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In this week’s Grumpy Economist Weekly Rant, John Cochrane examines artificial intelligence and the recurring fear that new technology will destroy jobs, destabilize society, and require sweeping new government intervention. He argues that AI belongs in a long line of productivity-enhancing innovations—from the printing press and steamship to the telegraph and airplane—that created disruption but ultimately expanded human capability and economic output.
Cochrane challenges the impulse to treat AI as an imminent civilizational emergency. The US labor market, he notes, constantly creates and destroys jobs, and the deeper barriers to opportunity lie in failing schools, weak higher education, labor regulation, occupational licensing, and other institutional constraints. Rather than launching another regulatory crusade around a future catastrophe, Cochrane argues that policymakers should first address the problems already limiting work, growth, and institutional performance.
Transcript
Hi, I’m John Cochrane, senior fellow here at the Hoover Institution, and welcome to my Grumpy Economist Weekly Rant.
I’m gonna rant this week again about artificial intelligence. AI is one more productivity-enhancing innovation, just like the printing press, the steamship, the airplane, and the telegraph. I don’t have time to go through all of them; you know the list. All of them have worked out fine, with a little bit of turmoil.
Since then, there have been a lot of interesting discussions at Hoover, which have gotten me thinking, and they all turn to AI. AI threatens jobs, everyone says. We need policies to handle the AI that’s coming. Even Elon Musk said recently that the government needs to have a universal basic income to pay everyone because all the jobs will be gone. Just where a bankrupt government is gonna come up with 50 grand a person for each of us, I don’t know, but that sentiment is widely expressed.
As you know, I don’t think any of that’s going to happen. The US economy creates about a million jobs every month, and about 900,000 lose their jobs every month. That flexibility of the US job market will continue.
If you’re worried about jobs, let’s look at where jobs are really a problem: education. Our educational system produces people who can’t read. Our higher education gives people junk degrees. Labor regulations. Occupational licensing. There are all sorts of things in the way of people’s jobs.
But my reflection today is: why is there such a desire for doomsday? Everybody wants to have new policies for AI. Why? Because just around the corner comes AI, which is going to destroy civilization, ruin the economy, and lose all of our jobs. Really? We seem to live in a millenarian cult where we have to atone for our sins, mostly capitalism, because the world is about to end.
Remember the population bomb? Ehrlich died recently. He was the author of the claim that so many people would be born that we would all starve, and indeed recommended a deliberate starvation of many people so that wouldn’t happen. The resource curse: we would run out of resources, and civilization would end. Nuclear power was going to poison the earth, and we would all die. Climate was originally called global warming, then climate change, then the climate crisis, maybe the climate catastrophe. The end of the world is nigh: repent; give up on your capitalism.
Minor ones: garbage was a big problem. We all still go through the daily penance of recycling and trying to stuff everything in Palo Alto into these tiny little garbage bins. We seem to desire some big end-of-the-world problem, and our leaders seem to want those in order to grab power for the government to lead us on a crusade, so long as it’s sufficiently around the corner that nobody can really see it coming.
In the meantime, our government is full of dumpster fires: education, getting the permits, building anything is nearly impossible, taxes, and social programs. And there are real worries. I stay up at night worrying about the next pandemic. Clearly, our public health bureaucracy is not ready to handle a serious new pandemic. I worry about wars. I worry about a political and social breakdown. But none of that is as attractive. Let’s have the regulators go out and fix AI.
So my real lesson for today is: relax. It’s going to be fine. And dear politicians, please put out the dumpster fires before you lead us on some new regulatory crusade.
Thanks for listening. And if you enjoyed my Weekly Rant, don’t forget to click to subscribe.
Read more on this topic:
AI, Society, and Democracy: Just Relax, The Digitalist Papers
John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow of the Hoover Institution at Stanford University. An economist specializing in financial economics and macroeconomics, he is the author of The Fiscal Theory of the Price Level. He also authors a popular Substack called The Grumpy Economist.