The problem is the direction of research and technologies that the tech industry has focused on - both because of ideological reasons and because of a particular business model that they developed. And I think both of those have pushed us towards technologies that I see as socially less desirable, in some cases actually undesirable. And as a result, we're actually getting growth without as much social benefits. 
And let me try to just make one very simple point. Economic output, as measured by statistical agencies such as Gross Domestic Product, does not have any welfare element in it. 

So if I find a way of hacking into your computer and spending $1,000, and you find a way of defending against me spending $2,000, that will increase GDP by $3,000. 

I think even the most demented person wouldn't say that that's a social [good]. 

Rot Economics - An Interview With MIT's Daron Acemoglu

Edward ZitronJul 24, 202419 min read

"I feel the thing I'll push back on is they're making new things, but it feels like the ones I mentioned — crypto, metaverse, and now generative AI — are actual products at the end. 

It's not so much that we couldn't live in a virtual world or that digital money wouldn't be useful, but it's more that the actual output from the companies is not translating into meaningful products, and they're still monetized."

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Growth has slowed in the industrialized world, and it's not a new phenomenon. 

This is one of these paradoxes which needs to be repeated more and more. The tech age has also coincided with a slowdown of aggregate growth and every indicator of aggregate growth. So we are growing much less today than we did in the 70s or 60s. Productivity is growing less. And I think this is also related to the fact that we're not getting enough out of the new technologies and the new ideas and the new scientific discoveries that we are making. And part of the reason why there is so much hunger for AI hype is that many people, including policymakers, are wishfully thinking “well, this could be a solution to our productivity slowdown. So perhaps in the next decade, we can have a much faster productivity growth thanks to generative AI or thanks to AI.” 

It's almost history is kind of slowing down. I've not really heard anyone really discuss it in these terms, but it's interesting. So you've seen that this is the growth at all costs is everywhere and growth is slowing. But it sounds like growth isn't just about a money thing.

No, no, growth is not just about money and I think if you do look at other indicators we're doing worse. One of the regularities of the 20th across the world is that health and life expectancy have improved everywhere. Today, people in Sub Saharan Africa have twice the life expectancy at birth as people who lived in London or Manchester in the 1800s. And Americans have had tremendous improvements in life expectancy and health until the last decade when it slowed and it started getting reversed. So on many indicators we're actually doing even worse than GDP suggests.

So what's contributing to it? Is it a welfare issue? Is it a societal one?

Well, I don't think there is a clear answer. 

• Some people think it's because of, you know, the life expectancy part is because of early deaths due to alcoholism, opioids and drugs. 
• But there is a more general deterioration, mental health. 
• There's a mental health crisis. So if you look at the health of surviving people, it's much worse if you're factoring that mental health issue.

I wonder if it's also where tech falls into this, as well as the exposure to social media. I've had this overall feeling — which is one of my flimsier theories — that I don't think people should be thinking about politics as much as they do. I’m not saying people shouldn't be political, but just the immediacy of political discussion has been errosive to people's mental health.

Well, I'll give you two factoids that might support your idea, although I'm not sure whether I completely agree with it. 

1. One is that if you look at when the mental health crisis seems to start, it coincides with smartphones. So people accessing social media and other things on their smartphones 24-hours a day might have something to do with it. 
2. Another one: two economists, Hunt Alcott and Matthew Gentskow, did this experiment where they incentivized Facebook users to stop using the platform. So when people stop using the platform, they get happier, their mental health improves, but they can answer questions about what's going on in current politics much less well. So their immediate superficial knowledge about what's going on in politics also declines.

Interesting. Yeah, it does feel like there is a wider discussion — eh, discussion, perhaps, is the wrong word — within the tech industry that there is almost no consideration of the social aspects or the welfare aspects of any technology being built. 

Take the metaverse, for example. As ridiculous as that was, I can understand an executive being like, “yeah, we use the internet now, what if we used more internet?” But there was just no consideration as to whether people wanted to. It feels there's just a disconnection between capitalism and... people. . .

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So a wrap up question, I really appreciate your time. Are you optimistic about the future for the tech industry?

No. I am not a techno-optimist and I'm not a market-optimist — meaning that if I define optimism as things are going to work out, there is an arc of progress, I am not an optimist. 

I think we have serious problems with the tech industry, have serious problems with the market process in the United States right now, with social processes, but I'm hopeful. 

I believe that there is a direction in which we could use technology that would make things better and there is a way in which we can improve better, introduce better regulation, better worker organizations, better training that would make the market system work better. 

But that's the hope that we could achieve that if we did the right things. But I don't think that we are heading there left to our own devices.

So where does it head if we're heading in that direction?

I prefer not to answer that question.

That's a perfectly fine way to end it. 

Daron, thank you so much for joining me today.