Jeffrey Sachs: AI and Geopolitics

The top 18 uh richest people in the United States have something like $3 trillion of personal net worth. >> What happens when artificial intelligence doesn't just change our jobs, but rewires the entire balance of global power? >> You better hurry. Uh if you're depending on your wage labor to get ahead, you don't have a big space ahead to do that. Will it create a new age of abundance or a world dominated by trillionaire elites and a relentless AI arms race? >> The dystopian idea that all the money goes to the top is not an impossible outcome or it really can be an age of abundance. My guest today has been in the room where these decisions get made.

Every American understands that the game is rigged right now. that if you're rich, you own government, and if you're poor, you look on like a helpless observer. Our system is disgustingly broken. Uh, and it's broken by money right now and by secrecy. Professor Jeffrey Saxs, over the past four decades, he's advised more than 100 governments around the world. Time magazine named him as one of the 100 most influential people on the planet and he has authored several bestselling books including the end of poverty and the ages of globalization. In our conversation, we dive into AI's entanglement with the militaryindustrial complex, AI's impact on wages and workers, and whether this technology will lead us toward an age of mass misery or a new era of shared prosperity.

Welcome to the Nick Stanley Show. The next show. >> Before we dive in, just one quick thing. This is a community. You are a part of our journey. And the way we keep it alive is by convincing a faceless, humorless algorithm that we care. So, do us all a favor. Tickle the algorithm by pushing that subscribe button. And in return, we'll keep bringing you brilliant minds like today's guest, Professor Saxs. Welcome to the show. Uh, one thing that really struck me about your career is how early you jumped into shaping the future of nations, and I was just hoping you could share the story of helping Poland transition to a market economy, just so our listeners who don't know you already can get to know you a little bit.

Thank thanks a lot. Uh well, I I've been lucky to uh be involved and to be able to watch close up some pretty significant changes in the world. It it actually started I began as an assistant professor in 1980 and actually in my first day of class uh uh somebody came up to me and said uh I was finance minister in Bolivia. Uh now I want to find out what I did. I said, "Oh my god, I'm teaching a finance minister." You know, I was a kid. Anyway, uh the reason I mentioned that is that a few years later, Bolivia was in a hyperinflation and that very nice uh gentleman and his colleagues asked me to come to Bolivia to help them solve the hyperinflation.

Thanks God it worked what I recommended. Uh and from there other governments said, "Well, help us." uh and uh one thing led to another and I was invited to Poland in the spring of 1989 as the revolutionary changes were underway. So when the solidarity movement which became the first postcommunist government in Eastern Europe uh was being legalized and then negotiating with the communist regime and then winning elections in June 1989. I suddenly became their adviser. And uh when that government took power in the summer of 1989, I was the one that first sketched out a strategy. How do you go from the communist era uh central planning to a market economy?

From there to Soviet Union with Gorbachov's team to Yeltson to Ukraine to many other places and and then on to other parts of the world. It's been now 40 years this year of active engagement with governments around the world. In uh 1999 uh Kofian, secretary general asked me to help him on a special assignment at the time. Uh then in 2000, I advised the World Health Organization to uh establish something that I thought was needed a global fund to fight AIDS uh which became the global fund to fight AIDS, TB and malaria. And uh then Kofian asked me to be his special adviser and when Bon Kimmoon came in he asked me to stay.

When Guteras came in he asked me to stay. So it's been uh very interesting. Let's say uh I've had the chance to work with governments in well over a 100 countries of the world. >> Yeah, it's incredible. uh now looking forward how do you see AI affecting the balance of power between China, the United States, Europe and globally? Well, first to say the basic direction of change in the world is what we call convergence uh which is that there's a narrowing of the gap between those countries that are the richest and most powerful and the rest of the world. And that convergence has been taking place gradually, fitfully, unevenly basically for the last 75 years from around 1950 till today.

The single most dramatic uh example of that convergence is China which was an impoverished country in 1980 and now is a high income very successful uh dynamic economy today. China's not the only case of this. the general catching up or narrowing of the gap between US and Europe which were in the front row and the first to achieve industrialization and then uh the technologies of the 20th century and the rest of the world that is pretty much happening around the world but fitfully less so in Africa where extreme poverty remains a major issue parts of Latin America America have been kind of stagnant for decades.

Asia has been quite dynamic. China number one, Southeast Asia, uh of course, Korea, uh Taiwan, Hong Kong, Singapore, even a couple decades before China, India now growing quite rapidly. So this is the basic trend. Where does it come from? It comes from technology that technology spreads. Uh know how spreads if you're at peace and you're not uh being dominated by an empire from outside and you're, you know, halfway clever. Educate your people, teach them the technologies or the tools to use the technologies and then you're able to leapfrog. Leaprogging means that you can make gains not only to narrow the gap but sometimes to jump ahead.

You know, an obvious example, by the way, since I travel non-stop, I'm in airports all over the world. Almost all airports in poor countries are more modern than the airports that I depart from from the United States because LaGuardia or JFK or Newark were built decades ago. But these other places have built their airports in the last 10 years or 15 years and they didn't build a 1950 variant. They built a 2010 or 2020 variant. So when you get back to the United States, you say, "Oh god, this is a 1950 version." This is true in general of physical infrastructure. A lot of places just go straight to the front of the line.

Whereas the United States evolved, it was in the lead decade after decade after decade. But you know, Manhattan, our our metro is uh you know, it's a 100red years old basically and you feel it. If you ride a metro in Southeast Asia or in China, it's a completely different experience. If you ride a a train in China, it has nothing to do with an Amtrak. Believe me, you know, an Amtrak, you're lucky if it ar it won't arrive on time. Maybe sometimes it does. Sometimes it doesn't arrive at all. You have to get off and change change trains. In China, they just finished their 50,000th kilometer of fast rail.

We don't have one kilometer of fast rail in the United States right now. So it's not only narrowing the gap, sometimes it's jumping ahead uh actually leapfrogging technology in physical infrastructure which is kind of set in place and very hard to upgrade. Whereas new construction is much cheaper for the first time when it's done. I mean, in in Manhattan, where I live, I don't know how many decades they've been talking about the Second Avenue Metro, but the cost of it is unbelievable because it's building in in Manhattan. But in other places in the world, it's cheap and they build modern metro systems, right?

>> So now to come to your question, AI is just the latest of this variant. It's complicated. AI is mostly software but there's a lot of hardware also there are data centers there's all of the data itself English language has an advantage because it is the global lingua frana it is the language of science so uh doing large language models in English really is per se a big advantage uh the US made the digital world it was invented it was thought up in Britain let's say even in the 19th century the idea of uh modern computation was uh in thought up first in Britain around the 1830s and 1840s the the genius that dreamt up the digital world was Alan Touring uh starting in 1936 but the United States gets a lot of credit for making uh the technologies of modern computation, the transistor, the integrated circuit, uh the uh uh connectivity, mobile connectivity.

These are American innovations and I I complain a lot about the United States, but I give the US credit for really building this world from the 1940s through the 1990s. Undoubtedly, almost every single innovation was a US innovation. uh from the I'd say the early 2000s, the US also basically bought up any innovation that was coming in Europe or and so forth. I used to visit Deep Mind when it was a a British company. so far ahead of the rest in uh in in um machine learning and and deep neural networks, but it became a US operation because it was bought by the US ASML with with the extreme ultraviolet lithography is a Dutch company, but it effectively became part of the US system.

What has changed of course is China, well two things changed. One is we outsourced all the production uh of of chips, microprocessors, actual fabrication facilities to Asia decades ago already uh to TSMC to Korea to Japan for DRAMs and so forth. So that goes back many decades just the outsourcing of some of the physical production. But those places became very sophisticated and very adept. And the rise of China is a an innovation and production ecosystem that absolutely rivals or exceeds the United States at this point in many many areas. And China is doing something very clever in AI also which is really using open-source as a way to be the second mover but not to be uh caught in the US trap or subservient to the US trap.

And then Donald Trump is giving a big hand to China by imposing export barriers and telling the Chinese make your own uh don't depend on us. and they're doing it because they're very very clever and very hardworking. And I visit China's industrial cutting edge companies pretty frequently. They're amazing. Uh and they're just are everywhere you turn. Young, extremely bright engineers uh that are innovating. And so Deep Seek and others are it's real. This is not a game. The US has tremendous competition. Now, what it all means when you add all of this up is this underlying process of convergence is going to continue as long as the world's at peace and and relative peace, I should say.

It's not at peace, but it some measure of peace. Uh it's going to continue. China is an extremely successful, impressive country. Don't let any propaganda that one reads every day in the New York Times or the Wall Street Journal about the coming economic collapse of China uh fool you at all. This is just stupid narrative. Uh the US uh claim that China has over capacity is as ridiculous as the word sounds. It's completely ridiculous. China produces what the world needs. The United States longs to produce it. This is what Donald Trump is saying. But we're 10 or 15 years behind in the industrial ecosystem.

Now, the US is still very innovative. Trump seems to be after killing that innovation, by the way, by attacking US universities. But even putting that aside, the US doesn't produce. And uh yeah, we we may be able to get some fabrication uh back. We may be able to get some industrial production back, but we're not going to build the industrial ecosystem that China has for a long time to come. And so the idea that the US is going to win its trade wars and contain China and be number one. This is all naive. Uh the United States is can be prosperous. It can be safe and it can be secure, but it can't just think that it's dominant because it won't be.

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11 Labs lets creators unlock ideas that used to take a whole team and a massive budget. I'm always looking for ways to stay ahead of the curve. That's why I've partnered with 11 Labs to show you how AI can be a part of your creative process, not replace it. If you're curious, check out the 11 Labs link right down below in the show notes. Because the future of creativity, well, you're literally listening to it. the Nick Stanley Show >> with AI uh in the hands of primarily private corporations. Do we have something to be concerned about there? I mean, I see a possibility of creating an AI aristocracy uh of trillionaires.

Um I mean it's it is and and even when we look at okay there are several companies doing it but there's really only four or five major companies. Um and how worried do we need to be about that because a lot of these technologies from the past came up through governments which has a more dispersed decision-making mechanism. Um, but these are coming up. I mean, this is worldchanging technology that's coming up through private companies. How concerned do we need to be? Actually going back to uh World War II, a great deal of our cutting edge technology has been civilian with military backing uh and uh symbiotic relationship between the military and uh and and industry and hence the military industrial complex.

This is AI today. Of course, there are lots of civilian applications of AI, but you look at all of the US tech giants, they are more and more deeply embedded with the CIA, with the Pentagon, with the uh military uh contractors in uh as as a general principle. So, these companies are not on their own. They're engaged in surveillance. they are engaged in war. Uh the Trump administration is an alliance of big tech and the military. This is probably the main theme of the Trump administration. It's Palunteer. Uh but it's not only Palanteer. It's basic and and Elon Musk was not representing an electric vehicle but representing SpaceX uh and Silicon Valley more generally.

I think the generals who don't know AI and you know probably didn't know what a neural net network was you know five years ago realize holy heck this is the future of the military and Silicon Valley has it and we need it and the way American politics works is that it's driven by uh industry it used to be uh big oil was the most important lobby because the military ran on oil and so the biggest lobby in the United States was Exxon and Exxon Mobile and Chevron and so forth. Now the most powerful lobby in the United States is basically tech. Uh but that's not only because they give campaign contributions and they're gazillionaires, but because it's deeply uh embedded with the military.

That worries me a lot. uh because I I don't want to get blown up by people who I don't regard as very sensible and I don't regard our military-industrial complex as very sensible. I regard it as very militaristic, very shortsighted, very stupid, very arrogant. Uh and I don't think it keeps me safe, frankly. I think it makes me uh and I mean all of us uh in more danger because they don't understand diplomacy. They only understand power, they think. And uh I happened to be at an event a few years ago in Europe at one of these many security conferences and um listen to a couple NATO generals talking about AI.

And their whole point was we're going to stay ahead of the Chinese. We're going to beat the Chinese. We're going to keep ahead of the Chinese. They didn't mention the word diplomacy one time or the idea that maybe this technology shouldn't be militarized. That didn't even it wasn't even mentioned to dismiss the idea. It just was an idea that never seemed to cross their mind. It was taken for granted. This is an arms race and we're going to win this arms race. So that bothers me a lot. of of course the fact that, you know, the top 18 uh richest people in the United States have something like $3 trillion of personal net worth doesn't thrill me.

Uh especially since they just got more tax cuts and we're supposedly cutting health care for the poorest Americans. This is frankly. uh how much wealth concentration can there possibly be before someone even at that level says you know this is a little too much greed uh maybe we should pay some taxes but they haven't arrived at that level yet uh it used to be uh you know that a billion might be enough for you then it no no no you need at least 10 billion no no you need at least a hundred billion soon it's going to be if you're not a trillionaire you know you're a per and this is actually a feature of this technology I think uh that it it really does reduce real wages and really does raise the return to capital and I think it's the deepest uh aspect of this technology in the civilian side which is that yes it can augment worker skills but it's going to replace a lot of work a lot of workers and it's going to ultimately drive down wages, not drive up wages.

And that means that the returns to uh this capital, whoever happens to own it, will be very very high. So we're we're moving more and more to towards a world in which there are gazillionaires. And then there are there's an elite which has enough wealth to pass along to their children uh to make sure the children can get whatever education, can own whatever they need, can get their housing and so forth. And then there's a uh the proletariat, if I could use the old expression, which are people who sell their labor for their subsistence, and that return is going to go down, not up most likely. Well, and given that's the case, I mean, how much of a danger is it to global stability if the technology is going to lead to increased increased wealth concentration at the very top, which ultimately across the spectrum means a lot less wealth equality?

>> Yes. because it does seem it does seem to be that it that the wealth inequality drives a lot of uh >> really bad things to uh to to put it mildly. >> Yeah, I I think it's a very interesting tough question for I'm I'm a development economist so I'm spending most of my time on say the bottom half of the world uh income distribution. Is AI good or bad for that? On the whole, I tend to think it's good actually because I like that it's going to democratize access to or democratize may sound too idealistic, but it's going to make lowcost access to information, health care systems, online education, and so forth available in ways that were unimaginable before.

So, I'm looking at this saying, God, this is a lot of great tools for for development. But if I also look, it means you better hurry. Uh if you're depending on your wage labor to get ahead, you don't have a big space ahead to do that because your wage labor, the one that used to uh plant crops in the field, that's all going to be robotics. Come on. Or if you were a minor, that's all going to be autonomous mining. Now, I don't think we need to miss mining because it it was a a a painful, heavy labor, dangerous occupation that killed miners at very young ages. But it does pose the question, so how are you going to make a living in this world?

And uh that requires a lot of strategy. And I'm, you know, thinking about that a lot. The dystopian idea that all the money goes to the top is not an impossible outcome of this. Uh the idea that we could have a an age of abundance in which everybody benefits, but using the government for basic income or redistribution or universal access to services is necessary. But these billionaires, they're really uh, you know, maybe having billions makes you crazy, but they they all become libertarians. Uh, so libertarians are well, make it on your own. I make it on my own. And yeah, they have billions of dollars to do it.

the crudeness, the the lack of any moral sophistication is is really amazing to me of this crowd at the top. So, we have a lot of politics ahead just to put it that way. Yeah, it does seem that government may become more important than ever um in making sure that this technology is routed. I mean, just as you said, it could lead to a world of abundance with incredible education tools, health care tools, solving diseases, rising uh living standards for everyone around the world. Um, >> and it could also lead to some really bad incomes. And it does seem I mean that's it's why uh so many of my future episodes are focused on this topic and why I wanted to talk to you because this this is the this is the going to be the the issue of our time.

>> Both of those views are logically consistent possible outcomes. This is I think the most important thing to say. It's not right to say oh that's stupid. That's theoretically impossible. I have been in the business of back of the envelope modeling of AI for the last 15 years. It can be emiserizing. In other words, making mass misery. It really can be. That's not a myth. That's not Marxist. That's not crazy. That's not inconsistent. Or it really can be an age of abundance because, you know, if you have machines that make machines, whoa, we can go out and have our coffee. you know, they're doing the work for us.

That's great stuff. But >> we can re rebuild those trains that are falling apart in the US. >> Got it. And if if only, you know, if if it's only Elon and uh and a few buddies that own those machines, then we're really in a shitload of trouble. But if everybody has their robot next to them that's doing the work, then, you know, we're all in good shape. So basically it is not the internal logic that will determine the outcome. It is societal dynamics and uh we have two kinds of dynamics at work. One is that you have a broad society that in one way or another has a voice. supposedly we still have some democratic institutions although not so democratic uh but we have a voice and so on and we want decency for our kids and so forth.

Uh and the other is government that is owned and operated by a small elite. Uh and we also obviously have that we turned our elections into money games. Uh and the Supreme Court consciously did this starting in the 1970s. It was, if I could put it this way, a plot. And it was a plot, by the way. Lewis Powell, who was one of our Supreme Court justices that played a big role in this, laid out the plot in a memorandum to the Chamber of Commerce uh in uh I think 1971 if I remember correctly or 1970. He said business needs to take the lead otherwise we're going to be eaten alive by the Ralph Naters of the world.

We're going to be controlled by dogooders and so on. So, we need to take the levers of power. And sure enough, uh, Richard Nixon appointed him to the Supreme Court and he wrote the opinions that said corporate money in politics is simply free speech. A more ridiculous proposition I can't imagine. And the American people know that it's insidious. And the Supreme Court justices are fools, by the way, or liars cuz they wrote in this thing. What could possibly go wrong? If you look at decisions like Citizens United, we don't think this will hurt the sanctity of our politics. Of course, every American understands that the game is rigged right now.

That if you're rich, you own government, and if you're poor, you look on like a helpless observer. They get that. We all get that. So the question is which of these versions of politics is going to prevail over time? And that's a an open question. >> Well, and I know your time is tight today, but here's a here's a big question going forward. If someone is listening to this, thinking about these same things, they share similar concerns to you and I right now, what can they do about it in the next one to five years to help make a positive impact? Because I do think when there's awareness and the people come together and and push for change, change can happen.

Um, but what what can those individuals do? It's it's a little hard right now. So, I don't think there's a glib answer to this, but um I don't support candidates that are on the take. Um and by the way, I didn't vote last last election for president because I couldn't stand either of the two party candidates. Yeah, that's not a great answer, I have to admit. But I think we need to actively support political movements, maybe new parties that are not corrupt. Is Donald Trump corrupt from morning till night? Probably from night till morning also. Uh but that's true of both parties. They're both on the take.

What congressmen do for a living is to be on the phone with campaign contributors, with lobbyists. This is wrecking our capacity even to think straight about how we're going to do this. How did we just pass a multi- trillion dollar, one big beautiful bill, which is, as Elon Musk actually said, one big monstrosity, basically in the middle of the night without more than one hearing in the House and in the Senate for this complete giveaway to the richest Americans because our system is disgustingly broken. uh and it's broken by money right now and by secrecy and it comes back also to this militaryindustrial complex because the whole theme of the military-industrial complex is not only the merger of Silicon Valley and the Pentagon but it's the secrecy around that cuz if it's national security we can't tell the truth about anything.

So, we have secrecy and money wrecking our politics and we need transparency and uh people not on the take and um if anyone has good ideas about that, that's what they should pursue. >> I like it. Um well, I Professor Saxs, I I could talk to you for hours. I know you have to get going because you have multiple uh appointments today. probably some that are much more important than talking. >> This is an important one, but I do have multiple appointments. >> I I really appreciate you taking the time. It was an absolute pleasure and I think this is this is a conversation that will help bring more awareness to all of this and these are really critical issues and I I want to see as many people get involved as possible.

So, thank you for making the time. >> I hope we can do it again sometime soon. >> Me as well. Thank you so much. Take care. >> All right. Okay, everybody. Until next time, ask questions, don't accept the status quo, and be curious. The Nick Stanley Show.