0:00:09.775,0:00:11.404
Thank you very much.

0:00:11.404,0:00:15.836
It's a difficult act to follow[br]someone such as Diogo Costa,

0:00:15.836,0:00:17.997
but I will do my best.

0:00:17.997,0:00:22.087
I want to address the question[br]of creative destruction

0:00:22.087,0:00:24.868
in a somewhat different context.

0:00:24.868,0:00:27.550
There's a lot of data[br]that's been presented,

0:00:27.550,0:00:29.728
I'll talk about that very briefly,

0:00:29.728,0:00:33.297
but I want to look at it[br]in the context of globalization,

0:00:33.297,0:00:36.319
just another controversial issue.

0:00:36.319,0:00:39.428
Many people start[br]the discussion by assuming

0:00:39.428,0:00:43.103
that the term "globalization"[br]has a negative meaning.

0:00:43.103,0:00:45.628
I don't think that's good social science.

0:00:45.628,0:00:50.330
We should start with a neutral meaning,[br]and then, investigate, in the world,

0:00:50.330,0:00:54.674
whether something is having[br]a positive or a negative impact.

0:00:54.674,0:00:58.719
So, one common approach[br]to understanding globalization,

0:00:58.719,0:01:02.230
that does not tell you[br]if it's a good or a bad thing,

0:01:02.230,0:01:06.186
is to refer to the diminution[br]or elimination

0:01:06.786,0:01:12.011
of state-enforced restrictions[br]on exchange across political borders -

0:01:12.011,0:01:14.491
so between, for instance,[br]Brazil and Argentina,

0:01:14.491,0:01:16.370
or the United States and Canada,

0:01:16.370,0:01:20.721
or Japan and Kenya -

0:01:20.721,0:01:25.632
and then, the increasingly integrated[br]and complex global system of exchange,

0:01:25.632,0:01:29.681
commerce, and production[br]that has emerged as a result.

0:01:29.681,0:01:32.922
So, this doesn't tell us if it's[br]a good thing or if it's a bad thing,

0:01:32.922,0:01:36.844
but it is a trend that we can[br]identify in the world.

0:01:36.844,0:01:38.452
It's not a new thing.

0:01:38.452,0:01:42.205
People have been talking[br]about globalization for a very long time.

0:01:42.205,0:01:45.792
The philosopher[br]Democritus of Abdera told us,

0:01:45.792,0:01:49.011
"To a wise man, the whole earth is open,

0:01:49.011,0:01:54.272
and for the native land[br]of a good soul is the entire earth."

0:01:54.272,0:01:57.414
Now, we can ask, "Is it accelerating?"

0:01:57.414,0:02:00.224
And rather than presenting you with data,

0:02:00.224,0:02:03.454
I'm going to suggest[br]you can find out on your own.

0:02:03.454,0:02:06.264
You can go to the global internet.

0:02:06.264,0:02:08.454
For the first time[br]in the history of humanity,

0:02:08.454,0:02:12.253
we have an entirely globalized[br]information system.

0:02:12.253,0:02:15.242
And here are some of the things[br]you could check through Google,

0:02:15.242,0:02:18.147
or other search engines.

0:02:18.147,0:02:23.128
International trade in goods,[br]as a percentage of economic output:

0:02:23.128,0:02:25.421
has it been rising or falling?

0:02:25.421,0:02:28.245
Hint: rising, quite dramatically.

0:02:28.245,0:02:31.015
International trade in services?

0:02:31.015,0:02:34.625
That's an interesting one[br]because, for most of human history,

0:02:34.625,0:02:37.737
services could not be traded[br]internationally.

0:02:37.737,0:02:41.886
You could not have your hair cut[br]in a different country, for example,

0:02:41.886,0:02:45.136
or get a massage on a different continent,

0:02:45.136,0:02:51.398
but now, services increasingly can be[br]traded across international borders.

0:02:51.398,0:02:54.257
We can look at cross-border investment,

0:02:54.257,0:02:56.738
that is to say, investors in one country

0:02:56.738,0:03:01.802
who own assets or businesses[br]in other countries.

0:03:02.667,0:03:04.688
International tourist arrivals.

0:03:04.688,0:03:08.268
That's one that is rarely talked about[br]in the economic context,

0:03:08.268,0:03:12.028
but you'd find an incredibly[br]steep upward curve

0:03:12.028,0:03:15.569
in the amount of people[br]traveling around the world.

0:03:15.569,0:03:18.308
When I was young,[br]you never saw a Chinese tourist,

0:03:18.308,0:03:21.035
unless they were from Taiwan or Hong Kong.

0:03:21.035,0:03:25.609
Now, people from the mainland can be seen[br]as tourists all around the world,

0:03:25.609,0:03:29.289
a huge increase in international travel.

0:03:29.289,0:03:32.631
And then, finally,[br]international telephone calls,

0:03:32.631,0:03:36.499
more people connecting with friends,[br]neighbors, families,

0:03:36.499,0:03:39.290
all around the planet.

0:03:39.290,0:03:44.421
I was just at a conference like this,[br]in Kenya, in Nairobi,

0:03:44.421,0:03:47.011
and one of the speakers asked something.

0:03:47.011,0:03:53.071
He said, "How many of you here have[br]friends who live in other countries?"

0:03:53.611,0:03:57.433
And the majority of their hands went up,[br]of East African students.

0:03:57.433,0:04:02.241
He said, "You are the first generation[br]of whom that could be said.

0:04:02.241,0:04:08.072
You have friends in Canada, and Korea,[br]and South Africa, and Germany.

0:04:08.072,0:04:10.542
That has never happened before."

0:04:10.542,0:04:13.612
It's an enormous change in the world,

0:04:13.612,0:04:16.265
and we can go and measure it.

0:04:17.322,0:04:20.773
Now, I want to put it[br]in a cultural context, though;

0:04:20.773,0:04:25.903
not so much about economic data[br]and how this is raising living standards,

0:04:25.903,0:04:30.034
but often we hear it said[br]that this is harmful to culture.

0:04:30.034,0:04:34.304
I want to tell a little story[br]about Guatemalan women

0:04:34.304,0:04:38.484
and the clothes that they wear,[br]the traditional Huipil and Corté.

0:04:38.484,0:04:43.924
Huipil is a kind of a shirt[br]for the top part of her body,

0:04:43.924,0:04:48.784
and the Corté is a skirt which she wraps[br]around herself and folds over.

0:04:49.384,0:04:52.776
I had a tremendous[br]opportunity in Guatemala.

0:04:52.776,0:04:57.586
I was teaching at the[br]Francisco Marroquín University,

0:04:57.586,0:05:00.784
and one of the professors there[br]is an anthropologist.

0:05:00.784,0:05:03.604
He made a great offer, and he said,[br]"You know, next weekend,

0:05:03.604,0:05:06.796
I'm going to go visit my family[br]in the Mayan Highlands."

0:05:06.796,0:05:09.727
He's an indigenous person, and he's Mayan.

0:05:09.727,0:05:11.946
He said, "Would you like to come with?"

0:05:11.946,0:05:14.296
And I am really glad I said yes,

0:05:14.296,0:05:18.426
because I saw a part of the country[br]I never would have seen otherwise.

0:05:18.426,0:05:24.462
I got to see a different way[br]of understanding that complicated country.

0:05:25.786,0:05:30.127
It's told me, as we were driving,[br]he takes many foreigners

0:05:30.127,0:05:31.898
because he's an anthropologist,

0:05:31.898,0:05:36.548
so he has visitors from universities[br]in France, England, America and elsewhere,

0:05:36.548,0:05:39.164
who want to go "study" the Indians,

0:05:39.164,0:05:43.988
and he speaks the Mayan languages,[br]as well as Spanish and English.

0:05:43.988,0:05:48.839
And he said, "Consistently,[br]they complain about one thing,"

0:05:48.839,0:05:52.761
which is the Mayan women[br]are wearing their Cortés and Huipils

0:05:52.761,0:05:55.242
less often than they used to.

0:05:55.826,0:05:58.953
They say, "I was here ten years ago,[br]and all the women had them.

0:05:58.953,0:06:00.902
Now, not so many."

0:06:02.820,0:06:07.430
They concluded that the Guatemalan women[br]were being robbed of their culture,

0:06:07.430,0:06:10.236
that they were victims of globalization.

0:06:11.545,0:06:13.990
But what was interesting, he said,

0:06:13.990,0:06:20.706
not once had he ever heard a foreigner[br]ask a Guatemalan woman a question,

0:06:21.340,0:06:26.026
the simple question: "Why are you[br]not dressed like your grandmother?"

0:06:26.880,0:06:30.001
That seems a little strange,[br]and maybe rude,

0:06:30.001,0:06:34.892
but increasingly, the indigenous women[br]are wearing clothes for everyday purpose

0:06:34.892,0:06:38.732
like the women you would see[br]in Brazilian cities,

0:06:39.308,0:06:43.435
and they reserve their Corté[br]for special occasions:

0:06:43.435,0:06:49.307
weddings, for going to church,[br]for special family occasions.

0:06:51.202,0:06:55.951
He, however, is a scientist,[br]and he speaks the local language.

0:06:55.951,0:06:57.741
So, he asked them,

0:06:58.451,0:07:00.719
"Why do you not wear the Corté?"

0:07:01.153,0:07:04.503
And he said, "I always get[br]the same answer, in one form or another.

0:07:04.503,0:07:08.086
They say this has become too expensive.

0:07:08.702,0:07:10.815
These are too expensive."

0:07:11.594,0:07:15.721
Now, they're handmade,[br]made generally by women,

0:07:15.721,0:07:18.595
it's traditionally[br]considered "women's work,"

0:07:19.475,0:07:22.364
And they take a long time to make.

0:07:22.364,0:07:24.998
They're very elaborate works of art.

0:07:26.669,0:07:32.372
What does it mean for her to say[br]these have become too expensive?

0:07:32.372,0:07:34.167
Well, what does "expensive" mean?

0:07:34.167,0:07:37.285
It means you have to give up[br]more to get it.

0:07:37.955,0:07:42.179
Well, it's labors what she has[br]to give up. To get what?

0:07:43.246,0:07:47.596
In economic terms, what it means is,[br]for the first time in their history,

0:07:47.596,0:07:52.937
the value of the labor[br]of an indigenous woman is rising.

0:07:52.937,0:07:54.576
That's what it means.

0:07:54.576,0:07:57.664
The value of her labor is rising.

0:07:57.664,0:08:04.130
So, she could make a Corté for herself,[br]and wear it, every day.

0:08:04.130,0:08:06.722
working in the field, doing her work,

0:08:06.722,0:08:11.344
or she could make it[br]and sell it to a lady in France.

0:08:11.344,0:08:13.554
They're very expensive.

0:08:13.554,0:08:18.282
And with the money she earns,[br]she could by five or six outfits

0:08:18.282,0:08:20.773
like Brazilian women wear,

0:08:20.773,0:08:24.212
and have enough money[br]also to buy eyeglasses,

0:08:24.212,0:08:26.263
so she can see at a distance,

0:08:26.263,0:08:30.853
and to buy shoes and school books[br]for her daughter,

0:08:30.853,0:08:34.715
so she can go to school[br]and learn to read and write,

0:08:34.715,0:08:37.563
so she can buy medicine[br]against dengue fever,

0:08:37.563,0:08:40.014
which they don't have[br]in France and America,

0:08:40.014,0:08:42.538
where they complain about these things.

0:08:43.615,0:08:45.614
So, the question is:

0:08:47.234,0:08:50.594
was her life made worse off

0:08:50.594,0:08:56.985
by the opportunity to trade with people[br]in France, in the United States,

0:08:56.985,0:09:00.047
in Germany, and elsewhere?

0:09:00.847,0:09:04.255
She now can buy more with her labor,

0:09:04.255,0:09:07.126
and she reserves the Corté[br]for going to church,

0:09:07.126,0:09:09.265
not for everyday work.

0:09:09.997,0:09:11.726
And the other question is:

0:09:11.726,0:09:16.746
from whose perspective[br]has her life been made better or worse?

0:09:16.746,0:09:20.286
From the perspective[br]of the foreign tourist, it's worse,

0:09:20.286,0:09:23.758
you don't see colorful[br]native people as often,

0:09:23.758,0:09:27.087
but maybe, from her perspective,[br]it's an improvement.

0:09:27.087,0:09:31.038
I personally have heard,[br]said by foreigners in Guatemala,

0:09:31.038,0:09:36.307
complaints when they see indigenous people[br]take out mobile telephones.

0:09:36.307,0:09:40.698
"Oh, it ruined the whole experience![br]It wasn't authentic!"

0:09:40.698,0:09:43.337
They're supposed to have[br]"smoke signals," or something.

0:09:43.337,0:09:44.497
(Laughter)

0:09:44.497,0:09:47.473
They didn't like it, but they didn't think[br]from the perspective

0:09:47.473,0:09:49.348
of that indigenous person.

0:09:49.348,0:09:51.734
What does it mean[br]to have a mobile telephone?

0:09:51.734,0:09:55.708
It means you can call your parents[br]and talk to them.

0:09:55.708,0:10:00.188
You don't learn two weeks later[br]that your mother got sick,

0:10:00.188,0:10:02.684
and you didn't have time to visit her.

0:10:02.684,0:10:07.419
You get a phone call from your dad,[br]saying, "Momma is sick, come home."

0:10:07.419,0:10:10.380
Is that a positive thing[br]for your life or not,

0:10:10.380,0:10:13.293
from the perspective of that person?

0:10:14.199,0:10:16.349
Now, if we want to look at it,

0:10:16.349,0:10:21.491
what's happening in the world[br]is this process of creative destruction,

0:10:21.491,0:10:23.680
from an economic perspective.

0:10:23.680,0:10:28.189
Joseph Schumpeter is one of the most[br]important economists of the last century.

0:10:28.189,0:10:30.295
He was really a great genius,

0:10:30.295,0:10:35.940
and these are some of the most intelligent[br]words ever written in economics.

0:10:35.940,0:10:40.473
It's about a dynamic perspective,[br]not a static perspective,

0:10:40.922,0:10:44.082
"The problem that is usually[br]being visualized

0:10:44.082,0:10:48.302
is how capitalism[br]administers existing structures,

0:10:48.302,0:10:53.861
whereas the relevant problem[br]is how it creates and destroys them,"

0:10:53.861,0:10:57.743
a constant process [br]of creative destruction.

0:10:57.743,0:10:59.503
It's happening in the economy.

0:10:59.503,0:11:04.987
It's also happening in the context[br]of cultural life, artistic life, as well.

0:11:05.833,0:11:10.693
If you want to visualize it,[br]let's think first about technology.

0:11:10.693,0:11:13.264
Here's something that is disappearing:

0:11:16.004,0:11:17.613
phone boxes.

0:11:17.613,0:11:19.653
There are a few outside here,

0:11:19.653,0:11:22.133
but they're disappearing[br]from Brazilian cities.

0:11:22.133,0:11:26.215
You cannot find them anymore[br]in North America,

0:11:26.215,0:11:28.854
or Western Europe, or Japan.

0:11:28.854,0:11:33.244
The first time I noticed, I was at a hotel[br]I frequently go to, for conference.

0:11:33.244,0:11:35.064
Someone who worked at the hotel said,

0:11:35.064,0:11:37.126
"Look at that wall.[br]Does it look different?"

0:11:37.126,0:11:41.175
It took me a moment.[br]There were no telephones on it.

0:11:41.175,0:11:44.851
Why? Everyone has a telephone now.

0:11:44.851,0:11:49.134
They have it in their pocket,[br]so why should they invest in these?

0:11:49.134,0:11:52.155
So, here we have what's replaced it.

0:11:52.155,0:11:56.156
My first mobile telephone[br]was the one on the end.

0:11:56.156,0:11:58.722
It was like talking into a giant shoe.

0:11:58.722,0:11:59.803
(Laughter)

0:11:59.803,0:12:05.877
It was huge and very, very expensive,[br]a gigantic device.

0:12:05.877,0:12:08.737
I had to have this put[br]into a special briefcase.

0:12:08.737,0:12:12.606
Now, they've become so tiny[br]you can put it in your ear.

0:12:13.775,0:12:16.495
This has transformed the world.

0:12:17.196,0:12:21.496
Well, here's another one.[br]Some of you may not have ever used these.

0:12:21.496,0:12:25.447
When I first started writing,[br]I wrote with a pen on paper,

0:12:25.447,0:12:28.998
and then I would type them[br]with one of these.

0:12:28.998,0:12:30.909
I had an Underwood 5.

0:12:32.197,0:12:35.857
Many people don't know[br]how to use these anymore.

0:12:35.857,0:12:40.027
A good friend of mine told me his son,[br]when he was five, came to him, and said,

0:12:40.027,0:12:42.698
"Daddy, there's something strange.[br]I want to show you."

0:12:42.698,0:12:44.338
He said, "What is it?"

0:12:44.338,0:12:46.879
He said, "It's a computer,[br]but there is no screen!"

0:12:46.879,0:12:48.248
(Laughter)

0:12:48.248,0:12:50.189
He didn't understand;[br]he went and looked,

0:12:50.189,0:12:53.109
"Oh, I see, yes. It's a typewriter."

0:12:53.109,0:12:55.843
These are now found mainly in museums.

0:12:56.340,0:12:59.858
I'll show you a big improvement[br]in my personal life:

0:12:59.858,0:13:03.589
my first IBM Correcting Selectric tool.

0:13:03.589,0:13:05.869
It could correct your mistakes.

0:13:05.869,0:13:10.960
You had to type backwards,[br]and it would take the type off the page.

0:13:10.960,0:13:15.980
You have no idea what an improvement[br]this was for people who type a lot.

0:13:15.980,0:13:22.009
And, talk about sexy,[br]you could change the type font,

0:13:22.661,0:13:24.060
the kind of letters you used.

0:13:24.060,0:13:26.441
You bought these expensive little things.

0:13:26.441,0:13:28.760
You had to take it out,[br]and put in the other one,

0:13:28.760,0:13:32.183
and snap it shut, and then type with it.

0:13:32.891,0:13:38.312
So, that's how we got by,[br]but now, I have a Macbook Pro,

0:13:39.152,0:13:42.714
and this is better than my typewriter.

0:13:43.273,0:13:46.223
Now remember, something was destroyed.

0:13:46.223,0:13:49.012
There are no more typewriter factories.

0:13:49.012,0:13:52.122
In every town, there were[br]typewriter repair shops.

0:13:52.122,0:13:56.751
They're all gone. I haven't seen[br]a typewriter repair shop in years.

0:13:56.751,0:14:01.007
When I was a boy, I thought I wanted[br]to become a typewriter repairman.

0:14:01.007,0:14:03.644
I thought, "You'll always have work."

0:14:03.644,0:14:06.027
I'm glad I didn't choose that career path.

0:14:06.027,0:14:07.647
(Laughter)

0:14:07.647,0:14:11.702
I can do things with this[br]I couldn't do with my typewriter,

0:14:11.702,0:14:13.814
like watch movies.

0:14:13.814,0:14:17.315
If I talked to my typewriter,[br]people thought I was crazy.

0:14:17.315,0:14:19.883
I talk to my computer all the time,

0:14:19.883,0:14:23.904
and it talks back, with someone[br]who's in another country.

0:14:24.647,0:14:27.235
Now, we can look at another example.

0:14:27.235,0:14:32.415
When I was a boy, I watched Star Trek[br]with my father on television,

0:14:32.415,0:14:34.875
the first Star Trek,

0:14:34.875,0:14:39.635
and they had these amazing devices[br]called "communicators."

0:14:39.635,0:14:45.156
You opened it and you could[br]talk to one person. That's it.

0:14:45.156,0:14:49.006
And that's all it could do,[br]talk to one person.

0:14:49.006,0:14:51.865
I thought, "Wow! That is so cool!

0:14:51.865,0:14:55.666
In the distant future,[br]someone will have those."

0:14:55.666,0:14:57.457
(Laughter)

0:14:57.457,0:14:59.167
Well, I've got one,

0:14:59.167,0:15:03.176
and it's a lot better than they had[br]in these science fiction movies,

0:15:03.176,0:15:04.788
flying between the stars.

0:15:04.788,0:15:08.978
I can watch movies, I can play music,[br]pay my bills, convert currencies,

0:15:08.978,0:15:12.066
I read the newspapers on it,

0:15:12.066,0:15:15.108
I can do all kinds of things[br]you could not do

0:15:15.108,0:15:17.941
on a Star Trek communicator.

0:15:18.607,0:15:21.918
It's not just products[br]that are being replaced.

0:15:21.918,0:15:24.747
It's also ways of doing business.

0:15:24.747,0:15:28.918
Imagine, 20 years ago,[br]having a discussion of online banking.

0:15:28.918,0:15:32.248
"What's that?" People would not[br]have understood you.

0:15:32.248,0:15:34.718
Live-streaming media:

0:15:35.928,0:15:38.339
your grandparents[br]wouldn't have understood that.

0:15:38.339,0:15:42.748
Hub-and-spoke airlines,[br]which have revolutionized travel:

0:15:42.748,0:15:47.029
poor people can afford to fly[br]because of this tremendous innovation.

0:15:47.029,0:15:49.361
And also firms:

0:15:49.361,0:15:53.999
firms are also destroyed[br]and created, on a constant basis.

0:15:53.999,0:15:57.319
Standard & Poors [br]measures the largest firms

0:15:57.319,0:16:01.257
by "market-capitalization" value[br]of their shares.

0:16:01.257,0:16:05.169
How many of those[br]that were in the Top 100 in 1960

0:16:05.169,0:16:08.381
were still on it in 2012?

0:16:08.381,0:16:11.141
Ten. Only ten.

0:16:11.141,0:16:17.772
And 25% of the Top 100[br]had joined in just the last few years.

0:16:18.733,0:16:21.869
So, firms are coming and going,

0:16:21.869,0:16:26.802
going out of business, being destroyed,[br]and being created to replace the others.

0:16:26.802,0:16:29.760
Now, a lot of people focus[br]on the destructive part

0:16:29.760,0:16:33.291
of creative destruction,[br]but how destructive is it?

0:16:33.291,0:16:37.142
Is it destructive on balance?[br]I don't think so.

0:16:37.142,0:16:40.670
Some value is destroyed,[br]but it's not pure destruction,

0:16:40.670,0:16:43.672
because you get something else[br]that adds more value.

0:16:43.672,0:16:46.043
That's why it replaced it.

0:16:46.043,0:16:49.742
My computer is more valuable[br]than a big typewriter,

0:16:49.742,0:16:55.393
it can do a lot more, and it cost less[br]than I paid for my old typewriter.

0:16:55.393,0:17:01.283
And I'll conclude: what makes possible[br]value-added creative destruction?

0:17:01.283,0:17:03.873
And we have a pretty[br]good idea what that is.

0:17:03.873,0:17:06.322
It's entrepreneurial freedom.

0:17:06.322,0:17:08.893
Now, what does entrepreneurial[br]freedom mean, though?

0:17:08.893,0:17:10.623
Something rather special.

0:17:10.623,0:17:13.954
It's liberty for the unknown person;

0:17:13.954,0:17:20.093
not for any known person, per se,[br]but for weird people, strange people,

0:17:20.093,0:17:22.599
who are called the English "geeks."

0:17:23.293,0:17:26.634
The boys who created the computer industry

0:17:26.634,0:17:30.745
were strange, socially[br]badly-adjusted kids.

0:17:30.745,0:17:34.035
They could not get any[br]of the girls to date them,

0:17:34.035,0:17:38.134
because they were obsessed with radios,[br]computers, and working in their garage.

0:17:38.134,0:17:39.985
This has changed.

0:17:40.675,0:17:44.135
They all found that the girls[br]were more interested in dating them

0:17:44.135,0:17:46.207
after they became billionaires.

0:17:46.207,0:17:47.456
(Laughter)

0:17:47.456,0:17:49.758
Friedrich Hayek put it very neatly,

0:17:49.758,0:17:54.067
"What is important is not the freedom[br]for what I would personally like to do,

0:17:54.757,0:17:58.647
but rather what freedom[br]some person may need

0:17:58.647,0:18:01.447
in order to do things[br]beneficial to society.

0:18:01.447,0:18:04.577
And this freedom we can assure[br]to the unknown person

0:18:04.577,0:18:07.392
only by giving it to everyone."

0:18:07.787,0:18:09.830
Now, that is in an economic context,

0:18:09.830,0:18:15.500
but it has a deep root in your society.

0:18:15.500,0:18:19.508
"Freedom is disruptive[br]because it's about freedom for everyone,"

0:18:19.508,0:18:24.042
as Joaquim Nabuco put it very neatly[br]in his book on abolitionism.

0:18:24.042,0:18:27.918
He says, "You should love[br]the freedom of other people.

0:18:27.918,0:18:32.732
When you love the freedom of other people,[br]you'll live in a great society."

0:18:32.732,0:18:33.969
Thank you.

0:18:33.969,0:18:36.265
(Applause)