The Rational Pessimist

In the 2023 book, Power and Progress, by Daron Acemoglu and Simon Johnson, the idea of progress improving productivity, and making everyone better off, is called the “bandwagon effect.” But they argue that in fact powerful elites often hog the benefits at the expense of the many.

Jefferson, in his last letter, wrote that “the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them.”

Acemoglu’s previous co-authored book, Why Nations Fail, similarly distinguished between extractive and inclusive economic systems. In the former, a narrow ruling elite can grab an outsized share of wealth — standard through most of history. Inclusive economies go hand-in-hand with inclusive, i.e., democratic political systems — a very modern development.

Life was revolutionized by the invention of agriculture and animal domestication roughly 10,000 years ago, enabling civilization to develop. But that also enabled powerful ruling elites to emerge, monopolizing the fruits of productivity, making most people their tools, and worse off. (It took around 9900 years before agriculture got efficient enough to truly benefit the masses.)

The story with the industrial revolution, starting in the mid-1700s, was similar. This greatly expanded our productive capacity, upon which the powerful could capitalize, together with a new class of industrial and technocratic entrepreneurs. Once more making proletarians their tools, laboring in the new factories — their lives nastier, more brutish, and actually shorter.

Because they had no power, as against the elites. Only, finally, with the advent of more democratic systems were common people able to get a better deal, with greater shares from productivity gains. Introducing our era of mass affluence. In advanced countries, at least, the average person began to live far more comfortably, healthily, and happily.

But this shouldn’t be taken for granted as somehow inevitable, the authors argue. In fact they see it as now unraveling. Mass affluence not only stagnating but going into reverse.

There’s been much negative comparison between a halcyon period of rising prosperity, roughly 1945-75, and subsequent decades, with growing inequality. Those calculations are heavily skewed by exploding fortunes at the top. Yet it’s not so clear that the existence of gazillionaires actually harms Joe Sixpacks. Seemingly stagnating incomes may be too narrow a picture, failing to recognize all the ways advancing technology has improved quality of life for the masses.

Poverty ain’t what it used to be. We take for granted aspects of mass society that simply were not available not so long ago. On vacation cruises I’ve been struck by how very ordinary my fellow passengers are.

But the authors are right that this is not from some law of nature, and even if they overdo their fretting, storm clouds do loom. A sci-fi staple (starting with H.G. Wells) is future dystopia with grotesque contrasts between a few rich and many poor.

I recall one tale with virtual immortality, but you needed government-issued time credits. They became the currency; go broke and your life terminated.

In modern times, the fruits of technological advancement have been widely spread thanks to their tendency to engender new needed tasks, hence more job opportunities. Counteracting Luddite fears. But what’s on the technological horizon now may be different, with AI in particular so omni-competent that work by humans becomes rarely needed. A socio-economic norm of full employment impossible. Up-ending a system wherein a non-working minority could be supported from the incomes of an employed majority.

Again, in past epochs most people were only barely subsisting because they lacked the political power to get a better deal. Mass affluence has been the product of democracy. But now democracy too is faltering. Just when broad populations may no longer be able to support themselves through work.

This is what makes our democratic crumbling so scary. People are witlessly chucking away their power, succumbing to the misguided allure of an “only I can fix it” strongman. Giving up control to his billionaire cronies.

One takeaway relevant here: propaganda works. I’d like to think people see it for what it is. But no. The book relates a study of Chinese students, indoctrinated with the government line and cut off from outside information. Ones given special incentives to view it changed their opinions. But most weren’t even interested. The authors see us less in 1984 with pervasive censorship than Brave New World where people are raised from birth to accept their status quo and to lack curiosity.

The brain simply tends to believe whatever information hits it. Disbelieving takes more effort. We evolved in a world where propaganda wasn’t even a thing, so we’re not equipped for one increasingly awash in falsehood. Especially with authoritarians cunningly exploiting it to cement their rule.

Meantime the authors see the whole AI push as basically undemocratic, again really promoting the interests of a narrow elite — who falsely imagine this serves the general good. Yet oddly, for all their negativity, the authors actually don’t see AI as threatening jobs massively. They don’t even think AI passes the Turing test for “intelligence.” (I’d say that horse has long since left the corral.)

But the Trump response is precisely the wrong one — a fixation on manufacturing is half a century out of date, that’s not our route to a broadly prosperous future. At one time the vast majority of workers were needed in agriculture just to feed ourselves. Greater farm efficiency freed up all those human resources to produce other things. More efficient manufacturing then similarly made workers available in services. AI capabilities will likewise free up vast resources for other uses. Our emphasis should be on finding ways to utilize those resources in different ways.

There’s much teeth-gnashing over what Democrats should stand for. We’re likely to need a new societal dispensation. It’s long been clear government taxes too little and the richest get off too cheap. They can pay far more without harming the economy — and it would be fair, given how they benefit from society. That can pay for a non-dystopian future of broad human flourishing.