The AI hype has been great for the stock market, but its introduction may be a different story for workers. Nouriel Roubini, Professor Emeritus of New York University’s Stern School of Business, Opinions on Artificial Intelligence’s Impact on Economic Growth and the Workforce, and How Climate Change Concerns Can Be Prioritized in the 2024 Presidential Election and Investments I also commented on sex.
video transcript
– Nuriel, let’s talk a little bit about AI. So far this year there has been a lot of hype with it being the main driver of the market. Nearly all companies mention this technology in their earnings reports whenever possible. Are you on this train of hype? Will it help economic growth? what do you see?
Nouriel Robini: Well, ultimately it will help potential growth, productivity and economic growth. However, it usually introduces significant delays. Where the first digital revolution happened in the 80’s, and where he had the internet revolution in the early 1990’s. But it wasn’t until the late 1990s, i.e. 1996 and 2000, that potential growth and productivity growth increased significantly, from 2% to something like 3.1/2. So it took about 15 years for that to happen.
oh yeah. Technological innovation, AI, machine learning, robotics, automation, cloud computing, quantum computing and much more are all buzzing around. But productivity aggregates don’t tell you that. US productivity growth is only 1%, slightly down. Will we be significantly more productive in 10 years? I’m pretty optimistic. I am a productivity optimist and a technology optimist. But I think there is a meaningful delay. And the idea that AI and technology will boost economic growth in the next few years seems far-fetched in a way.
In fact, many other negative aggregate supply shocks such as deglobalization, decoupling, derisking, immigration restrictions, population aging, geopolitical recessions, climate change, cyber warfare, global pandemics, etc. It is an age when factors exist. In other words, there are many stagflationary factors that actually constrain growth and increase production costs. In the medium to long term, technology will be deflationary. But we may face stagflation for a decade until we see the bright light of technology and AI boosting growth and curbing inflation.
– Doctor, I need a drink after that. Even when we’re thinking about all these risks, specifically the timeline of when we’re going to be more productive in the next 2-3 years plus his 10 year time span you showed long-term impact over time. Where does regulation intervene?
Nouriel Robini: We know that AI has many side effects that may require regulation. One of them could be excessive oligopolistic or duplicitous concentration. The second is misinformation and disinformation, which can influence elections and other things. But there are other side effects as well. AI could increase the economic pie and lead to permanent technological unemployment, first among blue-collar workers, then white-collar workers, and even some creative classes.
These innovations are also capital intensive, buying skills and saving labor, which can increase income and wealth inequalities. So if you own the machine, or the capital owns the machine, you’re good to go. For the distribution of the top 10% skills, education in human capital, AI will improve productivity.
If you are low or medium value add, blue collar and white collar, your job and income are increasingly threatened by technology. Therefore, we need to have a larger social safety net, tax the winners and redistribute that income to those left behind to also address the socioeconomic impact of technology. Naturally, therefore, there will also be negative side effects that require sensible regulation.
– What we’re getting here is looking at, and possibly through, another big event that could have a big impact not just on the US economy, but on the global economy. And that is the 2024 presidential election. It’s already starting to pick up. We would love to hear your thoughts as we consider what could happen here and what impact it might have.
Nouriel Robini: that’s right. Political uncertainty will lead to policy uncertainty. It’s not just policy and economic policy certainty. Of course, Trump’s economic policy will be very different from Biden’s. But there are also geopolitical implications. If Trump was in power this time, I would say, Russia would have already taken over all of Ukraine, and Russia’s policy on the Russian-Ukrainian conflict is something we don’t care about. It’s like
Will he be more aggressive than Biden against China? Probably so. The Cold War is getting colder and colder. We have to find a way of life with China. If this conflict were to escalate, it could eventually lead to a bitter war. So, not only are there differences in both economic, tax and regulatory policies, but there are also differences in foreign policy and geopolitics, which of course have significant implications for economies and markets. And overall, policy uncertainty is not good for the economy.
– Nuriel, I want to hear from you. Despite the allegations raised, former President Trump has become the frontrunner for the Republican Party, but given the circumstances and what could potentially happen, what does the United States mean in terms of superpower status? Does it matter?
Nouriel Robini: Well, I would say it challenges the US superpower status on several dimensions. The first dimension is that we need to develop allies. And when Trump was in power, he had a condescending attitude towards Europe, to say the least. He even said he supports a split between the eurozone and the European Union.
I don’t know if he supported NATO expansion. I don’t know if he would have supported the brutal Russian aggression against Ukraine to be as aggressive as we are right. And his attitude has always been that of a dictator, not really friendly with the liberal democracies with which we must be our friends and allies in order to have not only hard power but also soft power. rice field.
That’s why I fear that President Trump will lead to further divisions within the country for the first time. More partisanship. Unfortunately, there is a risk of violence. But it will also divide the United States in terms of its own soft power relative to its allies, relative to the global South, and relative to the world. That’s the risk we face.
– Last while you guys are here. Many of us, especially in the Northeastern United States, recall what we saw last week. Wildfires in Canada ultimately took a toll on air quality here in New York and in several other states as well. BlackRock CEO Larry Fink highlights climate change as a risk and urges preferred investors and companies to commit to investing in sustainable solutions thinking. How important do you think these solutions are as an economic overhang?
Nouriel Robini: It is clear that climate change is getting worse and we need to do something about it. The good news is that there are some promising technologies. Of course one of them is playable. And we need to invest more in wind and solar. The second is carbon capture and sequestration. Third, over time, clean and even green hydrogen may become economically viable. And perhaps in the medium term, the killer technology could be the fusion that allows us to produce unlimited energy at low cost with net zero emissions.
But we need to invest in these new technologies. The good news is that passing the IRA will provide hundreds of billions of dollars. Some say up to trillions of dollars in incentives will be invested in various green, renewable and other technologies that will accelerate the green transition we need. So the situation is pretty ugly and needs to be worked on further. But we have the technology and tax incentives to accelerate these necessary green transitions.
– have understood. must be left there. It’s always great to have you here. Thank you, Nouriel Roubini. Professor Emeritus, New York University Stern School of Business. Thank you.
