From The Wall Street Journal:
Daron Acemoglu and Simon Johnson have written a long, eloquent book arguing that technological progress is a decidedly mixed bag. They believe that the power of the state can and should be used to select the best of the goodies from the bag. The state, they argue, can do a better job than the market of selecting technologies and making investments to implement them.
Mr. Acemoglu is a prolific economist and a shoo-in for the Nobel Prize; his MIT colleague Mr. Johnson is an economist and professor of management. In “Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity” they claim that the billions of daily decisions by you and me—to venture on a new purchase or a new job or a new idea—do not “automatically” turn out optimally for ourselves or society. In particular, poor workers are not always helped by new technology. The invisible hand of human creativity and innovation, in the authors’ analysis, requires the wise guidance of the state.
This is a perspective many voters increasingly agree with—and politicians from Elizabeth Warren to Marco Rubio. We are children, bad children (viewed from the right) or sad children (viewed from the left). Bad or sad, as children we need to be taken in hand. Messrs. Acemoglu and Johnson warmly admire the U.S. Progressive Movement of the late 19th century as a model for their statism: experts taking child-citizens in hand.
The authors begin with the questionable assertion that the most prevalent attitude toward technology today is a heedless optimism. “Every day,” they write, “we hear . . . that we are heading relentlessly toward a better world, thanks to unprecedented advances in technology.” Their chapters then skip briskly through history—from the agricultural revolution of the neolithic era, to the industrial revolution of the 19th century, to the Western postwar economic expansion of the 20th century—seeking to show how at each turn new innovations tended to empower certain sections of society at the expense of others. The “power” that concerns them, in other words, is private power.
Since the 1920s, economists from John Maynard Keynes to Paul Samuelson to Joseph Stiglitz have been claiming, with increasing self-assurance though with surprisingly little evidence beyond the blackboard, that (1) private arrangements work poorly, (2) the state knows better, and (3) we therefore need more state. Messrs. Acemoglu and Johnson have long believed in this anti-liberal syllogism. Statism recommends a growing Leviathan, as Mr. Acemoglu argued equally eloquently in “Why Nations Fail,” a 2012 book with James Robinson.
We need, in other words, the legislation currently being pushed by left and right to try again the policies of antitrust, trade protection, minimum wage and, above all, subsidy for certain technologies. Messrs. Acemoglu and Johnson are especially eager to regulate digital technologies such as artificial intelligence. “Technology should be steered in a direction that best uses a workforce’s skills,” they write, “and education should . . . adapt to new skill requirements.” How the administrators of the Economic Development Administration at the Department of Commerce would know the new direction to steer, or the new skills required, remains a sacred mystery.
Choosing a path for a society and its economy is not the only role of Leviathan; distributing economic justice is equally important. “Government subsidies for developing more socially beneficial technologies,” the authors declare, “are one of the most powerful means of redirecting technology in a market economy.” Messrs. Acemoglu and Johnson regard the private economy as an inequality machine.
In former times, they write, “shared benefits appeared only when landowning and religious elites were not dominant enough to impose their vision and extract all the surplus from new technologies.” Today we need the state to use its powers “to induce the private sector to move away from excessive automation and surveillance, and toward more worker-friendly technologies.” Fear of surveillance is a major theme of the book; therefore “antitrust should be considered as a complementary tool to the more fundamental aim of redirecting technology away from automation, surveillance, data collection, and digital advertising.”
Link to the rest at The Wall Street Journal
PG says absent draconian government controls, which would snuff out modern economies, there have always been and will always be inequalities in wealth and power.
Government is never populated by saints, angels, or true prophets, just by the same type of people occupied in the management tiers of capitalism, small and large.
One difference is that a company, even a very large one, cannot force individuals to do what it wants. Capitalism, in its relatively unfettered form, must always work hard to attract customers lest another group of more intelligent people finds a better way to attract individuals to be their customers.
Governments can and are regularly persuaded, through various methods, legal and illegal, to favor one group of people or another, to create ingroups and outgroups. Ingroups support those at the heights (or depths) of current governments. Outgroups are the ones who want to change what governments are doing by kicking out the incumbents and replacing them with people who will make decisions differently.
If a significant portion of humankind was comprised solely of saints and angels, such people would be suited to run a society from the top down, treating each individual equally and fairly and ensuring that individuals would be treated with unconditional kindness and equity.
Unfortunately, only a relatively small percentage of the general population even comes close to being saints and angels, and a large share of such people don’t aspire to be rulers or politicians, or the leaders of large business organizations.
In the OP, “government subsidies for developing more socially beneficial technologies” sounds like something straight out of the faculty lounge of a typical large university. Who decides what a “socially beneficial technology” is, especially when it is in its nascent stage? What happens if there are two candidates to provide a “socially beneficial technology,” and each wants to do this differently?
Do we really want to have a group of government officials deciding the Windows vs. Mac type of question? Which of the two is more socially beneficial?
The solution is to let individuals decide which one they prefer for whatever reason is most important to them right now. The faculty lounge solution will constantly be screwed up in some way for a whole bunch of people.
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