ANDREW LIMBONG, HOST:
Technological innovation has led to a steady rise in standards of living for the last two centuries. Three men who study that process were rewarded today with the Nobel Prize in economics. Their findings could help shape our response to next-generation breakthroughs like artificial intelligence. NPR's Scott Horsley explains.
SCOTT HORSLEY, BYLINE: To illustrate the dizzying advance of technology over the last 200 years, members of the Nobel Prize committee held up a slide this morning showing the evolution of the telephone from an antique hardwired desktop model to a sleek, modern smartphone. Despite those advances, though, 2 out of 3 econ prize winners missed their congratulatory phone call this morning from the Nobel committee.
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JOEL MOKYR: (Laughter) See, my phone is set in such a way that I can only receive phone calls from people on my contacts list because otherwise I get junk calls in the middle of class and I - you know, (ph) stuff.
HORSLEY: That's Joel Mokyr of Northwestern University, who only discovered he'd won the Nobel Prize when he later fired up his computer and found a note of congratulations. Mokyr is an economic historian. He found that innovation doesn't necessarily lead to economic growth, only when it's paired with the know-how to commercialize a new technology and with a society that's open to change. John Hassler of the Nobel committee says that combination has allowed living standards to more than double with each generation thanks to new medicines, better communication and more efficient sources of energy.
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JOHN HASSLER: Over the span of one or two centuries, almost everything has changed. Change, not stagnation, has become the new normal.
HORSLEY: But as with telephones, technology that's state-of-the-art one moment can soon be eclipsed by something better. So Mokyr shares the Nobel Prize with two other economists who helped describe that process of creative destruction - Peter Howitt of Brown University and Philippe Aghion of the College of France. Howitt says it's important to create safety nets for workers who might be displaced by new technology. Otherwise, they're likely to fight it in a way that limits economic growth.
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PETER HOWITT: Every new technology that has a great impact creates great losses as well. People have to be compensated, people have to be negotiated with in order to resolve that conflict in a way that allows the technologies to proceed.
HORSLEY: Artificial intelligence could be the next big innovation, but Howitt says it's vital to maintain a competitive environment and not allow a handful of superstar firms to short-circuit the next round of innovation.
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HOWITT: New technologies are brought in by disruptive outsiders who are interested in shaking up the status quo. But if they succeed in doing that, they become the status quo. And they are very resistant to people that want to do that in turn to them.
HORSLEY: Howitt is skeptical about claims that AI will trigger widespread unemployment. He says similar fears about earlier technological advances proved to be unfounded. Still, Howitt and his fellow prize winners did warn of dark clouds on the horizon. Cuts to university research could create potholes in one path to innovation. Aghion says the Trump administration's protectionist trade policies could also hamper economic growth.
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PHILIPPE AGHION: Openness is a driver of growth. Anything that gets in the way of openness is an obstacle to growth.
HORSLEY: The winners will split a prize of 11 million Swedish krona, or about $1.2 million. Aghion plans to invest his share into research with younger colleagues in further pursuit of creative destruction.
Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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