"Liberal democracies have no future in their current state, says Daron Acemoglu, who will receive the Nobel Prize in Economics on Tuesday. He warns against Trump, a crypto crash and has a clear recommendation for Germany.
Mr. Acemoglu, on Tuesday the Swedish king will present you with the Nobel Memorial Prize. You will then stand in a row with Nobel Prize winners such as Albert Einstein, Milton Friedman and Marie Curie. Is that more of a burden or an inspiration?
Both. Success is a combination of luck and opportunity, and that also applies in science. It is a burden to now carry even more responsibility for seizing opportunities. But the award is also inspiring. Your own words have more consequences than before.
Your research has the following core message: For states to be wealthy, power must be widely distributed, people must have the chance to share in the wealth and feel heard. And there must be free competition.
Will all of this still be the case in America under Donald Trump?
No, America's institutions are in danger. Democracy will not end tomorrow. But Trump's first term has already chipped away at democratic norms. There have been attempts to weaken core principles and institutions of the United States. I expect this to intensify over the next four years.
What does this mean economically?
We will not see an immediate stock market crash if Trump, for example, starts using the Justice Department for his political purposes. But the more such democratic foundations are damaged, the more difficult it will be for companies to innovate, invest and grow.
What are you specifically afraid of?
People close to Trump could ensure that companies that do not follow his lead are investigated or burdened with additional regulation. This slows down the momentum.
At the moment, however, the markets are very optimistic about America.
One reason for this is that Trump wants to reduce corporate taxes and regulation.
If he does it right, that's good, but the regulation goes way too far in some cases. But we must not forget that Trump has announced that he will deregulate cryptocurrencies and artificial intelligence. There must be no Wild West mentality here. Crypto is a highly speculative business and has been used for fraud and illegal activities.
Cryptocurrencies like Bitcoin are currently becoming interesting for serious investors too. Is there a risk of a crash?
There is a risk of a crash and that people will lose their money. But artificial intelligence is even more important. Competition and the right regulation must ensure that this powerful technology is steered in the right direction and is not misused for misinformation on social networks and other things. Trump's deregulation can cause great damage, which will become apparent in two or three years.
Would you become Trump's economic advisor if he asked you?
No. He is a danger in this position. No reasonable person should support him.
Amazon boss Jeff Bezos has now offered to advise Trump, similar to Elon Musk. Is this pure opportunism?
Yes. But the Bezos case is different from Musk. Bezos feels that his business is at stake and that Trump is a threat to him. If you have to fear that the IRS, the Justice Department or something else terrible will come after you, it makes sense to follow Trump's line.
Is America turning into an oligarchy?
If Trump is successful, the country would move in that direction. His failed attempt to make his loyalist Matt Gaetz, who is himself under investigation, attorney general, Trump's nomination proposal for FBI chief - these are all signals to the population that he wants to take over these institutions. It will be the death knell for these institutions if it happens in this way.
The truth is that people were also dissatisfied with the institutions under Joe Biden. Liberal democracy is losing support throughout the Western world.
Yes, the data clearly shows that. But that is not because there is a better alternative. For several decades, democracy has not really delivered on what it promises: prosperity for as many as possible and functioning public services. People want to be heard, but often feel speechless, as if they do not exist. That is the case in America, but also in parts of Germany, Sweden, and France.
Who is to blame?
Elected representatives do not listen to people, for example those who have lost their jobs. Moderate politicians refuse to engage with their views. Social media and polarization are of course also contributing to the negative development.
In Germany, populists are on the rise, the government has collapsed, but above all our export-driven business model no longer seems sustainable. Is economic decline imminent?
The current weakness is partly due to the fact that global trade is not developing well and the world is changing in some areas, such as cars. It is clear that Germany has a few challenging years ahead of it. But I believe the German economic model still has its strengths.
Which ones?
German industrial companies in particular benefit from a good co-determination system. On the one hand, it makes it possible to develop and establish new technologies such as robots, but at the same time protect the rights of workers. That is not an easy balance to strike. German companies are good at training and upgrading employees for good jobs, especially in the export sector. We can build on that. But the key will of course be to catch up with electric cars. It won't be easy, but I hope it can be done. And the political problems are not trivial either.
We are currently discussing the debt brake . . .
Yes, the biggest problem Germany has is the crumbling infrastructure. I saw that when I was last in Germany, it really is a break compared to the better situation ten or 20 years ago. Tying your own hands in a phase like this makes no sense. Fiscal discipline is important, and Germany should not do without it in principle. But such strict limits are not useful.
What should a reform aim at in your view?
Public-private investment in new technologies and infrastructure must be encouraged. They are the key for Germany.
The government in France has also collapsed. Is this parallel more than a coincidence?
I think we are currently experiencing the birth pains of a new model, and we don't yet know what the new model will be. But there is a lot of anger against the establishment, i.e. against the established forces. I hope that the new model will not lead to authoritarian populism. But it is quite clear that "business as usual" no longer works in politics.
But what exactly needs to happen to stop the trend?
Politics must deliver, in the form of functioning administration, participation in prosperity. There are also cultural things that need to be resolved. The gap between the population and the politicians, who often do not follow the people, must be closed. Bureaucracy and regulation have also become an enormous problem in all industrialized countries.
Christian Lindner, the chairman of the liberal FDP, is therefore calling for more Musk and Milei in Germany. What would you say to him?
They would not be my role models. Musk is a good entrepreneur, but he has terrible political influence through his short message service X. He is the wrong person to cut regulation and bureaucracy. AI and the pharmaceutical sector in particular must be effectively regulated so that people build trust in the technologies. Musk will probably also have more power in the future when it comes to who receives subsidies. That is not the way a market economy works best for the masses.
But you yourself are still active on X despite this criticism of Musk. Why?
Yes, I am. I tried the competing platform Bluesky, but it is much smaller. I have more than 300,000 followers on X and around 5,000 on Bluesky. That is a problem with the platform economy, the platforms are very "sticky". If you are a certain size, you keep it for the time being.
Is the European Union on the right track with its stricter regulation of AI and fake news?
The EU has taken the right steps. But it will not get the influence it hopes for as long as it is not an innovator in AI itself. America is not making it easy for the EU in this respect. Many young, talented people from Europe go to Silicon Valley because they earn more there and there is Wild West regulation.
Do you personally think that scientists will have an even harder time being heard in the future, even if you are a Nobel Prize winner?
We are becoming more and more dependent on science - whether it is about climate change, pandemics or the ageing population. But at the same time, science is being trusted less. Polarization plays a role here too. We need to make sure that scientific expertise is not something that people feel like it is being imposed on them. People need to trust science. And we, those who speak for science must earn our trust.
The interview was conducted by Johannes Pennekamp.
The Nobel Prize winner
Daron Acemoglu is an international researcher in every respect. Born in Istanbul in 1967, he was educated largely in London and is pursuing his academic career in the United States. For years, Acemoglu has been considered a candidate for the Nobel Memorial Prize in Economic Sciences, which is awarded by the Swedish Riksbank. Together with his colleagues James Robinson and Simon Johnson, the researcher from the Massachusetts Institute of Technology (MIT) will receive the award, which is worth a total of almost one million euros.
Since his youth, Acemoglu likes to say, he has been interested in why some countries are wealthy and successful, while others are poor and corrupt. In numerous studies published in the most prestigious specialist journals, Acemoglu and his colleagues have highlighted the central role of "inclusive" institutions. Economies only grow in the long term if many people can share in wealth, power and competition.
Acemoglu's scientific interests go much further. Recently, he has been intensively concerned with what he sees as the excessive power of American digital corporations. He believes that the hope that artificial intelligence (AI) can provide a major productivity boost in the economy and eliminate the weak growth is exaggerated. In one of his articles, he therefore warned against an "AI hype." [1]
1. "Wir erleben die Geburtsschmerzen eines neuen Modells". Frankfurter Allgemeine Zeitung; Frankfurt. 10 Dec 2024: 18.
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