Most critics of President Donald Trump consider him the ultimate threat to American democracy. But to Nobel Prize-winning economist Daron Acemoglu, Trump simply had a fever, the result of an infection that had been brewing for years before he rode the golden escalator to declare himself president.
The MIT economist has spent decades studying the roots of economic and political decline, specializing in how institutions foster inclusive growth or succumb to extractive ones. In the 2012 book Why Nations Fail: The Roots of Power, Prosperity, and PovertyAcemoglu and co-author James A. Robinson argue that countries are what they are because of their political institutions. In 2024, Acemoglu, along with Robinson and Simon Johnson, was awarded the Nobel Prize in Economic Sciences in recognition of how political and economic institutions shape prosperity.
Acemoglu argued that while Trump’s authoritarian tendencies are weakening the country’s institutions, the president is not the source of broader structural problems. He warned that China was on a serious path and outlined two shifts related to the development of artificial intelligence that he believed were crucial to avoiding further recession: combating economic inequality and mitigating job losses. “If we go down this path of destroying jobs [and] American democracy will not survive if more inequality is created. ” wealth.
1: Rising economic inequality
Acemoglu said AI-driven job losses could be catastrophic and further exacerbate inequality. He pointed out that the current level of wealth inequality in the United States is unprecedented, and traditional policies have failed to close this gap. “We probably need a wealth tax because anything else we do today would still result in a huge wealth gap in this country.”
The economist pointed to California’s proposed “billionaire tax,” a ballot initiative that would impose a one-time 5% wealth tax on all individuals in the state with a net worth of $1 billion or more. But the economist said even that wasn’t enough. “It’s not enough to just tax the rich,” he said. “You really need ways to include workers of all skill sets in the growth process.”
But AI proponents say Acemoglu’s diagnosis of AI development is counterintuitive. Adam Thierer, a senior fellow at the think tank R Street Institute and a long-time advocate of technological innovation, believes that artificial intelligence will create opportunities and drive the economy into the future. “The way we get new and better jobs and opportunities is through technological advancement in society and the economy,” Tiller told wealth.
