One of the biggest problems with politics in this country is assumed connections that simply don’t exist.  DOGE and the closing of USAID and other government offices were money in the bank for the Trump base (instead it went to tax cuts for the rich).  Getting rid of immigrants will leave more of the pot of gold for everyone else (growing the pot is the big issue and immigrants are contributors).   The reason we can’t have free public college here is that the Europeans didn’t contribute enough to NATO (the Republican Party has consistently blocked any such public service).  And of course the big one—making rich people richer will trickle down to everyone else (which has never happened anywhere—they just get more power to help them keep it).

You have to be really careful with tacitly assumed connections.  Even if they existed in the past, there’s no guarantee they’re going to continue as before.  The particular case I want to talk about is the assumed link between national power (military and corporate) and population well-being.  For most of the 20^th century that link really was close.  That’s Trump’s factory economy with good jobs and the corporate might that won two world wars.  But that’s not the reality today–manufacturing is 8% of GDP, unions cover 10% of workers, and many service sectors are low-wage.  It’s even less the reality going forward.  The AI world is simply not going to supply that kind of employment-linked prosperity—there will be good jobs but not so many of them for a good long while.

Many people have compared AI to the industrial revolution of the nineteenth century.  Britain at the time was the most powerful and prosperous country that had ever existed.  It was a world of fabulous wealth and horrendous destitution, both domestically and in its empire.  Eventually the world was able to adapt to the new reality, but that took a whole century of well-documented horrors.    Economies can’t adapt overnight.  The private sector will not miraculously solve the problem.  The only way is for government to create the link that is broken.

The government needs to finance work that needs to be done—but won’t get done by the private sector alone.  An obvious case is climate change, which will require monumental transformations well beyond the cost of the new equipment.  But there are many other parts of the public sector that have been starved for years.  This sounds like the great depression—how to put people to work—but it’s much better.  We have the money.  As with the industrial revolution the problem is not a shortage of work or a shortage of money—it’s making the link.  This time we need to do it.

This isn’t a trivial problem, but it’s worth understanding that it’s THE economic problem.  In principle, as we’ve noted elsewhere, we’re not talking about taxing companies in cut-throat price competition with each other.  But we do need to figure out how we do tax companies, and how we order world trade so this can be handled consistently.  There are many reasons why the world needs a basis of cooperation.  This is a fundamental and solvable one.  And if we’re lucky it can help with the rest.