Our Thousand-Year Struggle over Technology and Prosperity

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Simon Johnson, the co-author of the just-released book Power and Progress (co-authored with Daron Acemoglu), discusses the book, what new technologies hold in store for us, and how societies might better manage and govern them.

Transcript

Rob Johnson:

Welcome to economics and beyond. I’m Rob Johnson, president of the Institute for New Economic Thinking.

I’m here today with Simon Johnson, the INET community would be quite familiar because of all the extraordinary work he did at the outset of INET around the great financial crisis and many other issues. He’s been a leading voice in economics, people like Dennis Kelleher and others sing his praises every week to me. So, I’ve stayed in touch and I’m glad to have you here today. Today we’re here to talk about his book, Power And Progress, Our 1,000-Year Struggle Over Technology and Prosperity. Simon and Daron Acemoglu wrote this book together and I will tell you at the outset, of all the books I’ve read in the last two or three years, it’s as well written and it’s about as important subject as I have ever considered.

So, I’m very excited to have Simon here today. I’m very excited to learn from him what he and his co-author envisioned and exploring what’s in this book which I would strongly urge you to read. It’s published by Public Affairs Press, my friend Peter Osnos has always had good taste. He published many things like the Memoirs of Paul Volker and I would say it’s going to be released on May 16th. Get on your horse and get to the bookstore because they’re going to sell a lot of them quick. Anyway, Simon, thank you for being here.

Simon Johnson:

Thanks for having me.

Rob Johnson:

So, you have this book, extraordinary book, 500 pages plus all kinds of beautiful explorations as a doctor’s son, diagnosis, potential remedies, the yin and yang of each perspective scenario and remedy and possibilities. It doesn’t come across as dogmatic, it comes across as thoughtful, it comes across as deep. What inspired you to write this book? What did you see and what did Daron see that brought you to the focus on this effort?

Simon Johnson:

Well, Rob, as I think Daron and I have worked together a really long time, actually 25 years, pretty close. And we’ve been talking about when societies do better and when there are problems. But it was really the election of 2016 I think that catalyze us to think that maybe perhaps we needed to focus a bit more on the technology of today and the technology of tomorrow and understand why what many people in including me personally had thought was going to be the promise of the internet. The promise of digital technology, why that had not only failed to deliver but why that had actually created some problems that we had to now deal with.

And of course, as we started to write, it became clear that artificial intelligence and now what everyone’s calling generative AI or versions of chat GPT, this was going to become really very important for the discussion about economic policy as well as everything else. So, all these threads came together as we wrote the book, Rob.

Rob Johnson:

And I remember you saying at the outset, it didn’t seem as though, how would I say, a broad-based public, which my own what you might call fantasies at the outset were that the broad-based public was going to become invigorated and broader based participation would be the result. What you seem to indicate right from the start in your first chapter called Control Over Technology is that there seems to be, how we say very little, what I might call commons or governance influence over the structures that have evolved. And some of the things like excessive tantalization leading to advertising, surveillance and other things have created tremendous moral dilemmas. And those good pieces that were part of my and others and perhaps your fantasies may still be achievable, but there’s some other things that have crossed the road and we’ve got to address as well.

Simon Johnson:

Yeah, absolutely, the digital transformation of our economies over the past 40 years has been quite disappointing and I think it’s actually contributed to the polarization of our societies in the industrial world, certainly because of what it’s done to jobs and also what it’s done to political discourse. So, there’s a lot of work to be done, Rob and that’s before AI arrives and further complicates it.

Rob Johnson:

Yes, well it does seem that the which I’m going to call fear of displacement is not just an American problem. I’m doing a lot of work now on the relationship of climate change to subsistence farming in the global south, particularly the African continent. And people in Africa hold out the promise that forms of education in accumulation of human capital might be at their fingertips. But at the same time, we might call East Asian development model, infant industry protection, labor-intensive exports, learning by doing. And essentially climbing up the ladder to be a developed or an industrial economy is not going to happen in the era of machine learning and automation and foreign direct investment with those methods rather than labor-intensive methods.

So, I see the echoes or the impactfulness being a planetary phenomena, not just about distribution of wealth and income in the United States, though that is certainly a catalyst as your book explains to discord, lack of trust, lack of faith in governance, expertise, academia, the media, whatever.

Simon Johnson:

Yeah, absolutely Rob. We have only a few pages on it because the book is already too long but we’re very worried about what you can call inappropriate technology going to developing countries which will be exactly as you say. Technologies that displace workers and create fewer opportunities in these economies that really need jobs that could derail development for a billion or 2 billion or 3 billion people in the coming decades quite easily.

Rob Johnson:

And how do you see, I alluded to it in my earlier comment, how do you see how concentrated power, say the ownership of these platforms, the billionaires that result from their success. How are they able to exercise so much control over what societies adopt and implement?

Simon Johnson:

Well, I think it’s because we allow them to have those positions, Rob and I think we defer to the people who run these large tech companies, we assume that they know best. There’s also this broad assumption among many people, including economists, that technology is just something that happens to you and you just have to deal with it. We wrote the book to try and make the argument that you can shape technology and you can change the direction in which it goes. And if that’s the case, then you can say, “Well, who’s involved in that shaping? Who can decide to change what technology actually delivers?” And that we think is the beginning of a different narrative and a much more healthy one.

Rob Johnson:

Yeah, it seems there’s a confusion in economics that the market and so forth are treated a little bit like deities and technology is being wonderful as opposed to being tools for society to realize its goals. And I think that confusion is coupled with another confusion. The notion that capitalism is morally legitimate because it’s governed by democracy may suffer a little bit. Bob Dylan had a song called One Too Many Mornings, I often sing it as one too many markets, but it might be three too many markets. And you mentioned this explicitly in your book, the market for politician’s survival needing campaign contributions affects laws enforcement, regulation, who’s on the committees who gets elected.

Secondly, the media doesn’t want to affect negatively with scrutiny, the people who are its biggest advertisers. So, the watchdog is perhaps a little off course as well. And then finally you allude to how universities are increasingly dependent on private funding, whether it’s plutocrats or big corporations, how experts are being channeled away from what we might call the public good or the common good in light of these financial dependencies may play a role. And maybe Bob Dylan’s had One Too Many Mornings, we might have three too many markets, but I saw how you explored all this and you do some beautiful work that’s not just conceptual abstract.

Those framings are great, but you take us through a series of chapters like the formation of the Panama Canal and what do you call the canal vision? What are you guys trying to say? I don’t want at the tip my hand have had read the book so enthusiastically, but what are you seeing in those chapters? It seems to me like you’re telling us that this isn’t the first time that technology has gotten off course or been implemented unmindfully for its social ramifications.

Simon Johnson:

Yes, absolutely, Rob. We think it’s a pretty common feature in human history and there are some very prominent examples in the 19th century. The Suez Canal and Panama Canal is a particularly compelling example because Ferdinand de Lesseps who’d led the charge on the Suez Canal which was an application of technology that was actually quite well done. When he turned his attention to the Panama Canal, he had the same blinders on and he thought it has to be done my way, my way is the Suez Canal way, there’s no other possibilities allowed. And that vision led to disaster in the case of Panama during the French led effort to build it.

So, it’s really, I think a cautionary tale about letting visionaries have all the power and not being able to challenge them when it comes to what exactly you’re doing here and what’s going to be the social impact.

Rob Johnson:

And sometimes powerful people are making things like canals but when in this case they are making the new communication system, you have a chapter on the power to persuade. And that power to persuade when they control the distribution system has to be turbocharged in terms of its capacity to serve them rather than the common good.

Simon Johnson:

Yes, very, very good point absolutely. The people who controlled the newspapers of course in the 19th century were very powerful, the press Barons they used to call them in England. But if you think about Facebook, if you think about Twitter, other social media or if you go on the other side and think about what’s developed in China under obviously an authoritarian regime. But also really focused on developing and controlling new means of communication, I think you realize that these things are so central to our societies that it brings inordinate influence and power when you control those.

Rob Johnson:

And one of the things that isn’t, how would I say just blocking you from printing and disseminating or arresting you if you do, is when you set up a system like you’re describing in China, you deter people from even speaking. They see what you might call the cost benefit analysis for their own life as having no upside and tremendous danger. So, you get what you might call uncomfortable silences that are quite deep and prolonged.

Simon Johnson:

Yeah, sometimes people call that self-censorship, I think that’s a misnomer. It’s not self-censorship, it’s really effective censorship. The really effective censorship stops you for even thinking about saying certain things and that’s definitely what we see in China, for example now. But I think also in other authoritarian states, Rob, we’re going to see that more and more and I think we’re going to see the world increasingly divided into places that are quite authoritarian using a lot of surveillance technology and a lot of censorship and places that are much more open and where you can debate these issues.

Rob Johnson:

And we have seen a couple of what I might call rascals who worked with the intelligence community that you cover in your book illuminate that these things are going on even in the United States.

Simon Johnson:

Yes, absolutely, I think the tendency to surveillance or the preference for surveillance is strong among all government officials. And if you don’t have sufficient constraints, then there will be abuses including in the United States. So, we need to be very honest about that with ourselves and very forthright and proactive in forced stalling those kinds of efforts I would suggest.

Rob Johnson:

Yeah, and we’re seeing some of the whistleblowers being either hiding out in Russia or being put on trial now. So once again, the deterrence to sharing with, in other words, if we portray what a system is and everybody votes for it, that’s different than in the quiet imposing something and not allowing anybody to describe its strengths and weaknesses. And one of the things I want to comment on in this is as leading economists at MIT, you and Daron deserve a lot of applause for the ways in which not in a hostile way, I feel like you’re trying to help us build the next NordStar.

But you put forward what you think is going on in a very courageous way and I think all my readers and my listeners and myself and my son whose birthday is next Monday and I’ve already ordered the book for him, they’re all going to say thank you just like I am right now.

Simon Johnson:

Well, I appreciate that, Rob. I think we are trying to be honest with ourselves and with our readers and friends and colleagues. And if we can’t do it in the United States, if we can’t do it from positions of tenure at major universities, where can we do it honestly? So, we’ll see how that discussion goes of course and we’ll see what catches hold in the US and around the world. It’s quite gratifying that we’ve already lined up at 18 or 19 translated versions that will be published. So, there’s a big demand out there for engagement with these issues and we hope to stimulate that as much as possible.

Rob Johnson:

Well, my son wrote a book years earlier, he was the champion of Pokemon Go Worldwide and he wrote the book, it’s called Modern Monopolies. And the translations, I think it ended up 26 countries there was quite an appetite. So, I think you may only be at halftime, you may get 38 translations before you’re done, but it is great to hear, it’s great. So, let’s talk a little bit about the different things that you see that give you heartburn or cause for you and Daron’s uneasiness. I’ve seen, we talked a little bit earlier about the tantalization with how you say raising advertising by telling people what they want to hear and studying the audience and giving different audience members different things.

But they’re all kinds of things that refract that sense of common purpose that these communication channels create and surveillance being one. But you had a menu of three or four things that you thought were, we might call the categories. You could explain each title and what you see inside the box that are what I’ll call candidates for reform.

Simon Johnson:

Right, well, I think first and most important is control over data, Rob. And it’s very clear that what has happened is we’ve put a lot of our own information, our data, our photographs on the internet hoping to share them with friends and family. And they’ve been acquired without our permission to train generative AI and that’s a major problem that needs to be addressed. I think the second piece that’s really quite salient is surveillance and that’s something that obviously predates AI. There’s been plenty of surveillance building up but it’s really, we think going to reach a new level of efficiency, which means squeezing workers and that is also something that needs to be prevented.

And then there are also, as you had mentioned just now, various forms of manipulation. The ways that we as consumers allow ourselves to be manipulated by the people who have these data, who have the algorithms and who are being pretty cynical about what they want us to do. So, there are plenty of minefields all around these issues.

Rob Johnson:

And how would I say, do you see things like congressional hearings about the issues or antitrust committees worrying about something that I would guess many of these platforms you would say are almost a different kind of monopoly. There’s increasing returns to very, very large scale but then once they dominate the environment, they can exercise a will, it’s not them serving the market, it’s the society implementing what furthers their financial wellbeing.

Simon Johnson:

Yes, and look, I think some of the congressional activity, some of the think tanks that are focused on monopoly, abuse of monopoly power, they’ve done a great job in raising awareness. But I think that we need to go beyond some of the traditional antitrust measures and really think about other ways to put pressure on these large companies to break themselves up. For example, I like the idea that Kim Clausing from UCL Law School has of imposing a surcharge on corporate profits if you’re above a certain level, let’s say $10 billion a year. Because that will give the companies an incentive and our shareholders who want to know why we don’t break up the company and get into the lower tax bracket.

So, I think that’s encouraging the companies to allow a proliferation and a diversity of business models and of ways of thinking about the development of technology. That’s a very important goal that we shouldn’t lose sight of.

Rob Johnson:

I’ve noticed through many of the chapters how much what I will call applied micro of incentive structures and deterrence and so forth that you explored. It’s not some abstract thing you seem to have, you and Daron have zoomed in on particular things. And one in particular is not to let AI choose the path of displacing workers entirely but perhaps augmenting, being a complementary raising of the productivity of workers which will augment their wage or augment their training or how do you say, inspire further employment. And so, I thought particularly in your last, I guess it’s the chapter before the bibliographical history, which was a beautiful chapter into itself. But because it’s really nice to know where you were inspired for people who want to dig deep and that last chapter does that.

But the one just before that which is exploring remedies, I remember hearing about forming narratives and then creating movements, sometimes foundations or public goods. And then you did some work on the analogy with essentially decarbonization energy sector and how we inspired with warning of what could happen or what was happening and how we could move. And then you create incentives and then the private sector comes in and what you might call implements the new design. But the narrative, how you say political organization, raising awareness and then the incentives I thought was a really nice mix.

Simon Johnson:

Well thanks Rob, that means a lot. We’ve had a lot of experience with attempting to turn out our ideas into not just policy but also messages that people could relate to and around which different people in the policy space can rally. And I think the combination you’re talking about where you show people a link from the general framing of the issues to the specific measures that could actually change incentives, I think that’s what you need to show people, that’s what people ask for and for good reason.

Rob Johnson:

And you showed a little bit how it worked in the past, the monopolies after the Civil War, the muckrakers, various different new organizations particularly related to labor unions. And then essentially by the time of Franklin Roosevelt and so forth, the tide was turning or even Teddy Roosevelt, tide was turning. But these, what you might call recipes that you create in an abstract sense do have historical precedent. This isn’t just a pipe dream of good feeling, it’s actually worked in the past in some of the analogies that you illuminate in the middle chapters.

Simon Johnson:

Yeah, absolutely, in fact, it’s probably the only thing that’s worked in the past Rob because you need countervailing power to offset the very large monopolies that develop around new technology. It happened in railways, it happened in oil, it happened to some degree in electricity, it happened in cars and in some of the post-war developments, semiconductors for example. So, in each one of these instances, you need to have some civil society organization, some governmental regulation and official action. And people need to understand why does this make sense? Why can’t we just leave things to the market?

So, I think you always have to have a conversation of this kind. Every generation has to redo it I suppose, but it’s unavoidable.

Rob Johnson:

But what you’re showing in your book is there are repeated challenges and there are methods for addressing those challenges. We happen to have a new challenge on deck right now, but this kind of process has been activated in the past with substantial success. So, the last chapter where you’re putting together how to address this challenge is a great guiding light but it’s also backed up by the fact that these methods have been successful previously.

Simon Johnson:

Yes, and I think that’s important evidence Rob, and it’s quite reasonable for people to say when they read a book like this, why should we believe that your approach is going to work? So, to the extent you can anchor it in history, primarily American history because we think that the US is at the forefront of the technology and has a particular responsibility and need to issue to address these things. But it’s also I think a lot of West European history and the history of that tradition of democracy because again, that that’s very relevant for thinking about what has happened over the past 300 years.

Rob Johnson:

Well, my own career started after finishing a PhD. I went to the Senate budget committee, and I won’t name the senator, but I worked for Pete Domenici but it was another senator was sitting next to me on the floor and he said, “I’m really worried about these deficits exploding.” And he looks at me and he says, “Well, you’re an economist, so what would you do about it?” And I said, “I would have every media company have to set aside what I’ll call public windows of time for political debate and not charge you like you were selling soap. And I would make federal expenditures for all the campaign financing.” So, you didn’t need donors because I said, “Then you wouldn’t sell policy and then you would have a much smaller deficit.”

And he started laughing, he says, “God, you’re right on target.” He said, “But the problem is, if I did that bill, I might lose 99 to one because incumbents want insurance that they can come back and they got to have an edge relative to challengers.” And so, some of these things might make a more responsive democracy but the people who have to make the decision are more concerned about how I say their own security and future in position than something that puts all their feet to the flames and might lead to some of them leaving.

Simon Johnson:

Well, maybe we should put that one back on the table though, Rob, precisely because it addresses one of the key markets that you pointed out that’s problematic. And remember that in the progressive era, they did introduce direct elections to the Senate and they did make other adjustments as the constitutional operational side of the constitution. But direct election of senators was a big one in terms of undermining some of the power the very large companies had. So, I think it should all be in play.

Rob Johnson:

Yeah, yeah. The only play chapter I didn’t see in your book was about the Supreme Court and whether the people who determine whether what passes fits with historic precedent, they can’t be on the payroll either.

Simon Johnson:

Absolutely, absolutely, there’s a particular level of concern that one would have if they lose their legitimacy.

Rob Johnson:

So, I’ve been flying high over the different pieces but let’s talk about what you think particularly you and Daron wrote about in the last chapter. Are the things to do now vis-a-vis what I’ll call digital transformation, whether it be in the workplace or in our communication system?

Simon Johnson:

Well, I think we’ve already touched on the main ones, the ones that we feel had best chance of getting traction, particularly bipartisan traction, Rob because I think that’s very important. The first one is securing data and securing people’s rights to data and then using that as a bargaining chip with the large companies. So, [inaudible 00:28:30] has this idea of data unions and using that as a way to exercise power and pool some of our market power including around images that are on the internet that are being freely used without permission.

The second point is around surveillance, a very strong safeguards on workplace surveillance that you need. We need some new regulations of that but also the use of surveillance in society. I think Shoshana Zuboff’s age of surveillance capitalism really pioneer work in this space. And we agree with her that it’s a huge problem that needs to be confronted. And then there’s the issue of what are you going to do about the monopolies, the data monopolies that develop. And I think there, we like the idea of Kim Clausing which is to have extra high profit tax on mega profits to create an incentive for the companies to figure out how to break themselves up and create more competing business models for which way technology is going to go.

If all of technology development is in the hands of two companies, I don’t think we’re likely to get, we’re not likely to enjoy the outcomes from that process.

Rob Johnson:

And you do cover a lot of what I might called the historic evolution of Google and Facebook and others. I did see in your references that you saw some people, which you might call already embody the spirit of what you’d like to see. There was a woman in Taiwan who you said had been quite a leader and Eli Pariser and his colleagues that were what you might call mapping the way forward to what a good system would look like. Because I do think because we’re almost in the realm of science fiction, meaning the existing systems you can diagnose are new but seeing what to build. Seeing how to get it built, which is the political economy, I thought you did a masterful job but I’d like to also feel comfortable that we have three or four principal architects for the common good system. And I thought at least two of them you mentioned quite enthusiastically.

Simon Johnson:

Yes, so those are people we have a lot of admiration for, they’re definitely pushing in the right direction. I think more broadly we’re big fans of Wikipedia Rob, and the way that Wikipedia structures data shows the sources, forces people to think about what they’re seeing as opposed to relying on a chat GPT which pretends or purports to give you a definitive answer. I think this is about encouraging human cognition, human information processing, human critical thinking and that’s the cornerstone of everything.

If we become overly reliant on one single supposed oracle, then I think we become compliant and we become dependent on that oracle and that would be regrettable. So, we are big advocates of or supporters of people who are trying to encourage various forms of what’s sometimes called plurality in the world today.

Rob Johnson:

The historic and the literary influences that you bring to bear. People like George Orwell or Aldous Huxley, they seem to paint pictures of dread. In other words, they are bringing to our consciousness what isn’t right. But these people I mentioned that I learned about from your book are actually trying to take us to what is right. And I think in a period like you mentioned earlier after the 2016 election, when the polarity and the hostility which I might call tactics of refutation and are so vivid. It’s very important to have people that aren’t just critics but are visionaries of a constructive future which I believe you and Daron are as well. But bringing those other people to the table, I think is more than medicine now than clever imaginative critiques or protest songs or anything of that sort.

Simon Johnson:

I agree, Rob wholeheartedly and that’s part of what we try and do at MIT is encourage our students and support our colleagues who are developing technology we think could move in this kind of direction. Because we’re not against technology, we’re not against technological change. We want to encourage it to be more human-centric and more useful to people and less focused on displacing people or pushing them aside or causing them to lose their jobs. Because while some of that might be unavoidable, that’s not the right focus if you want shared prosperity.

Rob Johnson:

I travel quite a bit around the world, when I came back from India recently, I was going to ask you about. Because there is another place where there is very concentrated wealth like plutocracy and many, many people at the lower end. But there seemed to be there a great enthusiasm because essentially the marginal cost of integrating people into the market or teaching them through digital channels or whatever. They seem to be holding out a tremendous hopefulness for the elevation and development of India because of the advent of digital transmission paths. Do you sense that kind of enthusiasm in other parts of the developing world or in your own experiences related to India?

Simon Johnson:

Well, there’s definitely enthusiasm Rob, but I think we’re also very worried about what generative AI will do. So, I wouldn’t say anybody has fully established exactly how it impacts the organization of work. One thing that chat GPT seems to be doing is taking away jobs for low level people, people who are doing very relatively simple tasks or you could call them entry level positions. And there’s quite a lot of those jobs as you know in India. In fact, that’s India’s big stepping stone to the global economy.

So, I think we worry that while there might be an impact on manufacturing which you pointed out earlier, we might lose some of those labor-intensive textile jobs, for example. We may lose even more of those labor-intensive text jobs, the people who input text, the people who do medical records processing, the people who run call centers. I think that losing that rung in the ladder would be a really bad blow to India.

Rob Johnson:

I think that’s right. I know a number of, I’ve worked for years on Wall Street and I know a number of firms that had essentially created research departments in India and now I’m seeing things like TradeSmith, which has got a new system, which is an AI system for picking stocks or analyzing stocks. That is by all my sense would be, its annual fee might be two months of what a wage is in India. It’s not a big expensive thing and it would be very dangerous to the security analysts wherever they sit on earth.

Simon Johnson:

Yes, I think there’s a particular threat that we can see to anybody who writes things that are permutations on things that have been written before. So, I think a good example is the mailings you get from realtors, which are obviously there’s a formula, the characteristics of the house, some fluffiness about the neighborhood and then some words about how the market’s doing. But that seems somewhat formulaic and it seems relatively straightforward to use an algorithm to write that. In fact, I think sometimes that’s already being done. So, that kind of writing I think and those jobs which are quite well paid in this economy and other economies, those jobs are absolutely in the line of fire.

Rob Johnson:

When I was in India, people were talking about this new horizon, unknown nature of technology, unknown potentials and so forth. You and I have worked on the analysis not only of the political economy but the advent of financialization. Do you see an analogy or a similarities between your study of finance and which you might call the common platform related to the bailouts and so forth? And the regulation systems and the international integration and what now people are experiencing with regard to tech?

Simon Johnson:

Yeah, I’m afraid I do Rob. As we worked long and hard, we, mean me and you and our friends to change that. What was a predominant vision that finance could do no wrong and that the finance guys had all the answers and they could have any degree of leverage, any amount of debt they wanted. They could do any kind of options trading they wanted and I think because of the financial crisis in 2008, the view that came out of that was that you need tighter constraints around what the financial system can do with regard to systemic risk.

Individuals can do things that are risky, fine if it’s their money. But if they have a knock-on effect for the entire system, we need people to be much more careful. And I think today in 2023, we’re grappling with at least echoes of what we saw in 2007, 2008. But the echoes are not that strong at the moment Rob, in part because the vision changed and the rules changed and the behavior changed. Now on tech, I think it’s very analogous that there is a vision of machine learning, creating machine intelligence, which is this I think complete misleading term.

The idea is they’re going to replace humans in production, in service sector everywhere in the economy. And that they can do, sometimes it’s not very effective Daron and Pascual Restrepo coined a term, so-so automation, like self-checkout kiosks at the grocery store. They don’t boost productivity that much but they do tilt the balance of power between the owner of the grocery store and the workers and then they are also popular perhaps with analysts, so that technology does get adopted. And I think we’re grappling with another vision Rob, that’s become too predominant, too prevalent and somewhat dangerous.

It doesn’t mean we’re anti-tech, I’m not anti-finance, we need a financial sector. I don’t want a financial that blows itself up, I don’t want a tech sector that destroys millions or tens of millions of jobs without giving us an opportunity to build new jobs, new tasks, new things humans can do.

Rob Johnson:

Well, in the spirit of transformations that innovation often bring, there seems to be perhaps an enlarged market for education. Is it in your mind, I think I remember reading this in the book that this could be a platform for subsidies or grants? Or for whether it’s companies retraining people to step up to the new technology, whether its people changing from what you might call working with their hands to working in the digital realm at a different place but having what I called a running start, the qualifications. Is there perhaps something that could be publicly funded that is what you might call the conveyor belt to transformation through education using these technologies?

Simon Johnson:

Yeah, I think that’s a great idea Rob, something we’d strongly encourage. We don’t think that education alone is enough, we do think that change in the direction of technology is super important, number one priority. But if you change the direction of technology to make education more effective, that could be extremely helpful for many, many people and help them connect with the new opportunities, the new jobs and really make the participation in that new prosperity much broader.

Rob Johnson:

So, I want to be clear for our listeners about that. You don’t want to leave technology alone to smash up all kinds of people in their careers. We got to be mindful of what’s implemented ex ante, but in the event of transformation, we might be able to enhance or turbocharge the transformational assistance using technology.

Simon Johnson:

Yeah, absolutely, I think that’s a good formulation Rob, very good. We’ll put that on our Amazon web book site.

Rob Johnson:

But I think it feels to me like you guys have almost opened a floodgate. I don’t think there’s a week when I go to a convening about what INET’s doing or a dinner party with people from China or what have you, where these issues aren’t at least broached a little bit. And now you’ve created a focal point around which we can all explore, invigorate our imaginations, look at some history, go deeper and I think making this a centerpiece conversation. We have a commission on global economic transformation at INET co-chaired by Mike Spence, Joe Stiglitz. The questions of globalization, what is a nation state anymore and how can it protect its people and how can it keep its big money from running offshore and hiding so the resources can’t be taxed?

The financial system, which you and I’ve worked on and talked about. Climate issues and climate issues as a public good and all over the planet but technology, Mike Spence, James Manyika have been the quarterbacks in that realm. But seeing technology, I mentioned earlier, how to deploy it constructively to invigorate India and Africa as well as what to do to channel it, not to damage other people but to enhance other people. And I don’t know whether, how would I say? One can be spiritual or religious and there might be the equivalent of St. Peter or not, but if you want to get through the pearly gates doing well and doing good at the same time might make a better chance of getting a pass to get into that arena.

What’s the scariest place from your and Daron’s conversations, what’s the scariest place on earth related to the technology challenges now?

Simon Johnson:

Well, I think the situation, the Russia’s invasion of Ukraine Rob is very dangerous in many ways. But if you think about the technology, when we developed technology in the past and when we’ve intensely looked for malevolent applications like during World War I, right? Where the technology that was behind artificial fertilizer was turned into poison gas, the production of poison gas by the same scientists. I think that distortion of technology and focusing on killing people, that’s very problematic. And I think there is always potential for more of that, particularly when technologically advanced countries are drawn into prolonged conflict.

So, I think we really need a de-escalation, well, we need Russia to leave Ukraine actually and then we need a de-escalation around Russia and we need China to recognize that and we should recognize that ourselves. If we can quiet down the world and push more of the technology into productive, peaceful purposes, everyone gains.

Rob Johnson:

And do you think that, how do I say, new digital technology has played a big role in the onset or the implementations in the Ukraine war?

Simon Johnson:

There’s certainly a lot of applications based on what I read in the newspapers, there’s certainly a lot of applications of drone technology and its definitely digital technology. And there may be a change in the digital control and digital interface used on the battlefield. Again, the stories about that and of course missile Rob, a very prominent, how do you protect your civilians? How do you protect all the civilians in your countries against any single one hypersonic missile that’s fired from far away that comes at you at five times or 10 times the speed of sound? These are very hard technological questions.

Rob Johnson:

And we don’t seem like we’re negotiating like Gorbachev and Reagan did in Iceland about how to de-escalate and tune these things down. And I know Daniel Ellsberg, who appeared at one of my Young Scholars events a couple years ago, he’s very concerned that it’s not just say, a fight between two countries that matters. That the upper atmosphere can be destroyed by the explosion of these bombs, which can destroy the ability to create food and feed all the animals and humans on planet Earth. His book, the Doomsday Machine shows and this is not what I’ll call a science fiction writer or some ominous, these are things that are published in Science and Nature magazine by very, very capable scientists.

He just happens to have worked in that realm of national security and illuminate it. But how would I say, I have young children so I’m asking a question, a lot of people are very concerned about what’s happening in brain development and formation of children, say from ages eight to 12 because of iPads and iPhones, it’s all that kind of [inaudible 00:46:53] or the equivalent on Samsung. I’m not picking out a company, but the digital consumption. In preparing for this book, did you come across some concerns from the medical world or the neurological world about that facet of either what I’ll call biological health or mental health?

Simon Johnson:

Well, there’s certainly a lot of concern Rob, and plenty of debate. I’m not sure that the evidence is yet definitive on that but we do emphasize that the need for people to continue thinking critically to understand what is being done to them in their environment by various forces attempting to manipulate them and so on. And I think that many of those abilities are best developed early on without overreliance on digital technologies. The question though on digital would be how do you use the access to all of this data that you and I, when we were young didn’t have access to a tiny fraction of that even in the best public library.

But young people can access a lot of information what do they do with it, right? To what extent does it help them make better decisions or are they just more confused, more angry, more polarized? I think those are absolutely pressing issues that we need to continue to work on, even as AI probably exacerbates some of those issues.

Rob Johnson:

So, with regard to AI the key fear is that it will displace the need for people?

Simon Johnson:

Yes, absolutely, I think that is the main problem that it will replace people in jobs very quickly. Now, automation always replaces people that’s the definition. If it’s very productive automation and it creates a lot of new tasks, which is what happened in the US auto industry in the early 20th century, then you get better outcomes. But if the form of AI just displaces people, doesn’t generate new tasks and also, it’s not very productivity enhancing even then you have a problem, then you’re much, much less likely to get good outcomes.

Rob Johnson:

Well, having grown up in Detroit and watched automation, machine learning and globalization without much transformational assistance, how would I say what they call the diseases of despair were quite evident among the adult community in those years when I grew up. And so, I have what you might call a haunted memory of transformational despair and hopefully it all ends up. But as somebody said to me, “This digital thing will all take out in two or three generations.” I said, “What are you going to do with the human beings for two or three generations?”

Simon Johnson:

Yeah, I think that that’s two or three generations that’s not acceptable. I’m from Sheffield in the north of England Rob, and I left as a young man but that’s a part of the world that really struggled, not with digital transformation but with other earlier industrial transformations. And it’s quite sad what happens to many people.

Rob Johnson:

Who is the guy, he wrote a book, the Long Revolution, he talked a lot about the need to transform education in the different regions. And the elite universities like Oxford and Cambridge are in one path but people from Wales and others are not going to get admitted because they were considered a different kind of worker in creating which you might call the rungs in the ladder for transformation, creates perhaps a more enthusiastic or less despondent society. So, I’ll come to close to the end here just quickly, you’ve offered this book, what would you like to see happen and how can people like my audience as activists, we have 20,000 members of our Young Scholars Initiative, they will be highly curious. We all read the book, what do you want us to do?

Simon Johnson:

Let’s have lots of arguments I think, Rob. I think arguments, discussions, proposals, can of proposals that’s the way we made progress over on finance, I would say, right? Very active engagement, lots of people for whom they might say, “Well, it’s not my job.” Good, if it’s not your job, make it your passion. Dive into these issues, confront them, the technology is everywhere, technology is all around us. What are we doing with it? Where is it taking us? What is it doing to our kids? Pound away these questions every day and let’s get some political candidates who run with different visions.

Let’s get some companies that get funded with different visions and let’s see if we can change this enormous ship which is technology development change its course. Or maybe it’s not one ship, maybe we need to break it up into lots of smaller ships that go in different directions and then we see what those can deliver. But I do think the energy of readers, the energy of people who participate in your network, for example, Rob, is incredibly important. That’s what gave us previous waves of reform in the US and elsewhere and I think that’s our main hope going forward.

Rob Johnson:

Well, how would I say I’m with you, I’m going to work hard on this one. I watched your beautiful work and I want to make another quick advertisement. Your book with James Kwak, 13 Bankers. Everybody that just saw Sun Valley Bank ought to order a copy of that and catch up with the echoes because they got to sort out what’s really dangerous now and what’s not. And that book was another guiding light in that other sector, [inaudible 00:52:33] and others loved that book, I remember when you presented it to us. But right now, when I think about scholars, I think of multidisciplinary integration. I think of their emotional maturity and compassion and I think about something that’s almost magical of choosing the right thing to focus on. You’re three for three man, way to go and congratulations to Daron as well.

Simon Johnson:

All right, I really appreciate Rob, your words mean lot to us always. Thank you so much.

Rob Johnson:

Thanks for being with me today and I’m probably going to be calling you back as Young Scholars Initiative are going to want you guys to do an event with them shortly.

Simon Johnson:

Delighted, we’re always delighted to work with you, you and your colleagues, Rob.

Rob Johnson:

Excellent, bye for now to be continued. And check out more from the Institute for new economic [email protected].