The Nobel laureate who co-wrote ‘Why Nations Fail’ warns U.S. democracy won’t survive unless these two things change

Most critics of President Donald Trump view him as the ultimate threat to American democracy. But to Nobel prize-winning economist Daron Acemoglu, Trump’s merely a fever, the result of an infection that’s been brewing for years before he rode down the golden escalator to announce his presidency.

The MIT economist has spent decades studying the origins of economic and political decay, specializing in how institutions foster inclusive growth—or succumb to extractive systems. In the 2012 book Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Acemoglu and co-writer James A. Robinson argue that nations proper because of their political institutions. In 2024, Acemoglu won the Nobel Prize in economics, alongside Robinson and Simon Johnson, for demonstrating how political and economic institutions shape prosperity.

Acemoglu argued that while Trump’s authoritarian tendencies are weakening the country’s institutions, the president is not the root cause of the broader structural problems. He warned the country is headed down a grim path and outlined two shifts relative to AI development he sees as critical to avoiding deeper decline: cracking down on economic inequality and tempering job destruction. “If we go down this path of destroying jobs [and] creating more inequality, U.S. democracy is not going to survive,” he told Fortune.

One: The proliferation of economic inequality

According to Acemoglu, AI-driven job displacement could be catastrophic and further entrench inequality. He notes the U.S. is currently seeing unprecedented levels of wealth inequality, and traditional policy has failed to close the gap. “We may need wealth taxes because anything else we do today is still going to lead to this huge wealth gap that exists in this country.”

The economist pointed to California’s proposed “billionaire tax,” a ballot initiative which would impose a one-time 5% wealth tax on all individuals in the state with a net worth of $1 billion or more. But even that doesn’t go far enough, according to the economist. “It’s not enough to tax the rich,” he said. “You really need ways in which workers of all sorts of skills can take part in the growth process.” 

But AI proponents say Acemoglu’s diagnosis of AI development is counterintuitive. Adam Thierer, senior fellow at the think tank R Street Institute and longtime advocate for technological innovation, believes AI will spawn opportunities, driving the economy into the future. “The way we get new and better jobs and opportunities is through technological improvements in society and our economy,” Thierer told Fortune. 

Two: The current rate of job destruction

But the Nobel laureate believes AI-related job losses have already hit the scene, with American companies tallying 1.2 million layoffs in 2025—up 58% from the year prior—with more than 50,000 directly related to AI.

Acemoglu said the focus on AI’s development and the pursuit of artificial general intelligence—technology that matches or exceeds human cognitive abilities—is the wrong priority. “I think there are ways in which this is a misguided agenda,” he said. “It would have huge social consequences that are quite adverse.”

Thierer, however, said technological innovation has always come hand-in-hand with economic disruption, a trend that’s persisted for centuries. As a result, it’s anticipated that some degree of job loss will accompany AI’s arrival on the scene. “We would not want to be doing the same jobs we were doing a century ago,” Thierer said. “Luckily, we don’t. For the most part, we’ve moved on. We found better jobs.”

He continued that any regulation on America’s AI industry could hamper its competition with China, and have long-term adverse effects for the U.S. economy. “So far, America remains in the lead and we’ve done some important things to make sure that we stay in the lead,” Thierer said. “But we also have to be cognizant of the fact that we could make bad decisions that could take us out of that race or put us in second place.”

But Acemoglu advocates for a “pro-worker” AI agenda, one that prioritizes human jobs while using AI as a tool for greater efficiency. “The best way to use something that’s different from you is not to use it to replace yourself, but to use it in a complementary way.”

This story was originally featured on Fortune.com