“Power and Progress” Technology and the New Leviathan

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

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.

18 thoughts on ““Power and Progress” Technology and the New Leviathan”

    • And it’s not just dispensing largess that givernments fail at.
      Their record at managing tech globally is ridiculously bad. The ITER international fusion research project is a horrible victim of CHEOP’S LAW; both ridiculously over budget and schedule.


      “The ITER project formally began in 2006, when its international partners agreed to fund an estimated €5 billion (then $6.3 billion), 10-year plan that would have seen ITER come online in 2016. The most recent official cost estimate stands at more than €20 billion ($22 billion), with ITER nominally turning on scarcely two years from now. Documents recently obtained via a lawsuit, however, imply that these figures are woefully outdated: ITER is not just facing several years’ worth of additional delays but also a growing internal recognition that the project’s remaining technical challenges are poised to send budgets spiraling even further out of control and successful operation ever further into the future.”

      Best bet is the projected *demonstrator* won’t be ready before 2030 and any functional product before 2050.

      Two weeks ago, one of the US privately funded fusion startups signed up its first customer for fusion generated electricty for 2028. And they might not even be the first.

      It’s not fusion that shows governments inability to understand, much less manage, tech. Nor just democratic nations. Autocracies are worse at it, like everything else.

      In the Space launch business, the european champion, Ariane, zigged when it should’ve zagged, and their disposable next gen Ariane 6 is years overdue and over budget, their last generation Ariane 5 is down to its last launch, their future reusable product is *starting* its paper studies, and they are being forced to (gasp!) rely on the reusable American “broomstick”, the Falcon 9, that has managed 200 consecutive booster landings for reuse, to launch their next two science missions. (Oh, the shame of it!)

      There are dozens of dissection videos on youtube, out of europe, lamenting how their governments stunt their tech companies, forcing even their few startups to relocate or sell to american companies. (Links available upon request if anybody cares.)

      The OP is recommending exactly the wrong thing at the wrong time. It can only destroy american tech at a time when venture capital is getting scarcer and needs actual technical expertise in triaging investment rather than politicizing the funding process. (We’ve already seen what that did to NASA.) Which might be what the academics behind the proposal want.

      • A good chunk of the money wasted on the French jobs program called ITER is American. It’s being noticed at long last. And even local IdiotPoliticians™ are waking up to the futility of government controlled science.


        They still want to keep a hand in the game but at least at a distance, the way NASA had to operate to get back into Space reliably (The private DRAGON spacecraft this week completed more visits (28) to the ISS and more time in orbit (1324 days) than the shuttle.

        This week NASA announced 7 more companies to help develop orbital infrastructure when the ISS is allowed to crash and burn in 2030, in addition to the 3 they chose earlier this year, and three more developing private space stations solely out of their own pockets. All are using technology developed at NASA *last century* that their politician overseers prevented them from deploying. In many cases, like at AXIOM, they are staffed with NASA refugees.

        In other words, all the goodies we are going to get this decade could have been completed and deployed 20 years ago but for the “quality” of government oversight.

        Oversight that is so good that one NASA contractor (Boeing, of course) is being sued for stealing tech from anither NASA contractor, without full documentation, and used it improperly, causing delays and cost overuns, and increasing safety risk. And NASA noticed nothing. (Friends of the party, don’cha know?)

        In short, to the OP: No, no, a thousand times no. Keep the government grubby hands off our future. They’ve screwed up the present enough. Let us at least have a bit of hope.

  1. I understand that, for example, the German educational system already does this.

    Homeschooling is not allowed. Each child gets access to the track their grades and/or interests qualify them for, and the State gets the workers it needs, properly educated for their slot AND appreciated in it, with everybody happy and productive (I haven’t asked any of them, but the German grad student I interacted with way back when seemed okay).

    I would assume Singapore and some other micromanaging countries do the same – we have a long-running experiment in those countries that we could interrogate to quantify the effectiveness of it.

    I would have hated to be pigeon-holed, but then I probably would have still ended up in STEM, where I was doing okay until I got sick at 40, something no one gets to know in advance will happen to them.

    Schools here would have to work a lot better to prepare for this inclusive system, currently failing many of their students, and we’re less homogeneous than the Germans (even with immigration there), and you-know-who would probably be up in (dare I say it) arms over their rights, but maybe it should be an option – at least a kid would have a reasonable profession if they followed the rules? Not my generation, nor my SEM children’s generation, but properly implemented as a citizen’s right?

    • Democracy is based on the assumption that a million men are wiser than one man. How’s that again? I missed something.

      Autocracy is based on the assumption that one man is wiser than a million men. Let’s play that over again, too. Who decides?

      The Notebooks of Lazarus Long

  2. One quibble, PG – there have been many governments over the millennia that have exercised draconian controls over their society (of which economics is only part).

    There is not one single case where the resulting inequalities in wealth and power have been any less than in capitalist and freedom based societies – and usually much, much greater.

    • Corvée comes to mind.
      Taxes and entitlements.
      Lots of ways humans organize themselves so the non-productive can exploit the productive.

      Historically, there have been two kinds of states: the ones where the population belongs to the state, and ones where the state belongs to the populace…for a while.

      We are in the final stages of the latter fighting a transition to the former.
      “A republic. If you can keep it.”

      Keeping the state out of the places it doesn’t belong is a never ending battle and, so far, always ends poorly.

  3. Oh good, the site is back. For a while I was getting a server error.

    Anywho, I choose to believe this is an April Fool’s joke a few months late.

    Daron Acemoglu and Simon Johnson have written a long, eloquent book arguing that … the state … can do a better job than the market of selecting technologies and making investments to implement them.

    Weapon’s grade stupidity, hence my believe this is not real.

    In light of the post on tone, I like this line:

    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.

    Mr. Acemoglu is a prolific economist and a shoo-in for the Nobel Prize

    So can anyone get those now? I thought they were for science? Don’t you have to use the scientific method? A hypothesis must be tested, no? Have we not run real-world tests over and over on their hypothesis? Does no one now remember all those “five-year plans” the Soviets had? Do economists not have to study those? Is it still true that theories must account or all the data and observations you have, and must be falsifiable via tested predictions? How many times does the theory need to be falsified before you abandon it?

    In this thread alone you have SpaceX vs. NASA vs. Ariane. How does one have this ideology while still living in the same time period as these examples?

    In fiction, these sort of people vex me because I require characters to be more complex and plausible, not cartoonishly dumb. My tone would be withering, but I would prefer villains /antagonists to at least have a rational starting point for whatever they get up to.

    • In fiction, characters that stupid serve a purpose: as stand-ins for a similarly stupid real world movement/philosophy.

      The closest example that comes to mind is Mikah, the irritant/antagonist of Harry Harrison’s survival SF DEATHWORLD 2: THE ETHICAL ENGINEER.
      Micah is, like many idiots in the real world, an absolutist and true believer in his own (childhood) mores. And throughout the story he stubbornly sticks to his beliefs despite the reality that they can and will get him killed in the world they are stuck in.

      That pretty much describes the “characters” in the OP: they believe in what they believe, to the core of their bones, and no privately developed safe/cheap reusable rocket or fusion power station will get them to accept the reality that they are wrong, wrong, wrong.

      And what makes them wrong is a lack of understanding of the difference between bureaucrats and entrepreneurs in two areas: area of competence and accountability.

      The primary reason ITER is and always has been a hot mess is that it doesn’t exist for technical reasons (an understanding of the tech) but for geopolitical reasons: the belief that Tokamak fusion will change the world and the change must not upset the status quo so all the governments chipped in to make sure the successful design is *delayed* as much as possible and available to all players so nobody gains an edge over the rest.

      The secondary reason is that those overseeing the government’s investment do not themselves understand the science, the engineering, or the management of multi-billion dollar projects. (The US side is managed by DOE–an agency whose sole job is to write and send them out to friends of the party. Consider: somebody submits to DOE a proposal for a thinly disguised perpetualotion device costing a billion bucks. How far *down* the chain of command would the proposal have to go before landing before somebody that woukd read it, laugh, and send it to the “circular file”? The DOE head, Granholm, has a deep resume…at everything *except* tech: lawyer, educator, author, political commentator, and politician. She’s not at the job because of her technical chops but as a reward for being a good foot soldier for the party, as a stepping stone to other political positions.

      And the third reason is that by the time the outcome of the bureaucrat’s decisions is felt, they’ll have moved on to other pigeon holes. No accountability. It’s not as if they are spending their own money or have to answer to their “investors”. The IRS and Treasury exist to ensure they have an endless stream of money to gift and waste.

      By contrast, the likes of Nadella, Musk, and Altman are either spending their own money (earned by being successful at their business) or their investors’. (Keep an eye on Altman: he not only runs OpenAI but is also a major investor in HELION ENERGY, one of the privately funded fusion companies. He may be the next big tech billionaire the luddites go after.)

      Goverment “managers” are rarely competent in the sphere the control nor personally accountable for their decisions. Which pretty much guarantees that, no matter how many establishment “experts” surround them, their output will be suboptimal at best and disastrous at worse.

      A case can be easily made that regardless of type of regime, goverment mandate is the absolute worst way to allocate limited resources. For autocratic outcomes, look to China’s “tofu construction” projects at home and abroad and the economic history of Russia through the centuries. Government control of vital functions only leads to Idiocracy.

      PS: Getting ready for STARFIELD? 😀

      • Thanks for mentioning Starfield (I have nothing to add or dispute on your subject). I’d been meaning to look it up and kept forgetting when I had a few free minutes.

        I’ll probably pick it up some time this fall or winter after the first half dozen or so critical patches that seem to be the norm in the industry these days…

        • Glad to be of use.
          Starfield Direct dog and pony show:


          September 6 release.

          It was delayed from last year so they pinky swear it will be the least buggy release ever from Bethesday. We’ll believe it when we see it, right?
          I’ll be happy if they stay within the confines of a humans-only 50 worlds milieu.
          I expect I’ll spend the first month prospecting all over to raise cash for my fleet and safehouses. They don’t look cheap.

          Biggest teapot tempest after the show is they’ve capped the XBOX version to 30fps while the PC version depends on the CPU and RAM to do 60fps. (A lot of the fury is coming from the Sony fanbase, griping that it can’t possibly be good if it’s XBOX and PC only.) Business as usual.

          (At the full MS trailer-fest last sunday, the other big splash came from FABLE. (2024). New developer, same british humor. The meme since is that no, no way was that footage realtime in-game. Yes, it was. I liked the vegan giant atop the beanstalk.)

      • Thanks, on the original point this sparked an idea for angle for approaching this sort of character. I can’t go too deep into such a POV, but I’ve figured out how I can make use them without being “mustache twirly,” which is the biggest issue for me.

        Then came the “Squirrel!” moment when you mentioned Starfield. This looks like the spiritual competitor / successor to Mass Effect I’ve been waiting for. Space mysteries! Intrigues! You can fight with a sword! And it all looks so gorgeous. I have a personal deadline the release date intersects, so the point about the patches is going to get me through this. I’ll stay strong …

    • Minor point: “The Prize in Economics is not one of the Nobel Prizes endowed by Alfred Nobel in his will” so no, not for science, no need for the scientific method or hypothesis testing.

      Mind you, Nobel’s will did include the Peace Prize so not everything was supposed to be scientific, though some of the awards for this suggest that its creation was a well intentioned error.

      • Gotcha! And I just remembered Yasser Arafat won the Nobel peace prize, so clearly standards are, um, optional in the prize arena.

        • Obama got one without actually doing anything, just for, ahem, BEING THERE, like Chance.
          And Neville Chamberlaine was nominated, seriosly, in 1939, “saving the peace” by caving in to Hitler.

  4. The problem with this is that just as not all “businesses” and “capitalists” are equal/comparable, neither are all “governments.” Some “businesses” and “capitalists” will, in the present, be better than some “governments,” and vice versa. Perhaps the business perspective will, in the present and on balance, be superior to that of the governments.

    What I worry about is that if there’s one thing that businesses and capitalists always screw up, it’s succession. What they do in the present is one thing; but as bad as governments are at establishing effective successors, businesses are pretty uniformly worse.

    In the end, it’s just different varieties of philosopher-kings to choose between — and Plato, who “invented” them, didn’t want to live in their realm.

    • Disney and LucasFilm are a great case in point on the succession front. You can build up a company, but passing it on to a worthy successor is where companies fail to stick the landing. I don’t have any insight as to why that should be the case, but it happens often enough that the brilliant innovator picks someone who is neither brilliant nor innovative to take over the reigns.

      If I had to guess, it’s the “dance with the one who brung you” factor, where you reward the trait of loyalty to the one who helped you build up the company. Rather than prioritizing having a vision and the competence to execute it. That’s one for the idea file, as “allynh” likes to say.

      • Your explanation is pretty common and yes, most successful businesses have trouble outliving their founder/architect.

        Your examples are good ones. Apple is another, with the non-Jobs reigns being troublesome, and while the current COO masquerading as CEO has been effective at milking the model Jobs used (close follower, high margins, and loads of hype to pretend they weren’t a me2 company) they are headed once more into choppy waters precisely for that model: they aren’t that close a follower of new segments, their margins are the result of goingball in on China, and the public is increasibgly seein through their hype.

        One point, though: the succession “problem” strikes me as a feature, not a bug.

        A dominant company remaining dominant for multiple generations isn’t exactly healthy. Ma Bell and IBM both did it but in the process they ended up being a drag on the evolution of their businesses. (“Nobody gets fired for buying IBM.”

        Dominant companies having a finite lifespan allows younger, hungrier challengers to emerge and succeed. This is an area where, yet again, Europe is an exemplar of what not to do, as the government-chosen “national champions” have grown ossified but still active enough to starve local would-be challengers. A good example of this is Philips, who devolved and divested itself out of relevance, yet no successor emerged.

        In the US there is, by contrast, the chain of silivalley companies serially descended from Fairchild:


        Similar “families” have been spawned by Microsoft and Amazon, both companies that constantly reinvent themselves and opportunistically add new lines of business. As company execs grow in experience, contacts, and wealth, many choose to go out and start their own companies to address areas the established company isn’t addressing. This ensures a constant flow of new blood that keeps the older company challenged, nimble, and effective.

        Elon Musk’s Tesla and SpaceX have both spawned a handful of “child” companies as expatriot execs carry their corporate culture and proceses to their own startups. New Space is evolving nicely while government darling ULA of the guaranteed military launch contracts is so behind the times its co-owners have put it up for sale.

        All that said, not all companies flounder or ossify after their first generation: INTEL has periodically run into trouble–no company is always right in its choices–but manages to reinvent/reinvigotate itself through new leadership. Currently on its third reinvention, adding graphics boards and foundry services. Ford has had its ups and downs and is looking to reinvent itself as an EV car company. They might succeed. Many do, though not always as market masters. IBM itself pivoted to computer services for a couple of decades but recently spun that out to focus on AI and Quantum computers. Not dominant but still healthy.

        It is too early to judge post-Bezos Amazon but as recently seen Microsoft’s third generation is going strong. And, for all his failings, Ballmer’s tenure was nowhere as bad as commonly perceived, Nokia buyout notwithstanding. His real failures were underinvesting in MS Reader, staying out of hardware too long, and above all killing Windows CE just as mobile exploded. Nonetheless, he built the cloud and subscription infrastructure that Nadella is leveraging for gaming and AI. His full story is TBD but if he takes them to $3T the company might thrive into its fourth generation.

        Goverment appears to renew itself regularly but mostly it is an illusion. The deep state is real and most policies cross administrations largely unchanged. A timely example being the China trade tariffs introduced by the last administration and reinforced and extended by the current one. Or the return of isolationism that is now into its fifth disengagement admin.

        Nimblevand effective arevadjectives of no government.

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