The Wages of Nations: How AI Changes What It Means to Learn, Earn, and Grow

Greetings from breathtaking, beautiful Stellenbosch South Africa. I am just outside of Cape Town, depending on the traffic, in a part of the world I never would’ve thought as a kid growing up in Mississippi I would’ve visited. I’ve been here for a week, and yesterday finished a three day workshop on diff in diff and synth. It was intense and I spilled a completely full cappuccino all over me but other than that, I thought it went great. I’ve met new people and had so many great conversations.

I brought my sister and brother in law with me. I am often thinking that in the blink of an eye, I and my loved ones will be dead. Therefore, I am trying to spend to combine things so that for work I am with them. And we have had a lovely time. My sister is obsessed with the fact that South Africa has cobras and I think deep down wants to see one, but on the surface tells us regularly that she does not want to see one. Here is a video of a woman who broke out and sang a beautiful opera-style song at dinner the other night.

It has been so lovely here. The Stellenbosch faculty have been so gracious and considerate at hosting, not only me, but my sister and brother in law too. My brother in law is a pastor, and I often feel that he and my sister sacrificed earnings and lifestyle in order to engage in tasks that they felt called to. So having the faculty welcome them to the dinners and be so engaging has meant a lot to me. I think they’ve never spent time with economists. They have had a pleasant experience too.

Here are some more pictures but I haven’t really been taking many yet. I’m not a very good picture taker. We had dinner at this vineyard and they brought out this giant multiple plates of fruit and veggies. I was stunned. And in the picture after that’s us at a wine tasting. My friend Baker said when I showed him “Scott why in every picture of you I’ve ever seen do you look constipated”. Thanks Baker.

In today’s post, I wanted to get some thoughts down because later today I’m giving a talk about AI and development. I have been working on this idea for a while, so it was quite a lucky grab that I had this one in the chamber when they asked me to give this talk. But before I go to it, drum roll please!

Heads! So this one is locked up, but consider becoming a paying subscriber! Below is an essay and I’m going to skip the hyper links because I have run out of time. But I have cited these a lot already.

AI, Ricardo, and the Puzzle of Productivity

Artificial intelligence isn't just transforming how we work—it's changing what it even means to work. David Ricardo warned that technological advances, in the third edition of his book, though seemingly beneficial, could paradoxically reduce wages and employment, an insight Paul Samuelson later summarized succinctly: "Ricardo is right."

Acemoglu and Johnson in a paper about the power loom revisited that historical insight through their recent exploration of automation during the British Industrial Revolution. But now, in our AI-driven moment, these old lessons offer fresh relevance and urgency, particularly around education, productivity, and the distribution of prosperity. Understanding this clearly requires connecting history with new realities.