## Café Economics

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**Canonical URL:** [Café Economics](https://www.imf.org/-/media/files/publications/fandd/article/2025/06/cafe-economics.pdf)

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### Tech, institutions, and the limits of progress
- Simon Johnson challenges the assumption that technological improvement automatically yields broad-based progress.
- Improving technology and expanding capabilities of some people "may not necessarily translate into improved living standards for everyone."
- Big Tech innovators tend to focus on improving capabilities for people similar to themselves: "These are highly educated people, mostly white, and mostly men."
- The direction of technological change matters: technologies can be "tilted toward raising the productivity of less educated people or more tilted toward boosting the productivity of highly educated people," and this tilt determines whether job-market outcomes diverge or converge.

### Concentration, the "vision oligarchy," and geopolitical distribution
- Johnson warns of a "vision oligarchy": a small set of people controlling the vision for what technology should do and whom it should serve.
- On geographic concentration of AI spending, Johnson reports that "95 percent of the money being spent on AI development is in the US, 3 percent in Europe, and 2 percent in the rest of the world." (China excluded from that calculation because "we don't know how much it spends on AI.")
- Historical cases show countries can shift from technology recipients to inventors (examples cited: the US in the 19th century; China moving from recipient in the 1980s to producing sophisticated products).

### Risks to democracy, inequality, and populism
- Digital technology has "to some degree begun to undermine institutions."
- Widening inequality, especially where "less educated people feel left behind," can "fuel forms of populism."
- Johnson contrasts the post–World War II US—where "a lot of people's wages rose and the middle class expanded" and inequality "was not the defining characteristic"—with the changed dynamics since "1980."
- Concern: AI, "which is made possible by our institutions, is pulled in a direction that undermines democracy" and can become "relatively or even extremely extractive" so that "A few people get all the value, all the income, all the power."

### Policy direction and prescriptions
- Recognize the distributional consequences of technological choices and "find alternative paths to push technology in a pro-worker direction."
- Priority: "Boosting the productivity of people without a lot of education" both in the US and globally.
- Consider "guardrails around Big Tech's activities" and be ready with "policies and safeguards" to prevent harms analogous to those seen in finance in the early 2000s.
- Encourage broader public engagement to contest and shape the leading-edge "visions" of rapidly changing technologies rather than leaving "1 or 2 or 10 people to drive the discussion."

### Context and credentials
- Simon Johnson's background cited: PhD at MIT; postdoctoral position at Harvard; work with Poland's first noncommunist government; former IMF chief economist in "2007–08"; Ronald A. Kurtz Professor at the MIT Sloan School of Management; winner of the "2024 Nobel Prize in economics."
- Coauthored book referenced: Power and Progress (with Daron Acemoglu).

*Source: Interview with Simon Johnson, "Café Economics," June 2025.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2025/06/cafe-economics.pdf_