The EU and the not-so-simple macroeconomics of AI - Luis Garicano

Professor Luis Garicano isn’t your usual academic economist. Academically, his theories have heavily influenced how modern economists understand the structure of firms and the labor market. But his influence hasn’t been confined to the ivory towers of academia — Luis spent three years in the EU parliament, seeing first-hand how EU policy gets made. This has given him an unusually grounded view of how institutions actually work.

Through this institutional lens, Luis has been keeping an eye on how organizations like the EU have been responding to rapid AI developments — and he’s deeply concerned. 

In this episode, Luis chats with our co-hosts Andrei Potlogea and Anson Ho about: 

• Why he disagrees with Daron Acemoglu about the macroeconomics of AI and how policy should orient to this
• How AI could disrupt the training ladder for entry-level workers, such that they can’t learn economically valuable skills—with major consequences.
• Why he thinks the EU AI Act has many major issues, and what he would like the EU to do instead

-- Episode links --

Youtube: https://youtu.be/L8IRbTab2Fk
Transcript: https://epoch.ai/epoch-after-hours/luis-garicano-not-so-simple-macroeconomics-of-ai

-- Timestamps --

0:00:00 – Will AI trigger explosive growth?
0:06:26 – Short-run macroeconomic effects
0:11:29 – The decline of junior jobs
0:20:21 – The missing training ladder
0:39:31 – Europe’s AI regulation problem
0:52:46 – Who captures AI value?

01:08:17 – AI, interest rates & fiscal future