24 - Ryan Avent on *The Wealth of Humans,* Job Automation, and Globalization

Episode Summary

Executive Summary: Ryan Avent argues that the post-crisis economy is undergoing a major, Industrial-Revolution-like transformation marked by labor glut, weak wage growth, persistent low inflation, and a rising demand for safe assets. He says the transition will be painful, politics will be shaped by dislocation and nativism, and policymakers should consider more demand support, broader asset ownership, and more flexible monetary/fiscal frameworks.

Main Topics: Avent’s career path and journalistic process (Priority: 2/5): He explains how an economics background, early blogging, and work at The Economist led him into journalism, and describes a weekly editorial cycle built around news scanning, idea generation, and sober economic commentary. Post-crisis economic rethink (Priority: 5/5): Avent frames the financial crisis and its aftermath as a period requiring major reassessment of macroeconomic assumptions, including monetary policy, nominal GDP targeting, and whether certain ideas like universal basic income are ready for prime time. The Wealth of Humans and the labor glut thesis (Priority: 5/5): His book argues that technology, automation, and globalization have created an abundance of labor, pushing down wages and contributing to weak productivity and labor-market dysfunction. Work, meaning, and adjustment costs (Priority: 4/5): The discussion emphasizes that work provides income, structure, identity, and social ties, so technological displacement is not just an economic issue but a social one that can produce lasting pain and dissatisfaction. Policy responses: education, work sharing, and wealth sharing (Priority: 4/5): Avent says past transitions were helped by mass education, but today’s returns are more limited; he favors practical steps like early childhood investment, wage subsidies, shorter workweeks, and broader access to capital income. Political backlash, Brexit, and Trump (Priority: 5/5): They connect economic stagnation, uneven gains, and social identity pressures to Brexit and populist politics, arguing that low growth and weak recovery intensify blame-shifting toward immigrants, trade, and elites. Monetary policy, low inflation, and safe asset shortages (Priority: 5/5): Avent argues that central banks have undershot inflation targets, that low nominal growth has hurt recovery, and that global demand for safe assets has driven down interest rates, leaving policymakers with limited room.

Key Arguments: The current era is not one of stagnation but of deep transformation comparable to the Industrial Revolution, with new technologies reshaping labor, production, and politics. Automation and globalization are creating a large pool of underused labor, which suppresses wages even when some workers become more productive. Education solved earlier industrial-era dislocation, but there is less scope today to upgrade everyone through schooling because the easy gains from mass educational expansion are already largely used up. Universal basic income may be conceptually appealing, but it does not solve the social need for contribution, dignity, and agency that work provides. A better short-run policy response is to share work and income more broadly through wage subsidies, early education, and possibly reduced hours, while avoiding political breakdown. The rise of populism and nativism is tied to weak recoveries and the perception that gains are concentrated geographically and socially among insiders. The eurozone is not an optimal currency area, so its structural weaknesses make crises and persistent adjustment problems likely without deeper fiscal and labor mobility integration. Central banks have consistently undershot inflation goals, and this low inflation environment has constrained recovery and contributed to secular stagnation dynamics. The global appetite for safe assets has pushed down yields, limiting how far national central banks can raise rates independently of global financial conditions. More fiscal stimulus and/or more safe government debt issuance may be the most practical way to address demand shortfalls and the safe-asset shortage.

Data Points: Podcast guest identification: Ryan Avent - Introduced as a columnist at The Economist and author of The Wealth of Humans. Weekly editorial cycle: Monday editorial meeting, Tuesday filing, Wednesday publication - Avent describes The Economist’s production timeline. Wage growth period: Past 7–8 years - The host references the period since the crisis and the debates it sparked. Global labor pool expansion: "another billion, two billion, three billion workers" - Avent describes globalization bringing more workers into the global labor market. Typical workweek idea: 40 hours to 30 hours - Suggested as a possible work-sharing adjustment to ease transition costs. Federal/central bank target reference: 2% inflation - Discussed as the standard flexible inflation-targeting norm in advanced economies. U.S. core PCE inflation average: ~1.5% - Used to argue the Fed has undershot its effective target on average. German and Swedish borrowing costs: Almost 0% or negative - Mentioned to support the case for borrowing to fund public investment. Greek economic collapse: Quarter of real GDP lost; unemployment above 20% - Used to illustrate the severity of eurozone adjustment costs. Japan gross debt: 240% of GDP - Referenced while discussing sovereigns that still issue highly trusted safe assets.

Pivotal Quotes: "what we really are experiencing now is a transformative economic period and social period that's not unlike what we saw in the 19th century with the Industrial Revolution" — Ryan Avent: Explaining the central thesis of The Wealth of Humans "we're trying to play the kind of sober mediator and say, you know, here are the things about our kind of fundamental outlook that we need to rethink" — Ryan Avent: Describing The Economist’s role in post-crisis macro debates "the end result is that firms are faced with this enormous pool of underused labor that would like to work, that is seeking jobs, and doesn't at the moment have the means to kind of put them to work in the most productive way possible" — Ryan Avent: Describing the labor glut and downward wage pressure

Implications: Listeners should expect continued pressure on wages, institutions, and politics unless demand, mobility, and income-sharing mechanisms adapt. The book’s message is that the next era may require more active macro policy and a broader social contract around work and capital.