The alpha, twice a week
That was 2 min.
Get the best new moments in your inbox every Wednesday and Saturday. It's free.
Check your inbox
We sent a link to your address. Click it to finish signing up. Not there in a minute? Look in spam.
or
Silicon Valley Girl · 2 min · Oct 6, 2026
Making workers 5% more productive beats automating 5% of jobs
Daron Acemoğlu
Institute Professor, MIT
Nobel-winning MIT economist who studies how AI and automation reshape work, productivity, inequality and economic growth.
Marina MogilkoHost · Host, Silicon Valley Girl
Co-founded LinguaTrip and built Linguamarina, an English-learning YouTube channel with almost 9M subscribers.
About this segment
Acemoğlu gives a simple calculus for business owners: boosting 100 workers' productivity by 5% beats cutting costs on 5% of jobs. Winning companies imagine new markets rather than just cutting costs.
From “Nobel Economist: Where He Sees the Real Money in AI”, Oct 6, 2026. Watch the full episode
Thanks. We'll look at and fix what's off.
“imagine you have 100 employees. And I tell you, you can automate 5% of those jobs and reduce the cost by half in those 5”
Takeaways
- Augmenting all workers can outperform automating a small share of jobs
- Cutting headcount erodes experience and commitment, hurting productivity
- Great companies like Ford created new markets, not just cost cuts
In this episode
Full episode- 40:08The money in AI is in data and applications, not models2:35
25:52Making workers 5% more productive beats automating 5% of jobs2:09
Transcript
Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.
- 26:05
So I want AI to be used for automation, so long as we also use AI for creating new things, like for nurses, for electricians, for many occupations we can't even dream about right now. How do you explain it to a small business owner whose only metric is increasing profits? What is the economic downside? Oh, productivity. Productivity. I think, again, in my experience, again, it may be cheap talk. People may be nice to me when I talk to them, or I might have fooled them.
- 26:30
But most businesses actually get that. Not everybody, but most of them get that. Your workers are your greatest asset. Imagine making them more productive. That's fantastic for the business. And in fact, it's a better calculus. Like, imagine you have 100 employees. And I tell you, you can automate 5% of those jobs and reduce the cost by half in those 5%. Or you can make your workers 5% more productive.
- 26:56
The latter is going to get you much more. Oh, and your competitors are going to be automating their workforce. And if you're getting rid of people, then your productivity is going to eventually fall. Right. I mean, it's just your workers have a lot of experience, have a lot of, some of them, if you've been a good boss, they have commitment to the work or to the business. If you can make them more innovative, better at problem solving, better at doing new things, that's the kind of business that's going to succeed.
- 27:22
Let me ask you a question. What are the companies, which ones are the companies from the past that you remember? And you'll give me familiar answers like Ford Motor Company, General Motors, General Electric, IBM, Microsoft. What's common about all of them did something new? They didn't just cut costs and took what others were doing. They imagined new markets, new technologies, new tasks. Henry Ford himself captured that.
- 27:52
He said, if I had asked the consumers what they wanted, they would have told me faster horses. So that's what we need from successful companies. And cutting your cost by 5%, that's not going to make you go down the Hindu history books. When it comes to automation, do you have a rule on how do you know which task?