ET Conversations | Michael Spence: AI Debt Bubble, US Recession, India-China Gap

Michael Spence, a Nobel Prize-winning economist, analyzes the shifting landscape of the global economy, focusing on India’s rapid development and the transformative potential of artificial intelligence. India’s growth trajectory relies on robust digital infrastructure, such as the Unified Payments Interface and biometric identification, which facilitate inclusive expansion without traditional manufacturing-led models. While AI introduces significant labor market turbulence, it functions primarily as a productivity tool rather than a wholesale replacement for human labor, provided that diffusion strategies are effectively implemented. Global stability faces ongoing "permacrisis" conditions, necessitating a strategic shift toward resilience over efficiency. Furthermore, the decline in academic prestige and restrictive immigration policies threaten the United States' historical role as a magnet for global talent, signaling a period of self-inflicted damage that requires urgent structural and policy corrections to maintain long-term economic dynamism.