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Like it or not, most business leaders, analysts and economists agree that artificial intelligence will play a major role in shaping the future of the American economy.
The next few years will be critical in defining the shape of the AI revolution, and economist and former dean of Columbia Business School Glenn Hubbard worries that the United States is not ready to embrace the obstacles that will come with it.
Before Bell spoke with Hubbard about what he saw as an increasingly dangerous problem that could hold back growth for years to come.
This interview has been edited for length and clarity.
Why is it the right time to refocus on AI and economic growth?
Growth is always the right answer. Everything we want to do as a society—if we want to fight climate change, if we want to rebuild our military, educate and train people—it's all about economic growth. . So why aren't politicians talking about it? Imagine I have a coin in my hand. There's growth to the head, and we all think that's great. But the tail side is obstructed. Economists believe that you cannot grow without obstacles. And because our political class doesn't know how to handle disruption, they have stopped talking about development.
A better idea might be to manage the barrier — actually help people get trained, get educated, support communities, and yet it's missing from the radar screen. The fact that we are interested in growth is hardly surprising. The big wonder is why we don't talk about it. I think the answer is that it is difficult for politicians.
When you talk about disruption, are you talking about the job losses that will come from the overuse of artificial intelligence?
Think of two waves. Over the past three or four decades, technological change and some globalization have slowed job markets and communities across the country. Now look at AI, we will have the same disruption except it will be much faster. We are talking about five years, not 30. And if we can't even handle a 30-year slow process, how are we going to do it in five? We really need to rethink how we manage change. Because of course we want change from AI. The question is, how do you help people?
Big CEOs are already talking about how they are implementing AI in their businesses. Do we really need government help and intervention?
I think it needs some government support because companies will certainly do what is in their own self-interest, to be more efficient or to use AI to revolutionize processes, but it As a company it is not in my power to train my workers for any other type of work. Job is not my only interest.
So you need public policy. I think it's easy and we know how to do it. It's arming community colleges, it's a public-private partnership between businesses and community colleges. It's not that we don't know what to do, but we need to do it. And of course, it won't be free either, the government will have to spend some money.
Many would argue that the Biden administration's CHIPS Act and the Deflation Act have done much to boost spending and spur growth…
I would go up and down. The government's main role is to support large-scale basic research that could lead to the next generation of chips. The question is not for today, but really for tomorrow. We are spending very little on R&D, and research is much better than writing checks to companies that already have a lot of money.
We also need to target and protect those things that we consider important to national defense. But we don't have a checkbook big enough to subsidize everything, that's not going to be the path to recovery. So we need to either go up and support research or go down and try to find tight pockets to subsidize. Both the CHIPS Act and the Inflation Reduction Act have good headlines and leads, but there's a lot of waste underneath.
Inflation is still above the Federal Reserve's 2% target. Won't prioritizing economic development exacerbate the problem?
Most of what I'm suggesting won't be a huge demand driver. It's more about supply-side productivity, so a little less of a concern. But it's still the case that you don't want to keep adding to the deficit. Policymakers will need to make a choice: You can raise some taxes or you can cut some other spending.
A massive tax hike is unlikely during an election year…
Yeah, I'm not expecting that from any candidate right now. But this is really a math problem. National debt payments, which were essentially zero a few years ago, are now as large as defense spending. And so we really have to think through that and the next president has to deal with that. He may not be campaigning on it, but whoever he is, he has to do something about it.
How does the distraction from growth hurt Americans' economic prospects?
This will slow down productivity growth. Generative AI will likely be the biggest driver of productivity growth in the next decade or two, not so much because it's replacing jobs but because it's increasing a person's productivity. But it also means that we have to be willing to tolerate the fact that some firms will go out of business, some people will lose their jobs, and other firms will become very large. Are we willing to do all these things? I would say yes, but I'm not sure our political process is ready to do that.
What will be the long-term consequences if current trends continue?
Social support for our system is eroding and has been for some time. There are many communities and many groups of individuals who do not really feel as if contemporary capitalism is serving them well. And the longer we let it go, the more likely we are to kill the golden goose.
I also don't see why it would be unpopular. If I said, “I'm going to give block grants to communities. I'm going to promote community colleges,” why is that bad? If I am the governor, I like it. If I'm the mayor, I love it. I can't understand why we can't do it.