Economist Daron Acemoglu: ‘When mistakes involve powerful technologies, you’re going to have trouble’
Lunch doesn’t usually happen at 11am, but MIT economics professor Daron Acemoglu is an efficient man. We are meeting early and close to his office in Cambridge, Massachusetts, so that he can jet off immediately afterwards to record a podcast to discuss his new book. Our venue, a Hunan restaurant called Sumiao, is something rare and wonderful for Boston, and indeed much of the Eastern Seaboard — a really good Chinese place.
“This opened up before the pandemic,” says Acemoglu, “and it was just like, ‘Oh my God, my utility has just shot up!’” Spoken like a true economist.
Acemoglu’s utility is so high that the restaurant has opened early just for us. “Hello professor!” the waiting staff say, greeting Acemoglu and seating us in a special room at the back, where we have a great view of the open kitchen.
Acemoglu is clearly famous here, but he’s also famous in political economy circles worldwide. He’s won the John Bates Clark Medal, often a precursor to the Nobel Prize, and his expertise in linking together politics, economics and technology puts him front and centre in nearly every global policy discussion these days. His latest book, Power and Progress, is a critique of the past millennium of technological progress, co-written with fellow MIT professor Simon Johnson.
I settle in for a discussion about why technology isn’t always a win-win for labour, wages or human development if proper incentives and regulatory safeguards aren’t in place. But we immediately fall into another conversation about a shared topic of interest — Turkey.
Acemoglu, who is ethnically Armenian, was born in Istanbul in 1967 and grew up there. My father is Turkish, and my paternal side hails from Trabzon, on the Black Sea, where Turks mixed with Pontic Greeks, Caucasus peoples and any number of ethnic minorities, a melting pot that belies the nationalism plaguing the country right now.
I ask Acemoglu what it was like growing up Armenian in Turkey. “There were various levels of discrimination, but I never felt insecure or unsafe,” he says. Still, he adds, “You’re different, and you recognise that.”
I observe that the Turkish economist Dani Rodrik — who teaches a stone’s throw away at Harvard — once told me that being from Turkey was one of the reasons he became an early questioner of the Washington Consensus. This was the view that neoliberal globalisation would lift all boats, all the time (it created more wealth than ever before, but also more in-country inequality).
Did place influence Acemoglu in a similar way? He nods. “It’s all about place and history. I was in school [in Turkey] at the end of the military regime. I saw democracy wasn’t functioning and that the economy was in trouble. My not-so-sophisticated 16-year-old mind was wondering, ‘What’s the connection between these things?’ So I said ‘OK, I’m going to study economics to try and find out.’”
His 2019 book, The Narrow Corridor, examined the balance between state strength and the strength of society, as measured by things such as civil organisations, collective action and the media. “Those things have always been very weak in Turkey, because the Ottoman Empire was a top-down empire,” Acemoglu says, observing that the bottom-up flourishing of politics that followed the empire’s collapse was quickly recentralised by Mustafa Kemal Atatürk. As for Recep Tayyip Erdoğan’s strong first-round showing in Turkey’s presidential election, Acemoglu says simply: “It’s a sad day for Turkey.”
Perusing the menu, I see that it’s full of spice. “Can you take a bit of heat?” Acemoglu asks. Always, I say. We decide on family-sized portions of Grandma’s Pork, string beans and aubergine, and the professor’s favourite dish — Yellow River Beef. “It comes in a broth with a very interesting type of pepper, very flavourful. It doesn’t actually burn your stomach but it will numb your mouth.” I am suddenly reminded of a painful lesson I once learnt over a dish of spicy chicken in Kunming — when the heat is too much, eat rice, don’t drink water, which only makes it worse.
When our server, Bernadette, arrives, I make sure we put in a double order of rice, both white and the black sticky kind. We also order a couple of mocktails.
I ask Acemoglu what led him to tackle technology as his latest topic. “Well, in some sense, I’ve been thinking about technology for over 30 years — my graduate research was about the effects of technology on employment and wages. Then, once I realised that I could also study these issues of politics, economy, democracy, conflict and so on, my academic research then progressed along two somewhat separate lanes.”
The research shows that major technological disruption — such as the Industrial Revolution — can flatten wages for an entire class of working people. It also points to the distributional conflict and power dynamics inherent in it. “Yes, you got progress,” Acemoglu says, “but you also had costs that were huge and very long-lasting. A hundred years of much harsher conditions for working people, lower real wages, much worse health and living conditions, less autonomy, greater hierarchy. And the reason that we came out of it wasn’t some law of economics, but rather a grassroots social struggle in which unions, more progressive politics and, ultimately, better institutions played a key role — and a redirection of technological change away from pure automation also contributed importantly.”
I tell him it boggles my mind that so many economists still don’t take non-market factors such as society, institutions and the nature of power seriously enough when coming to their conclusions. His own view, which is that capital takes what it will in the absence of constraints, and that technology is a tool that can be used for good or for ill, seems obvious to any normal person.
He smiles. “Yes, to me it sounds very reasonable too. So why did it take us as a profession so long to come to this?” he asks rhetorically. “Because at the end of the day, economists are conditioned — and for good reason — to think that the market works. And in some senses that’s right.”
But, he adds, even the smartest economic policymakers “are going to make mistakes”. And when those mistakes “involve very powerful technologies, and some people control that, and they can shape them in a way that empowers them further or makes them the beneficiaries, makes them the takers, that’s when you’re going to have a lot of trouble”.
270 Third Street
Grandma’s Pork $24
String beans with aubergine $22
Yellow River Beef $30
White rice $3.50
Black rice $5.50
Pot of jasmine green tea $12.50
Summer Twilight mocktail $9
Lychee Blossom mocktail $9
Total inc tax and service $182.46
The food arrives, steaming and gorgeous. Our beflowered drinks look like something you’d order at a beach resort, and the monochromatic mounds of rice served in a single bowl remind me of New York’s famous black-and-white cookies. “Those are dangerous,” says Acemoglu, who seems to enjoy food as much as I do.
We begin digging into one of the best Chinese meals I’ve ever had in the US. The string beans and aubergine have been perfectly sautéed with just the right amount of spice and sauce (Chinese food in America all too often tends towards the gloopy). The pork is also amazing, served with thin slices of red pepper and leek, but Acemoglu’s Yellow River Beef is the real star. It has a spongy texture that soaks up the savoury broth, which is laden with mushrooms, pickled cabbage, duo jiao (homemade salted chillies) and banana pepper.
I’m glad that Acemoglu is doing most of the talking because it leaves me more time to eat. He continues to ponder why the economics profession is often late to recognise obvious truths. “I think one of the things you have to do as an economist is to hold two conflicting ideas in your mind at the same time,” he says. In the case of his recent work, that’s the fact that technology can create growth while also not enriching the masses (at least not for a long time). “Technological progress is the most important driver of human flourishing but what we tend to forget is that the process is not automatic.”
What’s more, mathematically modelling and quantitatively understanding the struggle between capital — which benefits most from technological advancement — and labour isn’t an easy task. Acemoglu baulks at conventional policy prescriptions for dealing with tech-based inequality, such as universal basic income, because “it leaves the underlying power distribution the same. It elevates people who are earning, and gives others the crumbs. It makes the system more hierarchical in some sense.”
On the other hand, he’s a big fan of the Biden administration. “I think they are doing a great job. They may be making mistakes, but they are confronting some key challenges that have not been confronted for at least five administrations before them — climate, globalisation, workers. Are they doing the right things on all fronts? I don’t know. I think they are taking a big gamble on China, because it’s a very aggressive approach, but probably in their shoes I might have done the same thing.”
On climate change, he believes they may simply have found an imperfect but “politically feasible” solution in the Inflation Reduction Act, which subsidises the green transition in ways that many other nations, including some in Europe, find problematic. “There is no silver bullet,” says the professor. “I don’t know what to do, but there are two levels — one is aspirations, the other one is levers.” On the former, at least, he feels that this White House is on the right path.
Biden is the most pro-worker president since Franklin D Roosevelt, something that Acemoglu supports, particularly at a time when technologies such as automation and artificial intelligence (AI) threaten jobs much higher up the food chain than ever before. He believes we need a stronger labour relations movement in the US — “We need to create an environment in which workers have a voice” — though not necessarily the current union structure. He prefers a Germanic model in which the public and private sectors and labour work together, rather than the US’s more fractious company-by-company organising model.
“I think the skills of a carpenter or a gardener or an electrician or a writer, those are just the greatest achievements of humanity, and I think we should try to elevate those skills and elevate those contributions,” he says. “Technology could do that, but that means to use technology not to replace these people, not to automate those tasks, but to increase their productivity by giving them better tools, better information and better organisation.”
He imagines a day when teachers could use AI to create individual lesson plans for every student, or nurses might be able to take on much greater roles in, for example, diagnosing diseases. “Why is it that nurses cannot prescribe medications? Why must everything go through this very hierarchical approach where you have to call a doctor [to do that]?” As it is today, the people who spend the most time with patients — nurses, not doctors — are those who are paid and valued the least. Using technology to empower such workers would raise overall productivity and quality of care while also raising wages.
Upskilling is also, in his mind, crucial to the future of democracy. “We have to be able to empower and increase capabilities among a diverse group of workers” — including those left behind by several decades of technology-driven worker displacement, the kind of people prone to the “deaths of despair” that economists Angus Deaton and Anne Case have written about. Like many educated coastal elites, Acemoglu admits that he didn’t take Donald Trump seriously at first. “I stopped listening to the news throughout the entire 2016 election year because I was convinced he would go away.”
He didn’t, and now Trump is back. “I hated him so much, and I think you may hate Trump as a centre-left person, but it would be an egregious crime in my view to hate Trump supporters” — as he believes left-leaning media in the US has. “People have very different views, very different ways of expressing them. Some of them are racist, some of them are misogynistic, but they are people and they have real suffering and real grievances and we have to accept them. And I think that the left has failed to accept that.”
The conversation provides a neat transition into the professor’s next area of inquiry: hierarchies. “You read evolutionary psychology or talk to many people who would say they want to be richer than you, more powerful than the other person and so on, and you think that’s the way it is. But then you talk to anthropologists, and they’ll tell you that for much of our humanity we lived in this egalitarian hunter-gatherer manner — so, what’s up with that?”
Acemoglu aims to find out. But first, we have to get the bill. My guest tries to pick it up, and I tell him that the only two rules of Lunch with the FT are that we pay, and everything is on the record. Then, Bernadette pops back to tell us that the manager says our large meal is on the house. I tell her I’m sorry, but I’ll need to pay.
As we wait for the bill, we talk about Turkey again, or more particularly Turkish food, which we both love. What, I ask, is his favourite dish? “I’m just crazy for this special fish that starts in the Black Sea and then comes down the Marmara. It transfers through very different climatic conditions and gets very fat and tasty as a result. You can go anywhere else but you won’t get the same fish.” In cuisine, as in economics, place and history do matter.
Rana Foroohar is the FT’s global business columnist and an associate editor
Find out about our latest stories first — follow @ftweekend on Twitter