← The Remnant with Jonah Goldberg
The Remnant with Jonah Goldberg
What Happened to Liberal Democracy? | Interview: Daron Acemoglu
01:09:15
Loading summary
Transcript106 lines
- [00:02]
A
The perfect lunch combo. That first bite of your favorite sub, followed by ice cold Pepsi. Add a couple of friends and now that's next level. Suddenly the laughs get louder, the stories keep flowing and the food tastes better because Pepsi brings out more flavor, more fun and more of the moment. Food deserves Pepsi. Grab a Pepsi, zero sugar today.
- [00:39]
B
Ladies and gentlemen, can I please have your attention? Can you dig it?
- [00:52]
C
Greetings, dear listeners. This is Jonah Goldberg, host of the Remnant podcast, brought to you by the Dispatch and Dispatch media. Absolutely thrilled about today's guest, our first Nobel Prize winner. I believe I'll be really embarrassed if I'm wrong about that because that means I've really forgotten somebody else important, but Darren Asamologu. Am I saying it right? Asamoglu, okay, it's one of those, I'm sure you've had your name butchered worse than I just did, but still was the co recipient of the 2024 Nobel Prize in Economics. His most famous book, which people probably heard me talk about more than once, was co written with James Robinson, why Nations Fail, which was really extremely useful for me. We will talk a little bit about where I might disagree a little bit or might have different emphases, I would say. And Darwin is one of the foremost champions and expositors and explorers of sort of institutional economics, institutional theories of development. And he's got a new book out which I've been diving into for all sorts of obvious reasons. What happened to liberal democracy? Darren, welcome to the Remnant.
- [02:17]
B
Thank you, Jonah, It's a really true pleasure. Thanks for having me on the program.
- [02:20]
C
All right, so here comes this hardball question. What's your book about?
- [02:24]
B
Well, as the title suggests, it may be about liberal democracy. But you look, everything that's been said that can be said about liberal democracy I think has been said in one way or another. But I think the way that you holistically understand what liberalism's most important ideas were about and liberal democracy as their institutionalization, why that worked is one of the most important achievements. Or it's the understanding of one of our most important achievements. Because I think the fact that such different motivations and peoples can exist peacefully under institutions that give them voice and security and liberties, that is just such an amazing achievement. So the book starts with why liberalism's ideas were sound not just in the past, but also for the future and why liberal democracy succeeded for quite a long time. But the bulk of the book is about why liberalism and liberal democracy plunged themselves into crisis and what that implies for the future. It's an economist's approach, which I am of course, because it starts with the economy, but it's not a simple deterministic, just inequality increased sort of explanation. It's about the transformation of the economy throughout the developed world from what you might call industrial economy to a post industrial one. And what that implied for shared prosperity, economic growth that lifted all sorts of groups up together with it. Why that was much harder during the post industrial age, but also how the post industrial age changed power dynamics, the leading coalitions and the aspirations of those coalitions. So in some sense my diagnosis is that liberal democracy failed to some extent after its spectacular successes because it did not adjust to the times. And also it started taking itself too seriously.
- [04:39]
C
There are a lot of different places we go. I would love for you to explain a little bit.
- [04:42]
B
I would love to go to all of them.
- [04:44]
C
I'll follow you about sort of the institutional thesis about development and stuff, but I think maybe we should start a little closer to just the sort of the title in your book. You conflate. I don't want to say conflate, but you see a consistency from Lock through Rawls, let's say.
- [05:05]
B
Right.
- [05:05]
C
And you are not an anti liberal, you're not a post liberal, but there are anti liberals and post liberals who will make that same claim. I'm much more in the sort of Fukuyama camp that I think the Rawlsian liberalism and the Lockean liberalism are. They're different tracks. Obviously there's some, you know, there's some DNA connecting them. But regardless, I think we all have a sense of what democracy is, you know, but what is, what is liberalism to you? Like, where does it come from? What is it? Does it start with ideas or does it start with. With patterns and practices and institutions? How do we get there?
- [05:42]
B
Great, great question. And of course not everybody's going to have the same definition of liberalism, partly because when you go back to liberal authors of the 18th, 19th centuries, and definitely also of the 20th century, you will see lots of ideas that are incoherent with each other for sure. So for me, liberalism is first and foremost about the protection and elevation of individual liberties, freedom of belief, association, speech, and some amount of ability to turn your beliefs into action. But at the same time it is about protecting weaker members of society so that it's not just about a few privileged people having these freedoms and everybody else starving. So that's sometimes more associated with left liberalism, but liberalism is a big tent. But I also emphasize, perhaps very differently from some modern conceptualizations of liberalism that community has always been central for liberal, because liberalism is not an individual act. A lot of the things that we do are collective. They are within society and they depend on shared understanding, shared moral principles, and most importantly, on forming networks, sharing ideas, and doing things together with other people. And in fact, my justification for liberalism comes from its ability to generate useful information for humans and disseminating that information so that it turns into practice and enables us to build better technologies, better material conditions, and better institutions and norms. And all of those are dependent on community and the ability of individuals to do things within their community. And not every community has to follow the same rules. That heterogeneity of what collectively individuals do is a very important part of liberalism.
- [07:42]
C
Yes, I often put it, the right to pursue happiness is an individual right. But the fact of the matter is, the way most people realize happiness is in groups, 100%. That's it.
- [07:53]
B
That's a great way to put it. I wish you had told me that before I finished the book. I would have put it in there.
- [07:58]
C
You can have it for the paperback. There's no reason you should know very much about me. I'm a sort of traditional conservative who did not care about.
- [08:07]
B
I do, I do. I read one of your books when I was.
- [08:10]
C
Oh, there you go.
- [08:11]
B
You know, my late 20s.
- [08:13]
C
Oh, wow, okay, there you go. Shows you how old both of us are then. But I did not get on board the Trump bandwagon. And I've been having a lot of arguments with. I'll just call them the new right, post liberals, anti liberals, nationalists, all of these various people. And I think one of the mistakes that they make is, which is particularly strange for Catholics is ignoring the subsidiarity part and the localism part and that.
- [08:43]
B
And so did liberalism. So did liberalism.
- [08:44]
C
That's right.
- [08:45]
B
I don't think liberalism should have used the language of Catholicism, of course, but I think the same ideas are very important for liberalism because you cannot have true freedom unless you delegate power. And self government at a collective level is part of that self government. And this is why. Now if we link it to philosophy, while firmly viewed in the liberal tradition, the strong social contractarians such as Rousseau and his followers, I think, are inimical to the realization of liberal aspirations because they do not recognize those possibilities. And it is their ideas that still have certain implications for how people view the liberal agenda, which is problematic.
- [09:32]
C
I mean, on the institution thing, I'm a big believer that institutions need to be sticky, which means they have to offer things that are unattractive. To some people and very attractive to other people. So everyone can self sort for the sorts of communities and institutions that serve their individual desires in a collective kind of way. And what's weird about a lot of the post liberals and the sort of Rawlsian or Rousseauian liberals is that they share this one size fits all vision of a regime that is very flat, 100%.
- [10:06]
B
That's why I think this is a secondary thesis of the book, but it's an important secondary thesis of the book, is that a healthy liberal democracy has to give up the conceit of a social contractor, resolving all the difficult dilemmas and let those organically evolve within communities by some sort of process of building on shared moral understanding.
- [10:30]
C
Okay, so back to what happened to liberal democracy, because I promise you I'd help you move books here.
- [10:35]
B
What happened?
- [10:36]
C
What happened? Yeah, what did we lose and why did we lose it?
- [10:39]
B
Okay, so I think the best way for me to answer that question, I promise you I won't be too long winded, is to start why liberalism succeeded according to the way that I see it. Because liberalism first and foremost promised three things. Shared prosperity. No group would be left behind. It's not sort of progress. Progress is important to liberalism, but it's not a progress that just benefits one group, public services. That's why liberal democracy and its institutionalization in the context of governments that function was very important and obviously voice and self government at the community level, at the organizations and associations level, which de Tocqueville understood and appreciated so much in the United States when he visited it, and of course at the national level. And all three of those succeeded partly because liberalism organized broad coalitions, like for example FDR's coalition that brought left leaning intellectuals, college graduates, together with the unions, the trade union movement, the labor movement and southern democrats that were self employed businesses with more conservative ideas and representing different sets of aspirations. But it held all of them together. That broad coalition provided both self government for each group to some extent, but also created the conditions for the other two, public services and most importantly, shared prosperity. But shared prosperity was made feasible in the context of an industrial economy, which helped a lot. In an industrial economy, what happens is that there is plenty of room for economic growth with innovation, new investments and business expansion. But when businesses do that, they have to go and labor for the main tasks that they need to perform. In a non democratic society, like for example in the US south during slavery, you could do that by coercing people, or by cheating people, or by giving them a raw deal under the framework created by democracy, liberal democracy, that was impossible. Trade unions were active, there was democratic governance. So you had to pay these people. You have to go and entice them. And in fact, you see that throughout the first half of the 20th century and somewhat also after the World War II, you know, employers going around and trying to entice people to come to their towns so that they could employ them. And that was the recipe for shared prosperity. Because when businesses expanded and they made profits, they also had to pay high wages and create jobs. And throughout history, there is no example of shared prosperity that works through any other channel than create jobs and generate high wage growth. It's a mirage to think that you can have shared prosperity where only a few people make all the earnings and then you somehow redistribute them. That never works. It's never satisfactory. It doesn't create the dignity of work, and it's not sustainable. So that channel was very important. So, you know, what happened then? You know, digital computers arrived. Globalization also exacerbated this. But especially digital computers changed the nature of the economy. And that's what I call a post industrial economy. Most importantly, the skills and activities of the college educated became much more important. Managerial positions, dealing with data, dealing with administrations. But even more importantly, the digital technologies became a platform for automation, meaning the use of machinery and algorithms for doing things that labor used to do before. And automation severs the link between business expansion, innovation and shared prosperity. Because now businesses can expand. They can produce billions of dollars of output, like Google, like Microsoft, without hiring workers. In fact, quite the opposite. They can sometimes expand instead, making huge profits while laying off workers. So that made the problem of shared prosperity much, much harder. But at the same time, it also created a very different politics. Why? Because in this process, the college educated first became much more empowered. In many countries, especially in the United States, of course, status and social influence follows income. They were becoming richer, they were becoming more important than the economy. And their social status grew, their numbers grew. But also as part of the reorganization of the economy, they started living in the same neighborhoods, in the same cities, having the same attitudes, having the same neighborhoods, having the same social networks, marrying with each other, having the same globalized experience. And that made their values diverge from the rest of society. So at the same time, they are becoming more politically powerful, socially influential, but also diverging from the rest. You see that in the data, you see that in the practices. And one of the very important parts of that is that the political map of every advanced economy for which we have data changed? The center left used to be the party of the workers. They had votes from the workers. And the more educated college educated typically supported the conservative or the center right governments. They had members and they had members of parliament or congressional people from the working classes or from similar backgrounds, small businesses. All of that changed everywhere, not just in the United States. In the United States it happened very sharply, but so did in France and Germany. In the UK and the newly elevated college graduates first omitted to worry about shared prosperity, and then, and this goes back to the Rousseau and Social Contract when confronted with difficult problems, dilemmas that liberalism never itself dealt with in the past, such as how do you include new diverse populations in the country? How do you deal with the intolerant? How do you deal with the education system when education is a very important part of imparting liberal values, but some groups are not going to want your education system. So all of these dilemmas, which were much more theoretical when liberalism was an opposition movement, became central when there was a liberal establishment governing the country. But because now that liberal establishment had divorced from that broad coalition that I described, for example, in the context of fdr, they started making decisions that were much more top down, which led to what I call a social engineering agenda. It's this combination of shared prosperity collapsing and the social engineering agenda, with the great help from the right, right wing entrepreneurs who really exploited this weakness of liberalism, created a huge backlash. So the way I say it is that liberalism failed. Not because it has more formidable opponents in the form of post liberals or the alt right or anything like that. It has failed because of its internal problems, but its opponents really exploited that very well.
- [17:59]
C
All right, we're going to take a quick break, but we'll be back soon with more from the Remnant podcast. Longtime listeners know we are huge fans of Aura here. I've gotten Aura frames as a gift for my mom, for my daughter, for friends. They check just an enormous number of boxes as a gift. You can load pictures from your phone in a minute. It's almost entirely idiot proof. So if you've got technophobic people in your life, you can either do it for them or you can make them sit and learn how to do it in 30 seconds. It's really not hard. You can personalize it by adding a message that, you know, plays when they open it up and they plug it in for the first time. Anyway, it's a great product. It was named the number one digital frame by wire cutter. You can save now by visiting auraframes.com for a limited time listeners and can get $35 off select frames plus free shipping with promo code remnant. That's a U R A frames.com promo code remnant. Support the show by mentioning us at checkout. Terms and conditions apply. I don't know if this is pushback or just sort of.
- [19:11]
B
Please do. That's what would make it fun.
- [19:13]
C
Request for ex explication and stuff. So first of all, your case for the New Deal, is it the apparatus of a more European style welfare state that proceeds from it? Because the case that the New Deal actually ended the Great Depression is very weak in my opinion. And there were things about the New Deal that are very defensible and good. And there were things about the New Deal that were arbitrary, capricious and indefensible in my mind. And it often gets all conflated as to all good or all bad.
- [19:47]
B
But every government is like that. Every movement, every government is like that. Absolutely 100%. I agree with that. I mean, for example, FDR trying to pack the court was horrible.
- [19:55]
C
His setting of the gold standard based on the price of gold to 21, raising it 21 cents because seven times three is a lucky number, is not the kind of due diligence that I'm looking for. The pulling out of the London Economic Conference, which really did enormous damage. The idea that the Western nations were going to get out of this together was. Anyway, there are a lot of problems with it. And so, you know, the, the just so story that we all that we often get is that the New Deal worked because it got us out of the Great Depression, when in fact that was more like World War II and the post World War II prosperity. But that doesn't mean that like the National Labor Relations Board rules and these kinds of things that were set up should all go away necessarily. I mean, I have more problems with them than you probably do, but that's not. But your point is that the New Deal, by setting up a new structure of shared prosperity, was good regardless of what it did about the Great Depression, right?
- [20:48]
B
100%.
- [20:48]
C
Okay, 100%.
- [20:49]
B
And we can debate the Great Depression. I am not the strongest proponent of Keynesian economics in general, but I think the Keynesian policies were an important step in stemming the tide and helping get out of the Great Depression. But they were half hearted. That's why World War II, creating much greater demand for labor and for material and for industrial output really helped as well. But I think much more important is indeed the welfare state. So I think we can have a debate about how much welfare state what type of welfare state, how inefficient it should be. But something like a welfare state is critical for liberals because there is no way you can have the protection that you need to the weaker members. And there are two dimensions of protection. One is economic, but second, it's about protecting their individual freedoms. None of that is possible without some sort of welfare state. Communities are great. I mean, this is why in my book they have a central role as part of liberalism and the future of liberalism. On the other hand, they are completely Janus faced. Communities are essential for the realization of people's aspirations, for their collective efforts for self government, for grounding their moral understanding and values and sharing information, camaraderie, solidarity. On the other hand, they are also oppressive. If you live in communities as we, I think we'll always continue to do so, even in the age of AI and social media, who is going to protect the individual against the community when that community turns against that individual's basic rights, including right to exit? Because you very rightly pointed out like it's we'll let different kinds of communities exist and people sort. But well, most communities don't recognize that. The communities based on Sharia law in Europe don't recognize that and some religious communities in the US don't recognize that. So you do need that protection for individuals. That's why it's a very delicate thing to find that balance between community and the state. But we do need the state both as an economic guarantor for people's worst times and as setting the rules for the protection of individual liberty.
- [23:15]
C
And we should say, I mean, look, I mean again, we would probably argue about what that welfare state looks like, but even Hayek conceded the point that you need something like that.
- [23:23]
B
And let me actually add one thing again, like going back to the philosophical foundations, that argument, if we have, if we had the time to do it, Jonah would be very healthy because I don't think there is a social contractarian solution. I don't think there's a solution you can get from moral philosophy, from Immanuel Kant, for Jean Jacques Rousseau, from John Rawls that says this is how the welfare state should be. No, we should debate and we should reach a broad agreement on what the main elements of that welfare state should be.
- [23:50]
C
Yeah, no, I agree with that. And this is one of these things where in my evolution, raised on the right, you hear welfare state, you flip the safety on your rifle and then you're like, well, wait a second, my old boss Ben Wattenberg is like, do you really Want to go back to the days where old people were eating garbage out of garbage cans because they didn't have Social Security or whatever. And this is consensus around things like Social Security and whatnot. You can come up with market based reforms at the margins, but there's going to be some sort of provision of a safety net and we just need to make peace with it.
- [24:21]
B
And communities play some of that role. There is another difficult balance. We should not deny that when you have too much welfare state, it takes some of the responsibilities away from communities. That then makes communities less relevant.
- [24:36]
C
Right.
- [24:36]
B
So I do not subscribe to the view that welfare state should provide all social insurance. Communities can provide some of it through social networks, through friendly associations, through family and other things, but that was not going to be enough. And that could be very oppressive to people as well.
- [24:53]
C
Just out of, for my own edification, you talk a lot about inequality, income inequality, wealth inequality. Why is inequality in itself a problem? I'm very much in favor of doing something about poverty, but a lot of the sort of the surplus elite that you're kind of referencing in terms of these college graduates who have got disconnected from the masses and whatnot, which I basically agree with, they're actually not doing poorly. It's an old joke in Washington now that the definition of rich is making 10% more than the highest paid columnist at the Washington Post.
- [25:33]
B
Right.
- [25:34]
C
And everyone talks about like setting, you know, taxing people who make more than $400,000 a year because all, all of the journalists that are into this stuff and the TV hosts are in this stuff. That's their cap about being middle class. And you know, the middle class is shrinking in part because the upper middle class is growing so much. And so on a moral or sociological or raw political terms, why the focus on income inequality versus things like poverty? Why the subjective definition of poverty rather than objective?
- [26:09]
B
Well, first of all, first of all, let me make a comment about what happened in the United States from the late 1970s, early 1980s to around 2013, 2014, for a period of about 35 years. It's not just that inequality increased. It is that the real wages, inflation adjusted wages and incomes, earned incomes of people without a college degree, high school graduates, those without a high school, and some with community college degrees actually decline almost every year.
- [26:43]
C
I can see that's a real problem.
- [26:45]
B
That is a real problem. So that was really, that's why I call that not just slowing down or weakening of shared prosperity, but entire collapse of shared prosperity. Some communities were mired in unemployment, drug Problems, teenage pregnancy, huge increase in out of work, wedlock, children, complete dissolution of community life, while certain metropolitan areas flourished and flourished and flourished. That picture, I think is inconsistent with people feeling good about their society or thinking that they are part of a shared understanding, because that just is very jarring for them. Second, I think you could tell the same argument that if we are all part of a nation, of a shared society, and there is one group with described with certain characteristics, let's say white people versus black people, college educated versus non college educated, those who want to work with their hands versus those who want to work behind the computer screen. One group keeps on getting very, very rich. The other group is like just making it perhaps growing like half a percent a year. The other group is growing at 4% a year. Again, I think ultimately human nature is such that that's going to create more and more discord and less and less of this shared moral understanding. And again, that's not going to work.
- [28:16]
C
So I'm sort of a one man revivalist for Fred Hirsch, the economist. And he had this argument which there's very serious and legitimate pushback against in various ways. But that part of the problem, why we can no longer promise people the American dream anymore is this positional good problem is that there was a time where culturally the idea of having a car in the driveway and a nice family home, single family home, in a nice neighborhood, just like all your neighbors, was the American dream. Now there's this line from Montesquieu that goes something like, if all people wanted was to be happy, that would be pretty easy. The problem is they want to be happier than everybody else. And it's very difficult to figure out how happy other people actually are. So you have the social media environment, you have all these sorts of things where status is now a positional good rather than economic prosperity. And I don't know that the state is in a great place or policymakers in a great place to fix that problem. If it's.
- [29:23]
B
No, no, that's. That's right, that's right. I mean, I think two things very important here in what you said. One is that state is always a positional. I'm a huge believer in the world not being zero sum. I mean, we would not have achieved the things that we have achieved as a humanity if the world was zero sum. But there is one thing that's zero sum and that's status. If you have more status, I have less status. Second, who is your reference group? Experiments, neuroscience experiments, and lots of other sort of evidence clearly shows that a significant part of how we judge things is compare things to our reference group. And our reference group, in a world without social media, without tv, without modern communication, was our community. Now it's the entire United States, sometimes the entire world. So that changes things. By the way, it changes politics, too. Politics was much healthier when it was local. Now it's national. Often people don't know who their local representative is, but they know the most famous member of Congress or Senate from New York because they are the most loud and controversial voices on social media. That, again, screws things up.
- [30:38]
C
Yeah, no, I'm with you on that. I think that's right. I'm not trying to caricature anything, but.
- [30:43]
B
Oh, yeah, please do. Please do so.
- [30:45]
C
I have friends. One of the things I appreciate a lot about why nations fail, and in your arguments more generally, is that you make allowances for contingency, for good luck. I'm with you. That geography is a very poor explainer of prosperity. Does it help if you are a country with oil underneath the ground?
- [31:08]
B
Yes.
- [31:09]
C
Right. But like.
- [31:09]
B
And it can create problems. You know, I'm originally Armenian. I was born in Turkey, but I'm Armenian. And Armenia, for example, has a very difficult geography, landlocked and surrounded by countries that are hostile. So that makes a difference.
- [31:27]
C
At the same time, I have dear friends in the Deirdre McCloskey world. And the way some of them talk about the institution, economic, you know, theory, people, is that it's way too contemptuous of ideas or dismissive of the role of ideas.
- [31:47]
B
But I never see it that way. I mean, again, I don't think that's
- [31:50]
C
fair to you, but I think it's.
- [31:52]
B
It's also not fair to Douglas North. I mean, he. It's just that, you know, I think it's very easy to say ideas matter, and it's relatively easy to say, to go to history and find some inspiring thinkers whose ideas influence things. Thomas Hobbes, John Locke, of course. But it's much, much harder to have a systemic understanding of social change and how we build institutions where ideals are integrated into it. And that's why when we first approach these things, we sometimes abstract from ideas. And let's take these ideas as given and let's look at their institutional implications. But in this book, I put a lot of emphasis on ideas. It was the liberal ideas that led to the movement of liberalism, with all of its successes and failures and problems. And liberal democracy is nothing but one particular, but a very important institutionalization of these liberal ideas.
- [32:51]
C
So Just for listeners who may not be super familiar with this part of your. A big part of your argument is that development comes when states or colonial powers imposing them on other states. But when you create institutions that are not extractive. Right. So like.
- [33:11]
B
So yeah, I mean I. That's just the, the broad idea is institutions matter both for incentives, innovation and opportunities. And that's the ensemble of economic and political institutions. Of course, economic institutions, how we organize economy, who has property rights, who has ability to get into wide occupation, Those are very important. But those are undergirded by political institutions that distribute political power. You cannot imagine the institutions, economic institutions, economic arrangements in Zimbabwe under Mugabe without understanding Mugabe and his surrounding elites. Power. So, and then extractive are those economic and political institutions that concentrate power and opportunity in the hands of a small group who then use it to extract resources or exploit the rest. Inclusive, just distribute it more broadly so that we have broad opportunity, broad incentives. But that has to be undergirded with some sort of political system that doesn't take those powers away from them. And that's why democracy again is one institutionalization of that. And when you have inclusive institutions that is more conducive to innovation and long run sustained economic growth, that doesn't mean that you cannot have growth under extractive institutions. We talk about that a lot. But I think it's ultimately harder and less sustainable in the long run.
- [34:33]
C
Right. Like there are a lot of communists or communist sympathizers or defenders of the Soviet Union. You get into this in great detail and why nations fail. It turns out that if you replace mules and donkeys with tractors and earth movers, you are going to get massive increases in productivity, which is, but there's kind of one offs. They're not dynamic, they're not innovative, they're not dynamic.
- [34:55]
B
And they, they have the seeds of their own problems within them. So similarly, if you sort of empower a few companies and say you have all the resources, go and take all of the technologies from the United States, that's going to generate growth for a while. But it's also very inefficient. There's no competition. Those companies are not going to be, be really pushing themselves. They're going to create a lot of corruption opportunities, all sorts of things that will ultimately turn against the possibility of economic growth.
- [35:31]
C
So what I'm getting at is when I've had to have these arguments with people about trying to keep peace amongst the tribes, as it were, I see this argument very much as like nature versus Nurture Nature versus nurture is a really dumb argument among smart people because at the end of the day, everyone understands it's both. And in some places nature is all explanatory, and in some places it's marginal or non explanatory and the rest it's just shades of gray. And so the question I'm trying to get to is, is it possible that the role of ideas as the prime mover, you know, the McCloskey thesis is in part that rhetoric is the story we tell about ourselves and that there was this moment where the story we told about ourselves changed and that opened all these vistas and then these institutions followed suit. And it's very much a chicken or the egg kind of argument. But when you're talking about institutional decay, doesn't that start putting more weight on the importance of ideas because the institutions matter? But getting people to believe in the institutions and defend the institutions is an argument about ideas more than anything else.
- [36:42]
B
I, I, I would say absolutely right. But again, that does not. Just like your nature nurture analogy, which I agree with completely. Say, you know, you can say institutions, sorry, ideas are the driver and institutions are the followers. In a, in my biology, there is very, very clear consensus and evidence that, you know, everything is shaped by environment. So like the way that genes actually lead to behaviors and not just propagate, but just lead to behaviors, is very much interacting with the environment. Same thing with ideas. So absolutely. Ideas are things that hold coalitions together. Coalitions are essential for institutions. Ideas are what undergird norms. Norms are absolutely essential for institutions and ideas influence whether people believe in institutions or trust institutions. One of the problems in the United States, in many liberal democracies right now, is that people have lost their trust in institutions, especially establishment institutions. So those are intersecting with ideas. But I would also not tell a pure ideational story where everything is just like a bottle of ideas.
- [37:58]
C
Right? No, I agree with that entirely. I think that's right. I mean, it's something I talk about on here all the time, but how intellectuals love to have arguments about ideas and with other intellectuals. But if you want to talk about something that did more to erode stable communities and stable family formation and all of these things. It wasn't some idea from a French nihilist, it was the automobile. But you can argue with Sartre, it's really hard to argue with a Buick. And so everyone starts arguing about Sartre anyway, right? Or Nietzsche or whatever. And the birth control pill did so much more to change social patterns than feminist theorists. Did. But again, feminist theorist is something to argue with. The pill is a much more difficult thing to argue with in a. Because it doesn't argue back in the same way.
- [38:54]
B
I love that.
- [38:55]
C
All right, so I mean, other than the economic argument about lack of shared prosperity and all that, what is your explanation for the institutional decay, the lack in faith and trust in institutions, the rise of populisms? Because there are a lot of different populisms out there. Is it mostly a technological story? Because I can make the case that a big part of it is a technological story going.
- [39:21]
B
I think the way I see it is that the technological part is the base, but what happens on top of it is critical. So if shared prosperity became much harder, but liberalism, other than that, tried to recreate other things that people liked and struggled mightily to deal with problems of shared prosperity, I think we would not have the same crisis of liberalism. So that's why the fact that public services became much worse, the fact that society became much more polarized, the fact that we had this social engineering agenda, all of those are very important for liberalism failure. At the end of the day, I think the best few statistics to think about when understanding why liberal democracies in crisis perhaps is too strong a word, but in dire straits at the moment is the degree of polarization. Not just in the United States. You see it in the uk, you see it in Europe, the decline in trust in bedrock institutions like the presidency, parliament, courts, and most jarringly, in my opinion, the fact that people who used to say 30 years ago, 20 years ago that they supported democracy, they had no interest in autocratic regimes and military dictatorships. Many people, especially among the young, are changing their tune. There's much less support for democracy that those are the symptoms. Why did these symptoms come? Because liberal democracy is viewed as not working and the establishment is viewed as out of touch.
- [41:16]
C
So one of the points I've heard you make, which I agree with, is there's a just so story you often get about technology being on the side of freedom.
- [41:29]
B
That was before social media. No, I'm kidding.
- [41:30]
C
No, but no, the problem is, you know, there was a time when people thought technology was going to be on the side of tyranny. Right? That's the whole premise of 1984. It's, you know, the Panopticon all. And the truth is sometimes technology is on the side of freedom and sometimes it's not 100%.
- [41:46]
B
There's nothing inevitable about technology. There's nothing inevitable about technological progress. It may happen, it may not happen. It's our society that determines it, but also the direction of it is very much determined by how we develop the technology, how we use the technology. And by the way, even more importantly, that's a very important part of my work, which has parts in what happened to liberal democracy, is that whether technology helps the working class is also a choice that we make in how we develop that technology. And that's why that's so important for AI.
- [42:19]
C
So that's where I was trying to get to. You're by, well, by the light compared to some people, including some colleagues of mine at the American Enterprise Institute. Anybody short of a full blown utopian is an AI skeptic. But you're skeptical about the, the massive productivity gains that will come from the predicted massive productivity gains.
- [42:44]
B
Yeah, I would say I am skeptical of AI in three different ways while still being very keen on developing AI for society's benefit. One is I do not believe that AI in the short run is going to generate huge productivity benefits. Second, I am skeptical that if we let AI be developed in the way that we are developing right now, it will ultimately be consistent with democracy and shared prosperity and other things. And then third, I'm also skeptical that we're going to get to something like AGI anytime soon. But these three skepticisms are different and they have different implications. The productivity one is more about the short run and what we should expect and how we should not, you know, rest on our laurels. The most important skepticism is the second.
- [43:42]
C
So how, so how, how, how, how will it destroy all that?
- [43:45]
B
So I think if my diagnosis that a major reason why the shared prosperity formula of the industrial economy was damaged or even perhaps destroyed by automation, we shouldn't be very worried about AI because its current rendition is all about automation. The AGI agenda, whether we do reach what everybody agrees is AGI or powerful AI or whatever you call it, is all about AI models doing first, all cognitive tasks better than humans in pretty much at every level, perhaps as good as the very, very, very, very best one in a thousand expert, or even better than them, and then ultimately merging with robotics and starting doing all sorts of things that involve interacting with the physical world better than workers. If that's the case, we're going to automate more and more and more things. There may be some new jobs, but there will be for a few people, people who control AI models, control the information of the AI models. And those who have political power will continue to have influence, but vast numbers of people will just become dispensable. And that is not consistent with liberal democracy. Liberal democracy is about individuals both in their communities and in the nation, having responsibility, having agency, participating in their lives and feeling that they're part of one society. It's not a one society if you have a two tiered system with, you know, the tech overlords and everybody else that's not consistent.
- [45:22]
C
All right, we're going to take a quick break, but we'll be back soon with more from the Remnant podcast. One of the points I was trying to get to about how technologies sometimes are friends, sometimes our foes, sometimes neutral. The same thing applies to things like automation. Where there was a time in the early Industrial revolution where wasn't a net benefit for the average worker, wages went down. I'm increasingly sympathetic that even the agricultural revolution took a long time to benefit the average human.
- [46:03]
B
100% agricultural revolution hugely. It took thousands of years. The mechanization of agriculture in the United States, it took quite a long time as well, but. And the British Industrial Revolution, as you pointed out, Jonah. But in all of these cases, it wasn't automatic. What really mattered was that we also started using new technologies for doing other things. It's not. If all we did, for example, starting in the middle of the 19th century in the United States was mechanized agriculture, but create no new technologies for factories, no clerical occupations that were so important, no engineering, no technician jobs, no new electrified machinery, together with all the new tasks and the technical expertise that those tasks require, the US would be a very different place and it would have very low wages, it would have a lot of hunger, it would have a lot of unemployment. It's those new jobs that were so essential. So we need to create those new jobs with AI as well. And that's what I call pro worker AI. I'm not against automation whatsoever. Automation has been part of our progress since the middle of the 18th century and it will continue to be so. But if automation becomes the only game in town, then we're in trouble.
- [47:20]
C
And so on the skepticism about the growth of the productivity gains. I heard you in some podcasts say you think it's about 1%, but maybe it's 2%. But it's not gonna be 50%, right?
- [47:34]
B
Not in the next five to 10 years. Yeah.
- [47:37]
C
So I guess one question I have about that is you may have noticed this. There are a lot of lawyers, there are a lot of CPAs, there are a lot of consultant class middlemen, professionals. And everything I hear from them, AI is helping replace paralegals, low end clerks, gut work people. But it's also allowing productive lawyers to be much more productive. And so I guess the question is why wouldn't the. It's not quite bureaucratic, but why would making that class of the economy, that segment of the economy, vastly more productive not translate into greater gains in productivity overall?
- [48:26]
B
I think ultimately it may. But if you look at the models right now, they are not capable of doing all the things that human workers do. And they often require a lot of handholding, create lots of other inefficiencies. So that's why they are diffusing slowly. And that's why when they are applied, sometimes they bring productivity gains, but they're not like earth shattering, since sometimes. Now it's become popular to call this jagged. AI. Models are jagged. They can do one thing and unpredictably another thing you cannot do. But that means that more or less the same people who are doing the tasks need to be around to babysit the AI models again in five years time. That may start changing. In five years time you may have much more usable, much more effective applications that off the shelves you can use. And you don't need the workers and you don't need many, many engineers. But the experience of every technology of the digital sort, from robotics to advanced machinery and now to AI, it requires a lot of engineering sort of adjustments. And it's no different with AI at the moment.
- [49:44]
C
Yeah, I'm constantly amazed by these stories of lawyers who save vast amounts of time by having AI write briefs for them and they're not willing to give back 10% of the time they saved to check to make sure that the AI didn't make up cases. You know, I mean, like, do the, do a little of your fact checking.
- [50:03]
B
And I don't see much massive unemployment of lawyers at the moment.
- [50:07]
C
Yeah, alas. Okay, so in the time we got left, I have to ask you, because it's one of the central issues that arises from a lot of your work is the case of China.
- [50:20]
B
Right.
- [50:21]
C
And when I'm often asked about the bet that we made in the 1990s, I bring this up on here all the time. People are tired of me talking about it. And people say, well, that bet was wrong about China. It didn't work out. They're not heading towards democracy. We're becoming more like them rather than becoming more like us. And that proved to be a mistake. I always come back and just simply say so far, because we don't know how the story of China is going to end. I think China is very strong, but it's also Brittle, correct?
- [50:57]
B
Brittle is correct, yes.
- [50:59]
C
What would it say about your thesis if it turned out that China was stable and intact and stayed authoritarian or totalitarian, whatever label you want to put on it going forward, and ended up being sort of a hegemonic, stable, totalitarian power with the kinds of institutions that it has? And how likely do you feel that is in the moment?
- [51:21]
B
Oh, I have never claimed or supported what social scientists sometimes call modernization theory, which is the idea that as countries get rich they will automatically become democratic, they will automatically start respecting civil rights and human rights. Absolutely not Being an authoritarian state, especially in the age of AI, with surveillance powers that bolster your control over society, that's a stable point, meaning you shouldn't expect that to collapse anytime soon. So China going in that direction and staying there is completely, completely a likely scenario. Number two, I agree our China policy in the 1990s was misguided and wrong. Allowing such quick inflooding of US markets with very cheap Chinese goods created huge hardship for many communities. I am for free trade, but that doesn't mean that you have to at all points in time immediately open your borders. And the accession of China in 2000 into the world Trade Organization created lots of problems. And worse was the conceit that somehow, in the words of George H.W. bush, I believe not George W. Bush, trade freely with China and everything else will come by its own accord. That was just not the right approach. That being said, two important points. I also think our current China policy is extremely misguided. In AI. We are ahead of China, but China is ahead of us in many applications of AI, especially robotics and AI into the production process because of their large manufacturing base and huge number of engineers and their emphasis they put on that. And moreover, the global governance of AI requires US and China to collaborate, remain as rivals, remain as competitors, but collaborate on rules and practices, on safety, and also learn from each other. And the world's peace depends on that. So thinking that our competition with China is zero sum is also the wrong thing to do. Now, what would be a bigger challenge to why nations fails thesis is that if somehow China surpassed the the US in per capita income in a stable manner, and I still think that's not likely, but AI and their engineering emphasis is giving them a big boost. And we are squandering some of the AI possibilities because we are not translating AI into the production process. And that's why my sort of proposal for pro worker AI is not just very important for workers, the working class communities for wage growth, but also to or translating AI into productivity gains.
- [54:33]
C
I know I said we're going to end on China, but just, I'm just very curious, what do you think? If you followed it and if you haven't, that's fine. This abundance argument on the democratic side, you know this Well, I think it has two parts.
- [54:49]
B
One part I completely agree with that if you read it the right way. It is also critical of what I'm calling the social engineering agenda of controlling everything and implementing, imposing values on, imposing the elite's values on everybody and doing so in the form of regulations and things that stifle construction, manufacturing productivity growth, economic activity 100%. What I disagree with very strongly is that there is also a techno optimistic element to it that somehow AI is going to create that abundance and that's actually an easy problem. And more broadly, what I disagree with or not disagree with is not the right word. What I find that discussion very unsatisfactory is that it has no holistic diagnosis of what went wrong. To say that, oh, you know, we started imposing a lot of regulations, that is just a symptom of something deeper. So unless you understand that something deeper, you're not going to be just to say, okay fine, we're now going to redirect ourselves towards abundance and then that will solve all of our problems. No, you really need to understand the problem and form the right governing ideology for this new age. So this is what I say in the book, that my aspiration in the book, and I know I can at most have a tiny, tiny, tiny contribution to this. But I think what we need is a new governing philosophy for liberal democracy. And my aim is to contribute to that debate. Abundance is not a new governing ideology. It's just a slogan and a way to say, okay, let's build some more and let's use AI that isn't the governing ideology. Governing ideology has to start with a new moral understanding, with shared understanding, with a new elevation of communities, with a new commitment to create shared prosperity by creating the new technologies for it. It's a big, big, big lift.
- [57:04]
C
All right, so my last point and respond to whatever you like. One of my great frustrations with the Mamdani DSA wing of the Democratic Party is very much like a lot of my frustrations with the new right neo reactionary. All these people is they all claim to have new ideas. Literally. This guy Curtis Yarvin, who's a guru for Silicon Valgar, his new idea is monarchy. That is not a new idea. You can look it up. And similarly, the DSA crowd their new ideas are price controls, rent control, socialist grocery stores and all of these kinds of things is part of the problem and part of the reason why we have this institutional decay is we just simply don't teach people well that the accomplishments of liberal democracy or liberal democratic capitalism, whatever label we want to put on it, these are actually newer ideas than a lot of the stuff. But because we don't explain this to people, they hear some idea that is literally 4,000, you know, like price controls are older than Christianity. And this idea that like, oh, we'll just control prices, that can only be appealing to people as a new idea if they are ignorant of how old an idea it is, is that part of the problem is that we just don't teach people to understand how much we've accomplished in the last 300 years.
- [58:34]
B
And that, well, that is definitely part of it. What we have accomplished over the 300 years and 2,000 years, all of those are often unrecognized. But let's focus it on Mamdani. I wrote an article in Financial Times about, I don't know, nine months ago or whatever, where I said, you know, what the Democratic Party and the left need is four things, and Mamdani satisfies two of them and fails on two of them. And to understand what those four things are, let's go back to what the recommendation of the book is. For this governing philosophy, which I call working class liberalism. It has to be centered on jobs, shared prosperity and communities, recognizing different communities, religious, conservative, progressive, immigrant, all of them, and give them recognition, dignity, self government possibilities, as long as they satisfy individual liberties at some basic level, but also understand all of the difficulties that these communities are having and deal with the shared prosperity, employment, jobs, challenges within that context. So Mamdani understands some of those things. He recognizes the problems, especially in New York, the affordability problem. He's a great communicator and charismatic leader, which is what you need for a new movement, for a new governing ideology. On those two, yes, but three, he is a creation of New York. He's not going to be able, or his brand of democratic socialism is not going to be able to appeal to conservative working class communities in Kentucky or Pennsylvania or the south or the Midwest. And that is a big failing because that is where the Democratic Party has been going. And if it continues to go that way, even with a better and more charismatic leader, that's not going to solve the problem. Democratic Party cannot exist. The center left cannot exist without the working class. So it has to win the working class back. And that means that it has to get much closer and much more understanding with the values and the priorities of the working class, whatever they are. No judgment on that, so long as individual freedoms are recognized to some basic level. So right of exit out of those communities has to be recognized. But you cannot just say we have the right values, we're going to impose on them. And then finally, democracy works when democracy delivers. So if you have unworkable plans, price controls, just by fiat, we're going to reduce grocery prices by 30%. Those are promises that are not going to work. And if they don't work, that's going to tarnish democracy more. And if you want to make liberal democracy work, yes, local politics is very important. But we really have to tackle these issues of job creation where AI is going, better manufacturing in the United States and things like that.
- [61:37]
C
All right, Darren. Acemol Glu. I'm just going to keep. It's funny, I pronounce it perfectly in my head and I'll tell you, I was in Istanbul a couple of years ago and there are these baklava places all over the place.
- [61:52]
B
I unfortunately have no ownership stating them.
- [61:54]
C
That's too bad. But is your last name generally Armenian or is it.
- [61:59]
B
No, I mean, it used to be Ajemyan at some point and then turned into Ajemogu.
- [62:06]
C
Okay, well, thank you so much for being here. The book again is what Happened to Liberal Democracy. By the time people listen to this, it'll just be pub date and highly recommend it. And thank you so much for coming on.
- [62:20]
B
Thank you, Jonah. This was fantastic. Thanks for having me on the program.
- [62:22]
A
Thank you.
- [62:23]
C
All right, Darren Acemoglu. See, now I can say it. Now he's gone. It's infuriating to me. There are some of these names that I know how to pronounce. I pronounce in casual conversation and then I get scared when the actual guest is on and I just butcher them. So my apologies. I think this stuff is very interesting. I hope I didn't try to just talk to my own interests too much. I was telling him before we started recording. I've mentioned this here before. There's a book that had a really big impact on me called Violence and Social Orders by this guy Douglas north and some co authors, which Darren is in that tradition of institutional economics, explaining how development happens. And a big chunk of it is, I don't want to say simply, but it's primarily how you get elites to be willing to share power or accede to other elites having Power temporarily or when it's their turn, elections kind of answers some of this. But it comes prior to modern democracy, this thing in development where you get rich enough, confident enough, secure enough as a society, as a nation state that the Tudors can handle the Windsors or whatever being in power. That power no longer is a completely zero sum game that if team A gets in power, team B will be slaughtered. And once you create, I shouldn't say create because I think a lot of it happens organically. Once a society creates a system that has a high degree of tolerance for rival elites that is not zero sum or eliminationist, you then get the kind of, I think north calls open access orders. It puts you on a path towards prosperity. And why nations fail is not exactly by any stretch just a expansion of North. But it's in that then it's in that vein insofar as it's a. It looks very closely like, for example, why did all these Latin American countries that adopted American style constitutions not get American style prosperity and stability? And it has to do with sort of institutions that are, are not necessarily formal. And anyway, it's a rich topic, I shouldn't be doing this right now. We can revisit this another time. But there are people, it's fascinating to me, there are people who get very, very, very angry at this explanation for development, which I think is an important part of the explanation. I did very deep dive in this for suicide in the west and had to sort of answer the questions to my own satisfaction. And my answer was that the why nations fail stuff is a necessary part of the explanation, but it is not a sufficient one. I think ideas matter a great deal. And it sounds like Darren is moving in that direction a little bit more because as I was trying to say before, institutions are hugely important, but you only get people to defend institutions and abide by institutions and trust institutions. If you make the arguments about the ideas behind the institutions, it's sort of like the Chestertonian thing about the purely rational man will not marry, the purely rational soldier will not fight. Simply making a pragmatic rational case for the importance of this institution or that institution just does not move people nearly as much as ideas about freedom, patriotism, prosperity, innate dignity, Western civilization, all these kinds of things. They need to see the point of these institutions within that broader context. And that's why I say it's a both and thing rather than an either or thing. Anyway, I find this stuff really interesting and I hope you did too. And other than that, I guess I'll just see you next time.
- [66:45]
B
No, you won't. This is a podcast, Jonah.
- [66:49]
C
It.