Rot Economics - An Interview With MIT’s Daron Acemoglu

Source: Where’s Your Ed At Date: 2024-07-24 URL: https://www.wheresyoured.at/rot-economics-an-interview-with-mits-daron-acemoglu/

Summary

Ed interviews MIT economist Daron Acemoglu to press the case that the tech industry pursues socially harmful technologies while GDP growth masks welfare decline. Core evidence: stalled metaverse, crypto, and generative AI progress; simultaneous mental health crises tied to smartphone adoption; declining productivity growth despite tech advancement. Acemoglu: “economic output does not have any welfare element in it” — profitable innovation can harm collective wellbeing. Ed frames this as “rot economics” — growth without social benefit, driven by management ideology disconnected from human needs.

Implications

• AI financial sustainability. The rot economics frame is the academic underpinning for Ed’s AI ROI critique: GDP-positive, welfare-negative technologies can capture investment indefinitely while making nothing better. Generative AI fits this pattern if adoption numbers don’t translate to measurable productivity improvements.
• Generative AI ROI critique. Acemoglu’s research on automation displacing workers without creating equivalent value is directly cited in later Ed pieces; this interview is the source for those claims.
• Capital markets. Short-term shareholder value optimization producing long-run welfare destruction is the structural critique of the AI investment cycle — the incentive is to sell the story, not to deliver the transformation.