Harvard University faculty members discussed on March 23 the economic consequences of global conflicts, trade policies, and technological advances such as artificial intelligence during a recent “From The Studio” FAS Symposium. The panel included Gita Gopinath, Gregory and Ania Coffey Professor of Economics; Carmen M. Reinhart, Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School; and Dani Rodrik, Ford Foundation Professor of International Political Economy at HKS.
The discussion addressed pressing concerns about job losses due to automation and AI, rising inflation from geopolitical hostilities, shifts in global currency confidence, and the impact of new tariffs. These topics are important as they have broad implications for employment rates and financial stability worldwide.
Gopinath said that threats to the labor market from artificial intelligence are “of a much bigger magnitude” than those experienced after the 2008 financial crisis. “The risk is that if we end up having a recession in a few years … we could go through a transition of very large job losses much bigger than what was seen after the great financial crisis.”
Reinhart commented on potential consequences stemming from an extended U.S.-Israel conflict with Iran: costs for food, fertilizer, shipping could increase along with oil prices. “Translation: higher inflation risks,” Reinhart said. She also noted that these pressures could interrupt efforts by the U.S. Federal Reserve to reduce interest rates.
Rodrik observed that despite shocks like new tariffs since President Trump took office fourteen months ago, “the global economy has proved ‘surprisingly, unexpectedly, relatively unaffected.'” However, he warned that ongoing crises might eventually erode optimism supporting U.S. growth.
Panelists agreed that recent events have strengthened the dollar’s position as investors seek safety amid uncertainty. “We have seen a resurgence in the dollar as the classic ‘flight to quality’ has taken root,” Reinhart said.
The conversation also covered how long-term changes such as Brexit initially seemed minor but later revealed significant economic impacts for Britain—an example Gopinath cited when discussing how policy shifts can take time to fully affect economies.
Looking ahead, Gopinath raised concerns about tax structures if AI dramatically reduces labor’s share in income: “But if AI leads to a transformation … you can’t run the kinds of programs you’re running … without having a higher capital income tax,” she said.
