Frenchman Philippe Aghion shares the economics prize with two others. They receive the prize for having developed models for what has created economic growth throughout history. Creative destruction is the watchword – new innovations knock out old ones and thus create growth.
Such “creative destruction” now revolves around the AI revolution.
It is the next big hope for growth, says Aghion in an interview with TT.
Jobs will disappear, new jobs will be created. And maybe an AI bubble that many are talking about now will burst, but if so, it is nothing that threatens the world economy, according to the Nobel Prize winner.
Missing options
Another painful adjustment the world is grappling with is the methods of addressing the climate threat. Here things are moving more slowly, too slowly according to many, while others, those who risk becoming the losers, are slowing down.
Philippe Aghion sees two failures – too much focus on taxes and too few carrots to help companies and consumers make changes.
He mentions the strong protest movement in France a few years ago, the yellow vests, who did not want increased fuel prices.
They had no alternatives to the car, as there was no policy for it.
He wants to see a group of countries taking the lead in climate change and mentions Germany, France, Sweden and perhaps the UK. The EU is too cumbersome.
Of course, he knows about the Swedish battery factory Northvolt that collapsed.
We have to rethink and do it together. Then we will succeed, says Aghion.
Must rethink
The European car industry, perhaps especially the German one, has taken a backseat. It feels threatened by the rapid transition to electric cars and is demanding that the EU slow down the transition.
Will it suffer from creative destruction?
There can be both destruction and creation here, says Aghion.
He thinks Europe needs to rethink. The regulatory system for countries' public finances is too rigid. Investments in the green transition should be given a boost. Europe can afford to borrow more.
"Because the US is doing it, China is doing it. Europe cannot decide to stand aside. And we have the knowledge, the engineers," says Aghion.
Europe has everything it takes to be a leader.
Olle Lindström/TT
Facts: They share this year's economics prize
TT
Joel Mokyr, Northwestern University, USA.
Philippe Aghion, Collège de France and Insead in Paris and the London School of Economics.
Peter Howitt, Brown University, USA.
