The Forgotten Depression’s Lessons for an AI-Driven Future

The violent transition from an agricultural economy to an industrial one in the late 19th century laid the groundwork for the devastating impact of the Great Depression. Today, we’re facing another transition, this time accelerated by artificial intelligence, which threatens to exacerbate existing social and economic inequalities.

In 1893, unemployment soared to 18%, with over a third of New York workers and nearly half of Michigan workers out of work. The economic consequences were severe: whole states were decimated, leading millions to march on Washington demanding action. By contrast, the current economic landscape is marked by stagnant wages and rising inequality. Research has shown that if you were born in 1940, your chances of out-earning your parents were above 90%. Now, nearly half of American households struggle to make ends meet.

People aren’t just imagining that they’re falling behind; they actually are. The AI era has thrown gas on a fire already alight, and our understanding of the causes and solutions is far more advanced than it was in 1893. Benjamin Bloom and Raj Chetty’s research provides a clear picture of what works and what doesn’t: policy choices have decoupled growth from workers’ prosperity.

The good news is that we’re not starting from scratch. The technologies that risk leaving millions behind may hold the key to transforming institutions where opportunities are won or lost. Claude Corps, championed by Anthropic co-founder Daniela Amodei, aims to embed AI-fluent fellows within civil society organizations. These individuals would prepare them to harness technological potential and drive change.

Anthropic’s collaboration with CodePath is particularly noteworthy. By equipping young Americans with the skills needed to thrive in a fast-changing economy, we can potentially transform institutions that benefit the public. New tools in the right hands will make a vital difference in areas such as education and job training, community lending, and mental health supports.

However, staving off an economic shock requires more than just technological innovation. It demands a sweeping effort on multiple fronts: preparing people for jobs, lowering living costs, and reinventing safety nets built for a bygone era. We must invest in new approaches to education and training, building on what we’ve learned from past crises.

The WPA, the Marshall Plan, the space program, and the polio vaccine all required discipline, faith, and a willingness to face brutal facts honestly. Today, we have both the imperative and the instruments to prepare more Americans for a rapidly changing world. The question is whether we can act fast enough to harness our collective potential.

The forgotten depression’s lessons are clear: technological disruption, coupled with policy choices, has the power to devastate or transform economies. It’s time for us to confront this reality head-on and invest in new approaches that prioritize people and institutions over profits.