Live Long and Prosper

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The piece reviews Power and Progress by Daron Acemoglu and Simon Johnson, arguing the Information Revolution is following a path similar to the early decades of the Industrial Revolution.
Central claim: globalization and automation since 1980 have been "synergistic, both driven by the same urge to cut labor costs and sideline workers," producing large gains in products and productivity but leaving many workers behind.

Early Industrial Revolution: new technology and machines “did not raise worker incomes for almost a hundred years”; textile workers experienced longer work hours and horrible conditions; coal miners, including children, worked in deplorable conditions.
Later correction: as awareness spread and workers organized, outcomes changed. Example: in the United Kingdom, from 1840 to 1900, wages increased more than 120 percent, surpassing the 90 percent growth in productivity.
Mid-20th century: the three decades following World War II were an era of shared prosperity where technology generated “plenty of new tasks, products, and opportunities,” and labor’s share of national income increased as unions organized.

Since 1980, globalization plus automation enabled global supply chains and new products but often aimed at cutting labor costs.
Consequence: low-skilled workers in advanced economies have not shared in prosperity, producing two-tiered societies.
United States examples:
- “Real wages for most workers have scarcely increased” since 1980.
- Only half of US children born in 1984 earned more than their parents, compared with 90 percent of children born in 1940.
Broader trend: in many countries, the share of labor in national income has fallen, with a corresponding rise in capital’s share.
Social impact: lack of opportunity has contributed to what Anne Case and Angus Deaton call “deaths of despair.”

When technology raises worker productivity rather than merely displacing workers, it can create ample new jobs; the key is workers capturing their share of new prosperity.
Institutional response matters: worker organization and political economy shaped the eventual sharing of gains in prior eras.
Acemoglu and Johnson’s concluding chapter lists more than a dozen steps societies can take, including measures such as “breaking up big tech” and “reform of academia.”
The authors highlight one most important step based on historical evidence: "worker organization"—whether workers will be able to—and be allowed to—organize to improve wages and working conditions.
Current signal: unionization has inched up in many economies, but efforts face opposition from companies and many unionization drives have failed.

F&D Magazine — "Live Long and Prosper" by PRAKASH LOUNGANI, September 2023.

Live Long and Prosper
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