Bloomberg's David Weston spoke with Larry Summers, the former US Treasury Secretary, and Steve Ratner, the CEO of Willet Advisors, to discuss the changes that will all experience with AI, as well as some of the consequences too.

Bloomberg's David Weston spoke with Larry Summers, the former US Treasury Secretary, and Steve Ratner, the CEO of Willet Advisors, to discuss the changes that will all experience with AI, as well as some of the consequences too.

I think there are two things that have to be added to the AI conversation. The first is that technological change really does have some major distributional and opportunity consequences. When I first heard, was first exposed to these arguments as an undergraduate student at MIT in the early nineteen seventies, there were people explaining about how terrible automation was going to be, and then there were the smart people for me at that time, personified by Nobel Prize winner Robert Solo, explaining that ultimately things evolved and new jobs were created and this was progress and it's all right. Just one thing. In the nineteen sixties, ninety six percent of American American men twenty five to fifty four were working and only four percent were not. Today it's more like fourteen percent who are not working.

I think there are two things that have to be added to the AI conversation. The first is that technological change really does have some major distributional and opportunity consequences. When I first heard, was first exposed to these arguments as an undergraduate student at MIT in the early nineteen seventies, there were people explaining about how terrible automation was going to be, and then there were the smart people for me at that time, personified by Nobel Prize winner Robert Solo, explaining that ultimately things evolved and new jobs were created and this was progress and it's all right. Just one thing. In the nineteen sixties, ninety six percent of American American men twenty five to fifty four were working and only four percent were not. Today it's more like fourteen percent who are not working.

Are there things we should be doing right now that we fail to do with automation and with globalization? To think about those distributional effects potentially AI to make sure that we bring more people along with the progress.

Are there things we should be doing right now that we fail to do with automation and with globalization? To think about those distributional effects potentially AI to make sure that we bring more people along with the progress.

Absolutely. Look, I don't think actually Larry and I really disagree. I understand the problem he's talking about. It actually relates to automation a lot, and also to trade. And where I think, frankly, the economists and Larry may jump down my throat for this, but I think the economists got it wrong on trade, which is similar in a lot of respects to automation or other technological improvements in terms of its impact, is that trade had huge macroeconomic benefits for the country. We missed the marcroeconomic impacts those workers in Flint or Detroit or in Ohio. Some of their jobs were and I actually just read something the other day, you know, rough justice. Maybe half their jobs were lost to automation, the other half were lost to trade. And didn't we had this little trade adjustment assistance program which basically did nothing. And we have not really done a great job as a society both in getting the benefits of technology into the hands of everybody. There's been this lack of wage growth commensurate with the productivity growth over a fairly long period of time. Now as well as individuals and finding them things to do where they can be more productive and happier.

Absolutely. Look, I don't think actually Larry and I really disagree. I understand the problem he's talking about. It actually relates to automation a lot, and also to trade. And where I think, frankly, the economists and Larry may jump down my throat for this, but I think the economists got it wrong on trade, which is similar in a lot of respects to automation or other technological improvements in terms of its impact, is that trade had huge macroeconomic benefits for the country. We missed the marcroeconomic impacts those workers in Flint or Detroit or in Ohio. Some of their jobs were and I actually just read something the other day, you know, rough justice. Maybe half their jobs were lost to automation, the other half were lost to trade. And didn't we had this little trade adjustment assistance program which basically did nothing. And we have not really done a great job as a society both in getting the benefits of technology into the hands of everybody. There's been this lack of wage growth commensurate with the productivity growth over a fairly long period of time. Now as well as individuals and finding them things to do where they can be more productive and happier.

Lurie, what about it? Did the economists, and yes, the policymaker in Washington, it sort of let us all down with respective both automation and trade.

Lurie, what about it? Did the economists, and yes, the policymaker in Washington, it sort of let us all down with respective both automation and trade.

We should have done more to cushion the various changes associated with trade. I agree with that, I'm not sure I agree with Steve's quantification, and I think that a full calculus on trade to recognize a large number of benefits in terms of jobs created and in terms of real wages enhanced. But that brings me to the other point I wanted to make about AI, and I don't know for sure about this, but if my suspicion is right, it's very big. Most of the technological changes we've had before came for working people doing relatively routine things. They were automatic ways of picking cotton that came from agricultural workers. They were things that replaced typists or telephone operators. As Steve mentioned, I have a suspicion that AI is coming for the cognitive class. And part of the reason you're seeing such hysteria now is that it's the people who write articles and their friends, the people like the three of us, who are more at risk from AI competition than has been the case with most of the technological innovations in the past. I would say that there's a substantial chance the AI is going to be much more of a threat to IQ than it is to EQ. It will be a very long time before AI will replace many of the kinds of direct physical work. Think of working in a garden, for example. So I have a suspicion that the distributional consequences of AI for the bosses versus the boss may be very different than the just retributional consequences of many of the other technological revolutions, and that affects how bosses are going to think about it in profound ways. They're going to be much more scared, and on the other side, may be more benign from the point of view of some of those who've been traditionally left behind.

We should have done more to cushion the various changes associated with trade. I agree with that, I'm not sure I agree with Steve's quantification, and I think that a full calculus on trade to recognize a large number of benefits in terms of jobs created and in terms of real wages enhanced. But that brings me to the other point I wanted to make about AI, and I don't know for sure about this, but if my suspicion is right, it's very big. Most of the technological changes we've had before came for working people doing relatively routine things. They were automatic ways of picking cotton that came from agricultural workers. They were things that replaced typists or telephone operators. As Steve mentioned, I have a suspicion that AI is coming for the cognitive class. And part of the reason you're seeing such hysteria now is that it's the people who write articles and their friends, the people like the three of us, who are more at risk from AI competition than has been the case with most of the technological innovations in the past. I would say that there's a substantial chance the AI is going to be much more of a threat to IQ than it is to EQ. It will be a very long time before AI will replace many of the kinds of direct physical work. Think of working in a garden, for example. So I have a suspicion that the distributional consequences of AI for the bosses versus the boss may be very different than the just retributional consequences of many of the other technological revolutions, and that affects how bosses are going to think about it in profound ways. They're going to be much more scared, and on the other side, may be more benign from the point of view of some of those who've been traditionally left behind.

So Larry, I agree. I agree with that.

So Larry, I agree. I agree with that.

I think it is the cognitive classes as you call them, who are most at risk. I might make a discis I'm not sure. I would think about it as bosses and boss and I'll use it, But I will use this historical analogy to give us a little bit of hope. When I started on Wall Street as a young investment banker, I had nothing. I had an early HB twelve C calculator in my hand. We had no we had no Excel, we had no computers to speak of, we had know nothing. All of our spreadsheets were done by hand. They took a really long time. They had to then be typed up. We'll put the typists aside, and then if I wanted to make a change, I had to start all over again. And now that can all be done with the click of a mouse with an Excel program by anybody with a small personal computer. And yet the number of people doing what I did forty years ago when I started on Wall Street has multiplied since then, and so it became a productivity enhancing tool, not a jobucting destructive tool. I'm perfectly prepared to believe that this may come out a different way. All I'm saying is I don't think we know yet, and I think history is probably still on the side that we will find our way through this in a positive way.

I think it is the cognitive classes as you call them, who are most at risk. I might make a discis I'm not sure. I would think about it as bosses and boss and I'll use it, But I will use this historical analogy to give us a little bit of hope. When I started on Wall Street as a young investment banker, I had nothing. I had an early HB twelve C calculator in my hand. We had no we had no Excel, we had no computers to speak of, we had know nothing. All of our spreadsheets were done by hand. They took a really long time. They had to then be typed up. We'll put the typists aside, and then if I wanted to make a change, I had to start all over again. And now that can all be done with the click of a mouse with an Excel program by anybody with a small personal computer. And yet the number of people doing what I did forty years ago when I started on Wall Street has multiplied since then, and so it became a productivity enhancing tool, not a jobucting destructive tool. I'm perfectly prepared to believe that this may come out a different way. All I'm saying is I don't think we know yet, and I think history is probably still on the side that we will find our way through this in a positive way.