It’s been an exciting 24 hours for the winners of this year’s Nobel Memorial Prize in Economic Sciences, which included Simon Johnson and Daron Acemoglu at the Massachusetts Institute of Technology, as well as James Robinson at the University of Chicago. The three are being honored for their work on how institutions shape economies.

“Marketplace Morning Report” host David Brancaccio was able to get on the line with Simon Johnson during some downtime on Monday. Below is the edited transcript of the conversation between David Brancaccio and Simon Johnson.

David Brancaccio: Let’s talk about an emerging institution that could make or break our prosperity and widen or narrow inequality. You’ve written in depth about technology and artificial intelligence, and we have a society that hopefully is thinking about, how do we get the good out of it and keep away the bad? That, I guess, is an emerging institution that could make or break us?

Simon Johnson: Well, it’s certainly David, I think, a driver of institutions, and it’s going to have a big impact on who has a good job and who doesn’t going forward. And those kinds of labor market impacts feed through directly into the political process. Do people believe in the system? Do they feel the systems delivering? So, is AI itself an institution? I’m not sure, but it’s central to thinking about how institutions do or do not deliver inclusive prosperity.

Brancaccio: Yeah, and also, we may set up a regulatory body. There may be an agency, there may be regulators who think about this. And if it’s enlightened and strong, it should feed through to prosperity.

Johnson: Right. So, we do believe in regulating various things in the U.S. We usually wait until there’s a big disaster, and then we have to clean up and think about how to regulate it. What I would say is, it’s not about stopping AI at all. I don’t think you can stop technology. But I think there’s a lot we can do on redirecting technological progress and pushing AI and the innovators around that space towards inventing things that are more useful to people and boost the productivity of particularly people with less education, as opposed to enriching a few people who, for example, live on the West Coast of the United States and run already very big tech companies. I think these are choices that can be made. And yes, you’re quite right, if we can establish some plausible, reasonable regulatory framework, that could be quite helpful.

Brancaccio: There is an interesting dialog between the economy and democracy. I think there’s going to be a lot written upon you and the other two winning this Nobel Prize about democracy being a precursor for success. But if the economy is seen by the electorate as failing — and I can easily interview people who will say that that erodes democracy — it sort of goes both ways in a sense.

Johnson: Oh, absolutely yes. I think that erosion is very real. It’s been with us for some decades. It may now, in November, be even more damaging than what we’ve seen in the past. You have to deliver on shared prosperity in any democracy for it to be viable, and if you fail to deliver over a prolonged period of time, sure, people are going to turn to alternatives. They’re not going to believe in the system anymore. So, we’re struggling with the effects of automation, globalization and the decline of trade unions. A lot of people who were previously in the middle have been driven down in the United States, and we need a big turnaround. Absolutely no question about that.

Brancaccio: How strong are America’s democratic institutions? I remember during, after the great financial crisis — 2008 and 2009 — you talked a lot about the U.S. government being captured by the financial industry, that the industry got the rules of the game that they wanted and that our institutions needed work. You still have that same mind?

Johnson: Well, that certainly was my read of the 2008 crisis, and I pointed out that the U.S. had been through various episodes like this before, such as the Gilded Age at the end of the 19th century, early 20th century. In those previous episodes, we’d renew the democracy, we had come up with reasonable and responsible regulation, and we can and should do that again. I think, strictly or narrowly on the financial front, David, we made much more progress after 2008 than I would have expected. Now, it’s never over. There’s always dangers of capture from that sector, but I think that particular front has held up quite well. Where we’re in more trouble is on the impact of automation and globalization on the middle class, and what we need there is better delivery of results. “More good jobs” is my bumper sticker from this whole research agenda, by the way. So without more good jobs, I think we’re going to continue to struggle.

Brancaccio: And when you think about successes coming out of that last financial crisis, I mean, one of them would be an institution — the Consumer Financial Protection Bureau, for instance.

Johnson: Yes, absolutely. I think the CFPB is a very good example of the U.S. coming to regulation late, probably too late, but doing a good job and being very thorough about it. And I think that all the work that they’ve done and the way that’s impacted American consumers has — in my personal opinion — been very positive.

Brancaccio: But with the march of technology and your clarion call just now for more good jobs, they need to be more good jobs fairly soon. The idea that, OK, you’ll lose your job in the prime of your working career, but maybe your grandson or granddaughter will get an awesome job in 15 years. That doesn’t reinforce faith in any system.

Johnson: No, that’s a terrible message, David. I mean, that’s actually what happened to a lot of people at the beginning of the British industrial revolution in the north of England, for example. The good jobs did show up 60 years later. If you tell people that today, they’re of course going to be very upset and look for alternatives. Now, we need to accelerate the process of creating more good jobs. And that’s actually what Daron Acemoglu, my co-winner today, and David Autor, also a professor at MIT, that’s what we work on. That’s our current big research push: How do you generate more new good jobs, tapping into new technology? Not turning our back on technology at all, but harnessing the technology to make people more productive, including people who didn’t go to college, for example. That, I think, is the key frontier at the moment.

Brancaccio: Like what? Like AI-powered training systems that get people up to speed quickly in some new area or skill?

Johnson: Yes, I mean, that would be a very good example. Reducing the barriers to formal education is a brilliant idea. In addition, expert systems that really help people with manual skills, blue collar jobs, be more productive, be safer when they build electrical systems, for example, for clean energy. Help them to manage workloads across all kinds of skilled artisanal work. Construction would be a leading example. I think there’s actually a lot we can do. It’s not, unfortunately, the low-hanging fruit as far as the tech industry is concerned. They’re more focused on digital advertising, which unfortunately has a lot of destructive side effects. So, I think we can and should do a lot better with the technology that is potentially within our grasp.

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