In an opinion article published in the Financial Times last week, Andy Haldane, former Chief Economist at the Bank of England, explores the role of disruptors in driving innovation and explains why we may need "unreasonable, but benevolent," leadership to rekindle economic dynamism.
"Economic dynamism can be measured along a number of dimensions, including the number of firms entering and exiting a market, the number of workers being hired and fired and the pace and scale of public service reform," Haldane writes. "Research has shown these measures help determine the intensity of innovation and so are good leading indicators of productivity and economic growth."
According to that same research, innovation has lagged across OECD countries by these measures. Historically, Haldane recounts, growth has been associated with the emergence of new transformative technologies: steam engines, electricity, and computing, to name a few. AI seems poised to bring about similar upheaval today, but is the technology enough to restart the engines of economic growth?
"The lesson of history is that technology is not, by itself, a sufficient ingredient for success," Haldane explains. “The drivers of past industrial revolutions were as much people as machines.”
Such disruptors have traditionally been entrepreneurs and industrialists, Haldane writes, and we certainly have our fair share of those today. However, politicians are now seeking to join the fray. "Governments in the UK, France and Germany largely comprise reasonable people who, as George Bernard Shaw put it, mould themselves to the world," Haldane explains. “In the US, on the other hand, President Donald Trump has chosen a government of, in Shaw's terms, unreasonable individuals who seek to mould the world to themselves.”
While the former is certainly more well-suited to avoiding global crisis, the latter is more likely to harness the benefits of AI and bring about economic growth, he argues. "With economic dynamism damped and a new technological wave breaking, the need for unreasonable, but benevolent, leadership has rarely been greater," Haldane concludes. “If they are serious about rekindling growth, leaders in Europe would do well to mark Shaw's words before a less benevolent flame-thrower ... replaces them.”
For more from Andy Haldane, read his contribution to Starling's 2021 Compendium.
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