Nobel Prize-Winning Economist Sees Era Of "Permacrisis" Ahead | Michael Spence (w/ Adam Taggart)
Nov 9, 2023
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Nobel Prize-Winning Economist Michael Spence discusses the permacrisis and broken approaches to growth, economic management, and governance. They explore the challenges faced by the global economy, increasing debt levels, policy mismatches, potential damage to balance sheets, and the transformative potential of digital transformation, biomedical science, and the energy transition.
The permacrisis is caused by broken approaches to growth, economic management, and governance, but can still be repaired.
Scientific and technological revolutions, such as digital transformation and energy transition, offer opportunities to address global challenges and bring positive change.
The workforce should carefully manage the pace of technological advancements, understanding the limitations and potential errors of AI systems, while embracing new opportunities for societal benefit.
Deep dives
The Challenges of the Global Economy and Society
The podcast discusses the interconnected tangle of challenges faced by the global economy and society. This predicament, referred to as the permacrisis by economist Michael Spence, includes issues such as supply constraints, higher interest rates, higher costs of capital, lower valuations, and a difficult transition from a highly indebted world. The podcast emphasizes the need to address these challenges to ensure a better future for individuals and the world as a whole.
Technological Revolutions and Potential Solutions
The podcast highlights the presence of three powerful scientific and technological revolutions: digital transformation, biomedical science, and energy transition. These revolutions offer opportunities to confront global problems and bring about positive change. For example, solar energy has become significantly cheaper in recent years, making it more competitive as a sustainable energy source. The podcast also mentions the transformative potential of generative AI, which has the capacity to revolutionize various industries and contribute to a productivity surge. By leveraging these technological advancements, individuals and societies can adapt and address the challenges they face.
The Importance of Understanding the Impact of Technology on Employment
The podcast delves into the topic of technological displacement and its implications for the workforce. While acknowledging the concerns about job displacement caused by automation and AI, it emphasizes the need to carefully manage the pace of technological advancements. The podcast points out that not all AI progress leads to human job replacement. Rather, it highlights the importance of understanding the limitations and potential errors of AI systems. Furthermore, the podcast encourages embracing the possibilities offered by technology and exploring new opportunities that arise, allowing for a balanced approach to ensure societal benefit.
The Transition to a New Global Economic Regime
The podcast discusses the transition to a new global economic regime characterized by supply side constraints and declining economic growth. This transition is expected to result in lower valuations and investors may need to adjust their expectations about market returns.
Factors Influencing Secularly Higher Inflation
The podcast highlights several factors that are expected to contribute to higher inflation in the future. These factors include the fading of the emerging economy growth story, population aging, changes in labor market behavior, and restructuring of global supply chains. These factors suggest a shift in the inflationary environment.
Michael Spence, recipient of the Nobel Memorial Prize in Economic Sciences, sits down with Thoughtful Money host Adam Taggart to discuss the findings of his new book "Permacrisis: A Plan to Fix a Fractured World" which he co-authored with Mohamed El-Erian & Gordon Brown.
Spence explains how at the heart of today’s "permacrisis" are broken approaches to growth, economic management, and governance. While these approaches are broken, they are not beyond repair. An explanation of where we’ve gone wrong, and a provocative, inspiring plan to do nothing less than change the world, Permacrisis: A Plan to Fix a Fractured World, written with Reid Lidow, sets out how we can prevent crises and better manage the future for the benefit of the many and not the few.
The longer a problem goes unresolved, the worse it will get; that’s what happens in a permacrisis – and that’s why we must act now.To learn more about what Adam Taggart has in store for this new Thoughtful Money channel, go to his Substack at adamtaggart.substack.com
#inflation #interestrates #recession
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