[Music] Americans are grappling with the complexities of economic growth, technology, and their impacts on society. This week on Hardly Working, Brent talks with Daniel Susskind, who explores these themes in his latest book, Growth, A Reckoning. Together, Brent and Susskind discuss the historical context of growth, the role of technological advancements, and Susskind's views on the need for policies that better align economic incentives with social values. We hope you enjoy this conversation. [Music] Daniel Susskind, thanks for joining us on Hardly Working. It's such a pleasure to be with you. Thank you for the invitation. Likewise, fascinating book. Why don't you tell us you've been writing a lot on work or the last decade or more, and particularly as it relates to artificial intelligence and some areas, and now you're on this topic of growth, which I think is fascinating. Why don't you talk to us a little bit about where your idea for this book came from? Sure. I mean, there are very few things that politicians agree about today, but the idea that we need more economic growth is one of them. So in the UK, worklessness and homelessness arising, public services are backlogged and broken, average real wage is the best measure of our collective prosperity, haven't really changed for about 15 years in the UK, and I think many countries around the world have similar growth-related difficulties. So on the one hand, there's this sense that we desperately need more growth, but on the other hand, there's also this sense that if you look at many of the great challenges that we face today, whether it is the impact of technologies like artificial intelligence, on work and society, all climate change, all growing inequality, all the loss of valuable local places and communities, what you see is that growth is often, or the pursuit of growth is often in the driving seat for those challenges as well. And so we face this growth dilemma that on the one hand, growth is associated. It turns out with almost every measure of human flourishing, richer economies have lower levels of poverty, better education systems, better health outcomes and so on and so on. But on the other hand, growth also appears to be associated with many of our greatest challenges, and it seemed to me this growth dilemma of which artificial intelligence and its impact on work and society is one part. This growth dilemma is one of the great challenges of our time, and I wanted to spend some time thinking about it and what we ought to do about it. Okay, so big challenge growth, we can't live without it, can't live without it. So walk us through the central pillars of your analysis and your thinking on how to unpack that challenge. Sure, well it's a book of two halves, the first half is a sort of intellectual history of the idea of growth, which I think is really important for thinking about what we then ought to do in practice in the second half of the book. And there are various, I think, interesting things about economic growth. One is, for instance, that before the 1950s, almost no economists, politicians, policymakers, anybody really was talking about the idea of economic growth as a policy objective. But today it sits right at the centre of our common lives, the fate and fortunes of politicians rise and fall depending on what happens to the level of growth domestic product, GDP. But it's a very, very modern idea. Another surprising thing is how mysterious the process is, despite its extraordinary importance and despite the confidence with which policymakers and politicians talk about the idea of growth, it's deeper causes remain fundamentally mysterious. It is a great mystery. I also just think it's completely fascinating how recent a phenomenon is, leaving aside its sort of mystery and its, you know, the fact that politicians have only turned to it recently. In most of human history, there was none. For 300,000 years, life was stagnant. You know, whether you were a hunter gatherer in the Stone Age or a labourer working away in the 18th century, your life from an economic point of view would have been remarkably similar, sort of relentless struggle for subsistence. But it only began really 200 years ago, 250 years ago. So the first part of the book is sort of this intellectual history of the idea of growth. And what I try and do is pick out the little that we do know, and I think there are some important lessons that we can draw from all the uncertainty and indeed the novelty of the idea of growth for thinking about the future. And then the second half of the book is what we ought to actually do about it. Well, I wanted to dwell a little bit on this question of our attention to growth. It's interesting that you cited, you know, sort of the 1950s as being a kind of turning point. I mean, that makes sense to me, in large part, because growth was such a critical issue at that point, with the entire world recovering from the effects of a devastating world war. And the need to rebuild a Europe and to stabilize an entire planet that had been destabilized and put hundreds of millions of people's lives at risk beyond the world. So that makes sense to me, like growth was extremely important. And I mean, I think you agree with this that growth has remained extremely important as a mechanism for reducing poverty and improving standards of living for everyone. So I just want to, your position is that we've kind of played that out. We've played out growth as a necessity. And growth is now, if not more optional, that it needs to be better tailored to our circumstances. So I think, yeah, you're exactly right, that the 1940s, that growth, the story of growth as we understand it as a sort of political priority begins. You know, sitting here from the British point of view, one of the great questions when you're at war is how much of the economy, how much of the economic pike and you slice up and put towards the war effort. And amazingly, those numbers weren't reliable versions of those numbers weren't available in the 1940s. In the UK, it's John May 9, Cain's in the US, Simon Cousinets in various ways contribute to a measure that of course becomes known as GDP. But then of course the hot war of the Second World War gives way to the Cold War. And that turns the pursuit of ever greater levels of GDP into a real priority. The conflict between the US and the Soviet Union, there weren't really traditional measures of who was winning in that war to rely upon, you know, soldiers, last territory gained and so on. And growth in what was happening to GDP figures became a sort of proxy measure of who was most successful, particularly in the sort of battle of ideas that was going on as well between the sort of market-based system and the plan system. I think we're in agreement that is that, is that the movement of heat and conflict in the 40s, 50s and 60s. On the point about whether or not we have, whether or not something has changed in the sort of nature of growth or our attachment to it, the argument of the book is that we have in the second half of the 20th century in a way neglected the full price of growth, that growth as well as the extraordinary prosperity that it brings and all the different measures of human flourishing that it's associated with also has come an at enormous, at an enormous price. Not just in terms of the damage it has done to the environment, but also in terms of, you know, these new technologies like artificial intelligence destroying work and politics, the inequalities.
that are associated with growth in the second half of the 20th century and the loss of local places and communities particularly through the pursuit of growth via globalization. And so it seems to me we cannot go on as we have done in the past. So then the question is what should we do? And the first thing that you're met with if you take that question seriously is the so called degrowth movement who say that if growth is the problem then less growth is the solution. And my view on that is that it's not just wrong but that it would be a sort of catastrophic mistake. One of the great acts of self-harm that humankind could have flicked upon itself it would have if it were to deliberately pursue less growth. And so I spent quite a lot of time trying to understand where this degrowth movement came from, what it really stands for, what its merits might be but also recognised just this fundamental if you take it seriously just how damaging it would be. And in response to that I try and chart a different course. So this really gets to the nub of research, I think what my issue might be with your approach here which is to what extent does and I don't want to put words in your mouth but it sounds like kind of managed growth. To what extent is the desire to try to manage growth kind of at war with human nature which we seem to have an inbuilt desire or tendency to want to improve our own personal situations relative to our standard of living. And that seems to be at least half of the equation when it comes to market driven growth. It's in part our innate social behaviour wanting to connect to other people, trade, comparative advantage, all of these principles that we've gotten used to thinking about in terms of describing what goes on in the economy. So it's partly our social nature and it's partly our desire to improve our lot in life. It's both self-interest and other interest that combine to create free trade and market economics and growth because people want a better life for themselves for their children. So what do you make of that? I think we're in closer agreement than at first glance it might appear because those instincts, those that sort of human capacity is precisely what I'm wanting to, what the book is arguing that we ought to channel but just in pursuit of slightly different ends. Let me give an example. One of the great costs to growth is the impact that growth has on the environment, that the technologies we use to increase material prosperity also tend to use fossil fuels, tend to emit carbon dioxide and have a harmful impact on the environment. So let's just take that setting and go back to 2007 when the Stern Review was published in the UK which was the first report of its kind into the sort of economics of climate change. And one of the central conclusions in that report was that it would cost 1% of GDP a year to reduce emissions by 80%. In other words, there was a strong trade off between growth and protecting the climate. If you wanted to protect the climate, you had to pay a price in terms of growth, 1% of GDP a year. The next year Nicholas Stern came forward and said, "Actually no, I've got it wrong. Climate change is worse than we fear. It's actually going to cost those 2% of GDP a year to reduce emissions by 80%. In short, the price had increased. The trade off between growth and the climate had got worse. Fast forward though to the year 2000. And if you look at the work done by the Climate Change Committee, which was the team of experts tasked with briefing the British government on how to respond to climate change, one of the conclusions of their work was that to completely eliminate emissions, so not simply reduced them by 80%, but completely eliminate them, would now cost just half a percent of GDP. In other words, the price of protecting the environment in terms of the growth we'd have to forego had got far less." And so the big question is why is it that we can now today respond to the challenge of climate change at a far lower price than people thought, say 15 years ago, people would have thought was imaginable 15 years ago. And the answer to that is bluntly technological progress. That the last 15 years have seen not simply a technological revolution, but a green technological revolution. The sorts of technologies that we are able to draw upon now, particularly in the world of renewables, not only promote growth, but they also protect the environment at the same time. So at a deeper level, what's happened is that 15 years of changes to taxes and subsidies, changes to laws and regulations, and changes to social norms with respect to the climate too, have just dramatically changed the incentives that people face in the market economy, creating and there's been a really strong incentive not just to develop new technologies, but to develop new technologies that are green rather than dirty. And you know, solar panel is solar energy is the great example of this. It begins in the 1970s as a sort of tool of last resort for generating electricity in lighthouses and out of space, but today it's completely commonplace. And the reason it's commonplace is because there's been an exponential decline in the cost of generating electricity via solar energy from about $100 per watt to about half a dollar per watt today and there's been an exponential increase as well. And the spirit of the book is that we ought to be trying to change the nature of the technologies that get developed in society so that they not only promote growth, but also protect the other things that we care about, not just the environment, but also the availability of good work, the functioning of our political system, the level of inequality in society and so on. And we can do this by channeling exactly the kind of you know, human sort of innate human capacities that you described at the outset, the sort of boundless capacity for human creativity and invention. The argument is not that we ought to try and put a lid on those things or try and restrict them or try and clamp down on them, but it's instead we ought to try and redirect them towards other ends that we might think of valuable society not simply. So just dwelling on the solar example for a second, how much of that phenomenon of radically reducing the price of, reducing the price, improving the efficiency of solar technology was the product of market forces in terms of rising energy prices. How much of it was due to sort of central policy, centrally made policy decisions to direct investment into the development of those technologies. You know, I guess the question I'm asking is, doesn't the market have within itself the tendency to drive the kinds of changes that we need to see anyway? Yeah, it's a really interesting question and you might, and just on that first point about how changing energy prices might have changed the incentive, incentives to develop these technologies. I completely think that that is an important part of the story. I mean, you only have to look at the Russia Ukraine war and what that did to the price of various you know, price of gas in Europe and to look at the sort of vast spikes in investments in renewables that were done after that to recognize the
that the market, that these incentives change for reasons other than government intervention. I suppose there's a sort of-- there's a few things going on, though. One is there's a kind of what we can think of as almost like a sort of neutrality fallacy, that the idea that if we don't do-- if the state doesn't do anything, then in some sense it's being neutral with respect to what particular ends people might value, whether it's growth or other things that they might care about. A good example of this is thinking about the debate about AI and its impact on the labor market. We know that technologies like AI can have two different impacts on the labor market. On the one hand, they can substitute for workers, replacing them at particular tasks. Or on the other hand, they can complement workers, making them more productive and more effective at the work that they do. One of the interesting things about the US tax system is that in every single year since 1981, the effective tax rate on labor on workers has been higher than the effective tax rate on machines. In other words, at the margin, the US tax system has created an incentive to develop the sorts of technologies that replace rather than complement human workers. And that's an example of an accidental incentive in the working world. But I think if we care, for instance, about the availability of good work, that's the incentive that we ought to be paying more attention to. Yeah, I mean, I spend a lot of time thinking about that. The AI issue and tax treatment of investments in plant equipment versus human capital. And I agree there's a pretty-- the government has its finger, has its thumb on the scale here. Knowingly, a witness layer unwittingly has a finger on the scale for promoting automation. And my view is that the tax treatment-- I'm not interested in raising anybody's taxes, but I do think that tax treatment should be equal between those things. Make the decisions. The businesses are making about where to invest their capital, really built around all of the market conditions, including labor inputs versus tangible capital on the same plane field. And then you're letting technology develop at the rate that otherwise would minus the additional incentives that have employment effects. So I agree with that. That we're, in the sense, we're potentially choosing more displacement of human labor, pardon me, via the tax code. And we ought to equalize that. So yeah, I suppose the more provocative question is then ought we to tip the scales in the other direction. If good work is something that we value, the availability of well-paid work, there's a source of meaning of fulfillment and so on, should we tip the scales in the other direction? Should we create an incentive and assist and to encourage not simply that these things are treated equally, but that we encourage business leaders and entrepreneurs to develop technologies that actively complement rather than substitute. We ought to put a bias in the system towards the creation of good work rather than the destruction of it. Just another example of this in action. It's not simply about taxes and subsidies and laws and regulations. I think the issue of social norms and cultures really important as well. I spend a lot of time with computer scientists. And one of the interesting things about that field is that the benchmark for success in computer science is human parity. You are celebrated as a computer scientist when you build a system that can outperform a human being. When you build a system that can outperform a human doctor or a diagnosis or a human lawyer at writing a legal argument. That's when you get the slap on the back. That's when you get the published articles. And crucially, that's when you get the research funding and newspaper headlines and so on. And so there's an argument to say, well, shouldn't we be trying to-- shouldn't research bodies be trying to change that incentive? Again, if you think the good work is something to be valued, should we not encourage those at the Vanguard, developing these technologies to be developing them in a direction that help workers rather than harm them? Now, in a sense, these are-- I'm phrasing all of these as questions because I don't want to suggest that I have the answers. These are not technical questions. These are moral questions about what we ought to value. What I'm trying to do is say to policymakers, look, the direction, our direction of travel in terms of the particular types of technologies that we develop and so the sorts of growth that we promote is not fixed. The choice that we have is not simply between more or less growth, but it's different types of growth. And by changing the incentives that people face in the market, we can change the types of technologies that we develop and change the type of growth that we get as well. So I guess that's really the heart of the issue is we don't like-- what I-- and I'm going to exaggerate this just for a fact-- but we don't like the effects of a market-driven system that focuses on returns to investors, increasing growth. And because we feel like A, there are these negative externalities related to, say, the environment. But there are also negative externalities in terms of impact on people and communities. What makes you think, though, that you're going to-- that you could get a better result by substituting-- by substituting a centralized policy-making process in favor of the outcomes that would occur without those interventions? Yeah. So at best, what we have at the moment is a system where economic incentives are determined by individuals acting as consumers in a marketplace. I think there is a difference between what consumers in a marketplace value and what those same individuals value when they act as citizens in a society. And I think there is an opportunity to change the-- not to-- I'm not someone who says we ought to dismantle capitalism or get rid of the market-based society. I think the market and capitalism are an extraordinary tool, an extraordinary invention. It just seems to me that at best, the incentives that we have in the market reflect market value, consumers in a market rather than social value, citizens in society. That's at best. There's also the fact that the government, of course, act present, intervenes in lots of ways and a sort of haphazard and often act, as we've been suggesting, often accidental way, to change those incentives. So at worst, we've got not only that mismatch between private value and social value, but then we've also got all these distortions introduced by the government. And what I'm saying is that, again, at least what the government should do is look in a more careful, structured way at how the incentives that it's interventions present creation.
are shaping the sorts of technologies that we develop. And I think the example that we were just discussing about how the US tax system encourages automation is a really good example of that. But if a more ambitious government could then say, well, once you're once addressing that, there's then this issue of the mismatch between what it is that individuals value when they're acting as consumers or what they value when they're acting as citizens. And I think as sort of an interesting and important terrain for policymakers and politicians concerned about the sort of growth that we are currently pursuing in terms of all its harmful effects and other things that we care about, I think there's an opportunity there in narrowing that mismatch between those two different types of value. - So let me put my libertarian baseball cap on here firmly and say, so what you're arguing is that government has intervened in the economies in a way that have distorted that endorsed a set of both economic and social values around growth that have created all these problems that we were experiencing in equity or inequality and environmental challenges and unsustainable growth trajectories and so on. And that the solution to that, the solution to the problems generated by those interventions is more interventions. - I'm afraid I'm not gonna fool it in that wrap. - No, no, no, no, no, no, no, no, no, but it's a really helpful. In setting out this idea that the government interventions currently create distortions, I was trying to create a space where your libertarian self and my less libertarian self could meet in the sense that we can surely agree that there are distortions in the market at the moment that encourage outcomes which we might not think are desirable and for instance the US tax system and its impact on automation, I think is, we can independent of our politics agree that if you care about the creation of good jobs, that's probably not a great situation to have. But what I then want to do is say, okay, well if we agree that the incentives in that individuals face determine not only the amount of technological progress that is generated, but also the type of technological progress that is generated, there is an opportunity for governments, for policymakers to change those incentives and change the type of growth that we enjoy and pursuit of other ends that we care about not simply more material prosperity. And so what I'm trying to do in the book, and it's important just to come back to this, is in a way respond to that incredibly blunt demand that comes from the degrowth movement, which it's an relatively, it was a relatively obscure movement, group of academics ecologically minded, but it spread from their secluded conversations and it's pretty popular now as an idea. They're large parts of the environmental movement sign up to this idea that if growth is the problem then less growth is the solution. And I think they're right that something has to give in the sense that the price of growth is extraordinary in many senses, but I think their solution is just as I said at the start would be catastrophic. And so I am, my project, my ambition is to try and show how we can use the market, use economic incentives to encourage a change in the sorts of growth that we enjoy as a society. - Okay, so I wanted to finish that point up. I appreciate what you said. It comes down to, in my mind, to this idea that we don't have the knowledge, we don't have the scope of knowledge required in order to know what happens, to predict ahead of time, the effects of the policy changes that we believe are necessary to correct problems. Like we never change just one thing. And so it's very hard to predict kind of where we wind up in the chain of events and the actions that flow from a particular policy decision. So is another way of approaching those to say particularly on the social community side of this equation, the environment's, I think, a different matter, but on the social workforce labor community side of the impacts, to focus on rather than in trying to prevent negative effects on those communities or workers or rather than focusing on trying to prevent that that we focus on trying to buffer those communities in the context of change. And the reason I'm asking this is that, you've got, the UK has its problems in the northern regions of England, the US has its problems in Appalachia and other kind of post industrial areas of our country and our economy. And what seems to be, to my mind that was missing was there was never any anticipation of ways in which policy choices were going to affect those communities. And that what we really need are, we can spend our public resources most effectively in supporting those communities through transition rather than trying to prevent the change from coming because change has a way of happening whether we like it or not. So I guess that's my thought on this. I'm not suggesting that we abandon people to the market, to these market forces and let communities rot. But rather that we focus on helping those communities to adapt, to change in the same way that we talk about adaptation, to climate change. - Yeah, yeah. Yeah, I think this issue about the impact of growth on local places and communities is around the world is hugely important. And I think it was a great mistake of the economics profession to not emphasize the negative effects of pursuing growth through globalization, either the economic effects in the fact that there will be winners and losers in a particular country, or indeed the non-economic effects that as we all know, work isn't just a source of income, it's all sorts of meaning and purpose. And that particular industries are a source of cohesion and community. And when those are lost, those sources of meaning community are lost as well. The debate about growth through globalization became essentially a kind of really stylized one where economists just made the argument again and again that free trade would make the economic pie bigger. But neglected to explain how it would then be shared out and again the sort of non-economic cost as well. And this is one of the projects of the book is to show that for certain types of growth, you can't have your cake and eat it, you can't have more material prosperity and also protect the local places and communities, for instance, that are no longer economically necessary to drive growth and that we have to confront those trade-offs. And what you're describing in terms of buffering transitioning and so on. Yeah, I think it's in time.
mildly plausible. But what it reflects is two things. One is a moral view that we ought to prioritize growth over those particular place in communities and two that we are willing to entertain the kind of high costs of helping people transition either in terms of skills or move to different places and so on. And it feels to me these are the kind of questions or issues or tensions that we have neglected, particularly over the last couple of decades, by pursuing growth, you know, just making the overall economic pie as large as can be, as relentlessly as we have done. You know, I don't in the book come to a particular conclusion about whether or not in the case, for instance, of the trade off between growth and particular local place in communities. We ought to do as you suggest and let those place in communities gradually, you know, gradually fade away or indeed protect them with everything we've got. I just point out that these are trade-offs that we have neglected until now and that whatever we decide to do involves difficult moral questions, lots of cost and those are precisely the sorts of things that we ought to be engaging with in thinking about what growth might look like in the 21st century. So tell me how this work relates to your previous work or maybe it doesn't, but I'd be interested in seeing how you see them connected. It does, I mean, in a few ways. I mean, one is the book is, although it's a book about growth, it is fundamentally a book about technology and technological progress and how we might change the type of technological progress that we encourage in society. And in a sense, that's the running theme of all my work. I'm interested in technology and I'm interested in its impacts. I think one of the things I found very interesting were the similarities in the world of artificial intelligence between those who were saying, you know, we need to slow down progress in AI or even abandon it full stop. And the similarities between those sorts of arguments and those in the environmental setting who were saying, you know, we needed to slow down or it would even stop or even go into reverse. That both groups were kind of climbing the same mountain, but from different sort of, you know, points that they were grappling with the same issue. Do we continue the pursuit of prosperity and neglect the sort of costs, either the costs of, you know, particular technologies like AI, disrupting work and politics or in the climate case, particular technologies disrupting the climate? Or do we grapple with this trade off perhaps slow down, or as I said, even going to reverse? So it was some of the activism in these different areas as well that caught my attention too that seemed to have something in common. Well, Daniel, this has been a fantastic conversation, a very provocative, especially for somebody who is thinking in a, it spends his days thinking in a pretty pro-growth mindset to think about, you know, what are the kinds of choices that we're making to get the kinds of growth that we're experiencing? And I recommend the book to everybody. I think it's very interesting, extremely well written and a really valuable contribution to the public debate. So thank you so much for taking time out to be with me today and with our audience. And we just look forward to having you on another 18 months when you put out another fantastic book. It might be slightly longer than 18 months, but thank you very much. Thank you for joining us on this episode of Hardly Working. I'm your host, Brantor Rell, and I hope you tune in next time to learn more about the state of workforce development in America. Be sure to like and subscribe to our podcast. Let us know at
[email protected] if there are any topics you'd like us to cover. As always, we hope you find the job that fits so well. It feels like you're hardly working. [ Music ]
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