1
00:00:09,775 --> 00:00:11,404
Thank you very much.

2
00:00:11,404 --> 00:00:15,836
It's a difficult act to follow
someone such as Diogo Costa,

3
00:00:15,836 --> 00:00:17,997
but I will do my best.

4
00:00:17,997 --> 00:00:22,087
I want to address the question
of creative destruction

5
00:00:22,087 --> 00:00:24,868
in a somewhat different context.

6
00:00:24,868 --> 00:00:27,550
There's a lot of data
that's been presented,

7
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I'll talk about that very briefly,

8
00:00:29,728 --> 00:00:33,297
but I want to look at it
in the context of globalization,

9
00:00:33,297 --> 00:00:36,319
just another controversial issue.

10
00:00:36,319 --> 00:00:39,428
Many people start
the discussion by assuming

11
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that the term "globalization"
has a negative meaning.

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I don't think that's good social science.

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We should start with a neutral meaning,
and then, investigate, in the world,

14
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whether something is having
a positive or a negative impact.

15
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So, one common approach
to understanding globalization,

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that does not tell you
if it's a good or a bad thing,

17
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is to refer to the diminution
or elimination

18
00:01:06,786 --> 00:01:12,011
of state-enforced restrictions
on exchange across political borders -

19
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so between, for instance,
Brazil and Argentina,

20
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or the United States and Canada,

21
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or Japan and Kenya -

22
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and then, the increasingly integrated
and complex global system of exchange,

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commerce, and production
that has emerged as a result.

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So, this doesn't tell us if it's
a good thing or if it's a bad thing,

25
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but it is a trend that we can
identify in the world.

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It's not a new thing.

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People have been talking
about globalization for a very long time.

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The philosopher
Democritus of Abdera told us,

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"To a wise man, the whole earth is open,

30
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and for the native land
of a good soul is the entire earth."

31
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Now, we can ask, "Is it accelerating?"

32
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And rather than presenting you with data,

33
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I'm going to suggest
you can find out on your own.

34
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You can go to the global internet.

35
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For the first time
in the history of humanity,

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we have an entirely globalized
information system.

37
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And here are some of the things
you could check through Google,

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or other search engines.

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International trade in goods,
as a percentage of economic output:

40
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has it been rising or falling?

41
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Hint: rising, quite dramatically.

42
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International trade in services?

43
00:02:31,015 --> 00:02:34,625
That's an interesting one
because, for most of human history,

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services could not be traded
internationally.

45
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You could not have your hair cut
in a different country, for example,

46
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or get a massage on a different continent,

47
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but now, services increasingly can be
traded across international borders.

48
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We can look at cross-border investment,

49
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that is to say, investors in one country

50
00:02:56,738 --> 00:03:01,802
who own assets or businesses
in other countries.

51
00:03:02,667 --> 00:03:04,688
International tourist arrivals.

52
00:03:04,688 --> 00:03:08,268
That's one that is rarely talked about
in the economic context,

53
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but you'd find an incredibly
steep upward curve

54
00:03:12,028 --> 00:03:15,569
in the amount of people
traveling around the world.

55
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When I was young,
you never saw a Chinese tourist,

56
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unless they were from Taiwan or Hong Kong.

57
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Now, people from the mainland can be seen
as tourists all around the world,

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a huge increase in international travel.

59
00:03:29,289 --> 00:03:32,631
And then, finally,
international telephone calls,

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more people connecting with friends,
neighbors, families,

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all around the planet.

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I was just at a conference like this,
in Kenya, in Nairobi,

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and one of the speakers asked something.

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He said, "How many of you here have
friends who live in other countries?"

65
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And the majority of their hands went up,
of East African students.

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He said, "You are the first generation
of whom that could be said.

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You have friends in Canada, and Korea,
and South Africa, and Germany.

68
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That has never happened before."

69
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It's an enormous change in the world,

70
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and we can go and measure it.

71
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Now, I want to put it
in a cultural context, though;

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not so much about economic data
and how this is raising living standards,

73
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but often we hear it said
that this is harmful to culture.

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I want to tell a little story
about Guatemalan women

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and the clothes that they wear,
the traditional Huipil and Corté.

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Huipil is a kind of a shirt
for the top part of her body,

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and the Corté is a skirt which she wraps
around herself and folds over.

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I had a tremendous
opportunity in Guatemala.

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I was teaching at the
Francisco Marroquín University,

80
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and one of the professors there
is an anthropologist.

81
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He made a great offer, and he said,
"You know, next weekend,

82
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I'm going to go visit my family
in the Mayan Highlands."

83
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He's an indigenous person, and he's Mayan.

84
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He said, "Would you like to come with?"

85
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And I am really glad I said yes,

86
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because I saw a part of the country
I never would have seen otherwise.

87
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I got to see a different way
of understanding that complicated country.

88
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It's told me, as we were driving,
he takes many foreigners

89
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because he's an anthropologist,

90
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so he has visitors from universities
in France, England, America and elsewhere,

91
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who want to go "study" the Indians,

92
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and he speaks the Mayan languages,
as well as Spanish and English.

93
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And he said, "Consistently,
they complain about one thing,"

94
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which is the Mayan women
are wearing their Cortés and Huipils

95
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less often than they used to.

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They say, "I was here ten years ago,
and all the women had them.

97
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Now, not so many."

98
00:06:02,820 --> 00:06:07,430
They concluded that the Guatemalan women
were being robbed of their culture,

99
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that they were victims of globalization.

100
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But what was interesting, he said,

101
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not once had he ever heard a foreigner
ask a Guatemalan woman a question,

102
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the simple question: "Why are you
not dressed like your grandmother?"

103
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That seems a little strange,
and maybe rude,

104
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but increasingly, the indigenous women
are wearing clothes for everyday purpose

105
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like the women you would see
in Brazilian cities,

106
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and they reserve their Corté
for special occasions:

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weddings, for going to church,
for special family occasions.

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He, however, is a scientist,
and he speaks the local language.

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So, he asked them,

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"Why do you not wear the Corté?"

111
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And he said, "I always get
the same answer, in one form or another.

112
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They say this has become too expensive.

113
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These are too expensive."

114
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Now, they're handmade,
made generally by women,

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it's traditionally
considered "women's work,"

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and they take a long time to make.

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They're very elaborate works of art.

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What does it mean for her to say
these have become too expensive?

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Well, what does "expensive" mean?

120
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It means you have to give up
more to get it.

121
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Well, it's labors what she has
to give up. To get what?

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In economic terms, what it means is,
for the first time in their history,

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the value of the labor
of an indigenous woman is rising.

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That's what it means.

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The value of her labor is rising.

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So, she could make a Corté for herself,
and wear it, every day.

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working in the field, doing her work,

128
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or she could make it
and sell it to a lady in France.

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They're very expensive.

130
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And with the money she earns,
she could by five or six outfits

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like Brazilian women wear,

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and have enough money
also to buy eyeglasses,

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so she can see at a distance,

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and to buy shoes and school books
for her daughter,

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so she can go to school
and learn to read and write,

136
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so she can buy medicine
against dengue fever,

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which they don't have
in France and America,

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where they complain about these things.

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So, the question is:

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was her life made worse off

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00:08:50,594 --> 00:08:56,985
by the opportunity to trade with people
in France, in the United States,

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in Germany, and elsewhere?

143
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She now can buy more with her labor,

144
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and she reserves the Corté
for going to church,

145
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not for everyday work.

146
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And the other question is:

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from whose perspective
has her life been made better or worse?

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From the perspective
of the foreign tourist, it's worse,

149
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you don't see colorful
native people as often,

150
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but maybe, from her perspective,
it's an improvement.

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I personally have heard,
said by foreigners in Guatemala,

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complaints when they see indigenous people
take out mobile telephones.

153
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"Oh, it ruined the whole experience!
It wasn't authentic!"

154
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They're supposed to have
"smoke signals," or something.

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(Laughter)

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They didn't like it, but they didn't think
from the perspective

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of that indigenous person.

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What does it mean
to have a mobile telephone?

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It means you can call your parents
and talk to them.

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You don't learn two weeks later
that your mother got sick,

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and you didn't have time to visit her.

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You get a phone call from your dad,
saying, "Momma is sick, come home."

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Is that a positive thing
for your life or not,

164
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from the perspective of that person?

165
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Now, if we want to look at it,

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what's happening in the world
is this process of creative destruction,

167
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from an economic perspective.

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00:10:23,680 --> 00:10:28,189
Joseph Schumpeter is one of the most
important economists of the last century.

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He was really a great genius,

170
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and these are some of the most intelligent
words ever written in economics.

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It's about a dynamic perspective,
not a static perspective,

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"The problem that is usually
being visualized

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is how capitalism
administers existing structures,

174
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whereas the relevant problem
is how it creates and destroys them,"

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a constant process 
of creative destruction.

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It's happening in the economy.

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It's also happening in the context
of cultural life, artistic life, as well.

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If you want to visualize it,
let's think first about technology.

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Here's something that is disappearing:

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phone boxes.

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There are a few outside here,

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but they're disappearing
from Brazilian cities.

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You cannot find them anymore
in North America,

184
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or Western Europe, or Japan.

185
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The first time I noticed, I was at a hotel
I frequently go to, for conference.

186
00:11:33,244 --> 00:11:35,064
Someone who worked at the hotel said,

187
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"Look at that wall.
Does it look different?"

188
00:11:37,126 --> 00:11:41,175
It took me a moment.
There were no telephones on it.

189
00:11:41,175 --> 00:11:44,851
Why? Everyone has a telephone now.

190
00:11:44,851 --> 00:11:49,134
They have it in their pocket,
so why should they invest in these?

191
00:11:49,134 --> 00:11:52,155
So, here we have what's replaced it.

192
00:11:52,155 --> 00:11:56,156
My first mobile telephone
was the one on the end.

193
00:11:56,156 --> 00:11:58,722
It was like talking into a giant shoe.

194
00:11:58,722 --> 00:11:59,803
(Laughter)

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00:11:59,803 --> 00:12:05,877
It was huge and very, very expensive,
a gigantic device.

196
00:12:05,877 --> 00:12:08,737
I had to have this put
into a special briefcase.

197
00:12:08,737 --> 00:12:12,606
Now, they've become so tiny
you can put it in your ear.

198
00:12:13,775 --> 00:12:16,495
This has transformed the world.

199
00:12:17,196 --> 00:12:21,496
Well, here's another one.
Some of you may not have ever used these.

200
00:12:21,496 --> 00:12:25,447
When I first started writing,
I wrote with a pen on paper,

201
00:12:25,447 --> 00:12:28,998
and then I would type them
with one of these.

202
00:12:28,998 --> 00:12:30,909
I had an Underwood 5.

203
00:12:32,197 --> 00:12:35,857
Many people don't know
how to use these anymore.

204
00:12:35,857 --> 00:12:40,027
A good friend of mine told me his son,
when he was five, came to him, and said,

205
00:12:40,027 --> 00:12:42,698
"Daddy, there's something strange.
I want to show you."

206
00:12:42,698 --> 00:12:44,338
He said, "What is it?"

207
00:12:44,338 --> 00:12:46,879
He said, "It's a computer,
but there is no screen!"

208
00:12:46,879 --> 00:12:48,248
(Laughter)

209
00:12:48,248 --> 00:12:50,189
He didn't understand;
he went and looked,

210
00:12:50,189 --> 00:12:53,109
"Oh, I see, yes. It's a typewriter."

211
00:12:53,109 --> 00:12:55,843
These are now found mainly in museums.

212
00:12:56,340 --> 00:12:59,858
I'll show you a big improvement
in my personal life:

213
00:12:59,858 --> 00:13:03,589
my first IBM Correcting Selectric tool.

214
00:13:03,589 --> 00:13:05,869
It could correct your mistakes.

215
00:13:05,869 --> 00:13:10,960
You had to type backwards,
and it would take the type off the page.

216
00:13:10,960 --> 00:13:15,980
You have no idea what an improvement
this was for people who type a lot.

217
00:13:15,980 --> 00:13:22,009
And, talk about sexy,
you could change the type font,

218
00:13:22,661 --> 00:13:24,060
the kind of letters you used.

219
00:13:24,060 --> 00:13:26,441
You bought these expensive little things.

220
00:13:26,441 --> 00:13:28,760
You had to take it out,
and put in the other one,

221
00:13:28,760 --> 00:13:32,183
and snap it shut, and then type with it.

222
00:13:32,891 --> 00:13:38,312
So, that's how we got by,
but now, I have a Macbook Pro,

223
00:13:39,152 --> 00:13:42,714
and this is better than my typewriter.

224
00:13:43,273 --> 00:13:46,223
Now remember, something was destroyed.

225
00:13:46,223 --> 00:13:49,012
There are no more typewriter factories.

226
00:13:49,012 --> 00:13:52,122
In every town, there were
typewriter repair shops.

227
00:13:52,122 --> 00:13:56,751
They're all gone. I haven't seen
a typewriter repair shop in years.

228
00:13:56,751 --> 00:14:01,007
When I was a boy, I thought I wanted
to become a typewriter repairman.

229
00:14:01,007 --> 00:14:03,644
I thought, "You'll always have work."

230
00:14:03,644 --> 00:14:06,027
I'm glad I didn't choose that career path.

231
00:14:06,027 --> 00:14:07,647
(Laughter)

232
00:14:07,647 --> 00:14:11,702
I can do things with this
I couldn't do with my typewriter,

233
00:14:11,702 --> 00:14:13,814
like watch movies.

234
00:14:13,814 --> 00:14:17,315
If I talked to my typewriter,
people thought I was crazy.

235
00:14:17,315 --> 00:14:19,883
I talk to my computer all the time,

236
00:14:19,883 --> 00:14:23,904
and it talks back, with someone
who's in another country.

237
00:14:24,647 --> 00:14:27,235
Now, we can look at another example.

238
00:14:27,235 --> 00:14:32,415
When I was a boy, I watched Star Trek
with my father on television,

239
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the first Star Trek,

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and they had these amazing devices
called "communicators."

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You opened it and you could
talk to one person. That's it.

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And that's all it could do,
talk to one person.

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I thought, "Wow! That is so cool!

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In the distant future,
someone will have those."

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(Laughter)

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Well, I've got one,

247
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and it's a lot better than they had
in these science fiction movies,

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flying between the stars.

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I can watch movies, I can play music,
pay my bills, convert currencies,

250
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I read the newspapers on it,

251
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I can do all kinds of things
you could not do

252
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on a Star Trek communicator.

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00:15:18,607 --> 00:15:21,918
It's not just products
that are being replaced.

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It's also ways of doing business.

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00:15:24,747 --> 00:15:28,918
Imagine, 20 years ago,
having a discussion of online banking.

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"What's that?" People would not
have understood you.

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Live-streaming media:

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your grandparents
wouldn't have understood that.

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00:15:38,339 --> 00:15:42,748
Hub-and-spoke airlines,
which have revolutionized travel:

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poor people can afford to fly
because of this tremendous innovation.

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And also firms:

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firms are also destroyed
and created, on a constant basis.

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Standard & Poors 
measures the largest firms

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by "market-capitalization" value
of their shares.

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How many of those
that were in the Top 100 in 1960

266
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were still on it in 2012?

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Ten. Only ten.

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And 25% of the Top 100
had joined in just the last few years.

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So, firms are coming and going,

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going out of business, being destroyed,
and being created to replace the others.

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Now, a lot of people focus
on the destructive part

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of creative destruction,
but how destructive is it?

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Is it destructive on balance?
I don't think so.

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Some value is destroyed,
but it's not pure destruction,

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because you get something else
that adds more value.

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00:16:43,672 --> 00:16:46,043
That's why it replaced it.

277
00:16:46,043 --> 00:16:49,742
My computer is more valuable
than a big typewriter,

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00:16:49,742 --> 00:16:55,393
it can do a lot more, and it cost less
than I paid for my old typewriter.

279
00:16:55,393 --> 00:17:01,283
And I'll conclude: what makes possible
value-added creative destruction?

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And we have a pretty
good idea what that is.

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It's entrepreneurial freedom.

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00:17:06,322 --> 00:17:08,893
Now, what does entrepreneurial
freedom mean, though?

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Something rather special.

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00:17:10,623 --> 00:17:13,954
It's liberty for the unknown person;

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not for any known person, per se,
but for weird people, strange people,

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00:17:20,093 --> 00:17:22,599
who are called, in English, "geeks."

287
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The boys who created the computer industry

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00:17:26,634 --> 00:17:30,745
were strange, socially
badly-adjusted kids.

289
00:17:30,745 --> 00:17:34,035
They could not get any
of the girls to date them,

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00:17:34,035 --> 00:17:38,134
because they were obsessed with radios,
computers, and working in their garage.

291
00:17:38,134 --> 00:17:39,985
This has changed.

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00:17:40,675 --> 00:17:44,135
They all found that the girls
were more interested in dating them

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00:17:44,135 --> 00:17:46,207
after they became billionaires.

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00:17:46,207 --> 00:17:47,456
(Laughter)

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00:17:47,456 --> 00:17:49,758
Friedrich Hayek put it very neatly,

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00:17:49,758 --> 00:17:54,067
"What is important is not the freedom
for what I would personally like to do,

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00:17:54,757 --> 00:17:58,647
but rather what freedom
some person may need

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00:17:58,647 --> 00:18:01,447
in order to do things
beneficial to society.

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00:18:01,447 --> 00:18:04,577
And this freedom we can assure
to the unknown person

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only by giving it to everyone."

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00:18:07,787 --> 00:18:09,830
Now, that is in an economic context,

302
00:18:09,830 --> 00:18:15,500
but it has a deep root in your society.

303
00:18:15,500 --> 00:18:19,508
"Freedom is disruptive
because it's about freedom for everyone,"

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00:18:19,508 --> 00:18:24,042
as Joaquim Nabuco put it very neatly
in his book on abolitionism.

305
00:18:24,042 --> 00:18:27,918
He says, "You should love
the freedom of other people.

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00:18:27,918 --> 00:18:32,732
When you love the freedom of other people,
you'll live in a great society."

307
00:18:32,732 --> 00:18:33,969
Thank you.

308
00:18:33,969 --> 00:18:36,265
(Applause)