written this in various outlets, criticize Trump if you want to hate Trump, but there is true grievance. There are true grievances among the Trumpists that are making them support such a strong anti-establishment candidate because they've become desperate. And it is that desperation that's going to get multiplied with AI and with the subsequent changes in our economy and society. We need both a new way of motivating people so that they can come together around shared values and shared aspirations, and also have a feasible plan of delivering the kinds of things that they want.

22:09I think the problem in our political system is this polarized discourse, which doesn't bring people together. And the only ones that gain some popularity are populist ideas that have no possibility of delivering on what they are really aiming for. So I think we really do need to speak for ordinary people. We really do need to lift ordinary people, but with feasible policies. And dealing with AI, I think, is a very important part of that.

22:44Paddy O'Connell:What happens if nothing happens? If we keep going in this way, do the other systems which do not rely on democracy, for instance, China, which has had soar-away growth, do they look preferable? I don't even want to think about the possibility that we do nothing, because, yes, it's a terrible path. Look, the anti-establishment feeling that has brought Trump to power, made reform so popular, led to Brexit, is only stronger today. And the bad news is that those right-wing populists or authoritarian leaders or these anti-establishment parties have no solutions to the problem. They're going to make the issues even worse.

23:32and in the process, as the Trump example shows, they're going to damage the fabric of our institutions, destroy trust in bedrock democratic bodies such as the parliament or the prime ministership or the bureaucracy. I think we are going worse and worse. China is not a viable model for the West unless we completely, completely abandon our liberal principles and that's what I'm afraid of. And moreover, there are many aspects of the Chinese success that rely on things that cannot be replicated in Europe or in the United States.

24:30Paddy O'Connell:with former Australian Prime Minister Julia Gillard and many others. Until the next time, bye for now.

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