Downstream: AI Will Destroy Liberal Democracy w/ Daron Acemoglu

Aaron Bastani (0:08)

A criticism often thrown at economists is that they know the price of everything but the value of nothing. Now, of course, that's sometimes true. There are, however, exceptions. Some of the best conversations we've had here on downstream have been with fascinating economists like Branko Milanovic and Joe Stiglitz. Joe Stiglitz, of course, won a Nobel Prize for economics, the first winner of that prize appeared on Novara Media. Today, we have the second person coming on our show who's won that leading. Accolade Branko Milanovic, maybe his time will come as well.

Daron Acemoglu has a new book out, What Happened to Liberal Democracy, Remaking a Politics of Shared Prosperity.

This is somebody, unsurprisingly, very comfortable with the numbers. I have to say though, it's very unusual to win a Nobel for economics, but also to have sold a million copies of a single book, Why Nations Failed. Unlike some people in that intellectual industry, Daron has a real hinterland. He's very good to question on the present political moment, where we are historically, and some of the great challenges we're looking at right now, from demographic aging in China to Trump and AI. Hold on to your hats. This is going to be a fascinating conversation. Daron Acemoglu, welcome to Downstream.

Daron Acemoglu (1:28)

Thank you. That's great pleasure to be here.

Aaron Bastani (1:30)

You are our second Nobel Prize winner.

Daron Acemoglu (1:33)

Very happy to be in that spot.

Aaron Bastani (1:35)

In the field of economics, our first was Joe Stiglitz. What was it like winning the Nobel Prize for economics? Was it a big deal? I mean, some people say...

Daron Acemoglu (1:43)

It's a big deal. It's a big deal. I won't pretend it's not, but it's okay.

After a while, you forget about it.

You have to get on.

Aaron Bastani (1:53)

What did you do to celebrate?

Daron Acemoglu (1:56)

I was in Greece, actually, and so I had a dinner that evening with Joe Stiglitz, whom you mentioned. I mean, not with just Joe, but we were at a conference.

Had a raki? Not quite, but some wine.

Aaron Bastani (2:11)

That's good. It doesn't change how you're perceived, you think, by politicians, media outlets? I mean, you have a ton more credibility, right?

Daron Acemoglu (2:21)

Yeah, I think politicians. I mean, I hope it doesn't change how I'm perceived in academia, because I think academia flourishes on challenging each other's ideas. But yes, it definitely does.

Prime ministers and presidents want to meet me. They didn't before.

Aaron Bastani (2:36)

It's a good thing to have an email signature, isn't it? So we're talking today about your latest book, What Happened to Liberal Democracy, Remaking a Politics of Shared Prosperity.

I found it really interesting.

Daron Acemoglu (2:45)

Thank you.

Aaron Bastani (2:46)

I found it really interesting partly because there's now a bunch of books in space talking about the challenges of liberalism from both the economic and social sides. I want to get straight into it.

Daron Acemoglu (2:57)

Please.

Aaron Bastani (2:58)

When you said there's a crisis of liberal democracy, what exactly do you mean?

Daron Acemoglu (3:03)

I think it has two dimensions.

One is that what is foundational to the popularity of liberal democracy, which is its ability to deliver material goods and services, shared prosperity, which then translates into purchasing power, but also dignity for workers, and public services. Those have not been doing well. Inequality is up, but more jarring than inequality in many advanced economies, especially in the United States. We've seen the bottom half, not benefit from economic growth at all, and in the United States, actually lose ground in real terms, while other people's fortunes multiply. So that's very much in contradiction to what liberalism promised, if the society was organized around its principles. And none of these are perfect, of course. No society will ever be completely faithful to any principle of organization. But liberal democracy, as an institutionalization of certain liberal ideas, especially led by social democracy or New Deal liberalism in the United States, delivered on many of these promises, and they have fallen flat. But the second aspect is more intangible. There is a general feeling among many of the populations, that establishment politics doesn't work, liberal ideas are out of fashion, democracy is not what it was supposed to be, or it's not even our future. And that, I think, is as damaging, because democracy as a set of institutions deeply depends on the trust of the people, and on legitimacy that comes from bottom up, and that's what we're losing. And sometimes people think, oh, that's just because of social media or because of right-wing provocateurs who are exploiting wedge issues. Of course, they are. But I think it's an internal weakness of liberal democratic institutions and what I see in post-industrial society that is to blame.