“Transitional”costs and the automatic view

Here’s an interview with the authors of what looks like an interesting book on the relationship between technological, economic, and political progress. I was struck by this insight in particular:

Simon Johnson: You can argue about when exactly the Industrial Revolution got started. I like the 1720s because that’s when the first big silk mill was built just outside Derby [an English city]. That began putting people into factories with machines that were controlled by an employer. So the 1720s is a good starting point.

Young children were working 18 hours a day pushing coal carts with their heads deep underground. We know that was happening in the 1840s because that was a matter of investigation by royal commission. Because it wasn’t illegal, everyone involved was quite candid about it, and said, “Look, that’s what you need in order for a coal industry to exist.”

So that’s 120 years where you cannot say that these 6-year-old children were living better. Some people argue a little about wages, but living conditions and public health in those cities were dreadful. And after the 1840s, there was a shift in thinking. It wasn’t particularly altruistic, it was more “My god, we have infectious disease rampant in Manchester because there’s no toilets. What are we going to do about it?” Consequently, there was a reimagining of how technology could be applied, including the modern sanitation movement, which was by far the No. 1 breakthrough in the use of technology in the 19th century. And this coincides with trade unions beginning to get organized and pressure on the political elite to allow wages to rise.

So if I said to you that generative AI is here, and that you and your families will be better off in 120 years, I think people should be fairly unsatisfied with that. Why do we have to wait so long?

Daron Acemoglu: It’s sort of remarkable how consistent this view is among many economists, policymakers, and even the Democratic Party: when you have better technologies, the costs are “transitional.” What that encapsulates is that there’s often an implicit belief that [shared prosperity] is automatic, but it might take time.

The biggest target for Simon and I is that there is nothing automatic about it. But the automatic view gives you a real sense of comfort. Wealth inequality may be horrible, democracy may be in a difficult position today, generative AI may create lots of disruptions, but we’ll work it out.

The point about the “automatic view” is I think very important. When people complain about technocratic neoliberal Democrats or what have you, at the core of what’s legitimate about those complaints is the valid concern that many liberals, especially those working in or around the tech sector, have this default assumption that technological progress will somehow automatically translate into political progress, in the sense that the wealth generated by new technologies will “eventually” be shared in socially beneficial ways.

This is, as the example from the first century of the industrial revolution suggests, too complacent of a view. A society that generates more wealth is not a better society unless that wealth is distributed in a sufficiently equitable way. Creating more billionaires is per se bad, in other words. Generative AI is neither good nor bad; it’s a tool that can be used for better and worse purposes.

The assumption that technological progress automatically equals economic progress, which in turn automatically equals human progress, merely highlights that those making the assumption haven’t thought much about what the word “progress” actually does or should mean.