Nobel Laureate Daron Acemoglu on Liberal Democracy, AI, and the Working-Class Backlash

In a wide-ranging interview with Bloomberg, Massachusetts Institute of Technology professor and 2024 Nobel laureate Daron Acemoglu argues that liberal democracy is facing a profound crisis of its own making. The friction, he contends, is driven by the center-left’s embrace of identity politics and an overreliance on college-educated voters at the expense of the working class.

A Global View Shaped in Turkey

The discussion covers politics in the US, the UK, Brazil, Serbia, and Israel, touching on the rise of artificial intelligence, shifting tax policy, and the intellectual revival required to counter right-wing populism.

Acemoglu earned his Nobel Prize in December 2024. He draws directly on his childhood growing up in Turkey under military dictatorship to explain his lifelong attraction to pluralism and liberal ideas.

Alienating the Working Class

Acemoglu contends that the center-left’s pivot away from its traditional working-class base toward college-educated voters has fractured post-industrial societies. Digital technologies and globalization have concentrated wealth while displacing labor, shifting political dynamics over the past half-century.

University graduates have come to dominate center-left coalitions, rallying around cosmopolitan cultural values and minority rights while largely ignoring deep-seated economic struggles. Acemoglu points out that between 1980 and approximately 2013, inflation-adjusted wages for American men without a college degree fell during a period of broader economic expansion—an anomaly. When combined with top-down societal efforts to alter traditional working-class values, that economic stagnation sparked a severe political backlash and drove working-class voters toward the right.

UK Government Should Target Capital Income to Protect Jobs

In the UK, where Andy Burnham’s government recently unveiled its first budget, Acemoglu argues that policymakers must aggressively expand the tax base by targeting capital income.

By taxing all income at its source without differentiating between labor and capital, governments can simplify tax systems and remove financial incentives that encourage firms to excessively automate rather than hire human workers.

Chasing AGI While Production Lags

On the subject of artificial intelligence, Acemoglu pushes back against the hubristic pursuit of Artificial General Intelligence, or AGI, championed by tech firms. While acknowledging that the rollout of agentic AI has accelerated faster than he initially anticipated, he argues that chatbots have mostly transformed personal lives rather than actual production processes, with coding remaining the sole occupation completely overhauled.

China, he notes, is currently more active in integrating AI directly into production than the United States, where an obsessive focus on AGI has slowed broader technological diffusion.