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♪ [music] ♪

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- [Narrator] "Infinity War" is known 
for its spectacular special effects.

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But we can pretty certain
that in a couple of decades.

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they'll look old and outdated.

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That's just the way it goes with movies.

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- [Ian] The first adult movie

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that I ever saw was 
the original "Jaws" in summer camp.

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It was terrifying,

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and now you go back 
and look at the mechanical shark

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that jumped onto the boat,

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the great white, 
over 20 feet long, thrashing about,

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and you go that is a ridiculous, 
stupid-looking thing.

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So, I feel pretty clear 
that we have come a long way

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since the '70s in terms 
of graphics.

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- [Narrator] This constant 
improvement is not limited

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to special effects --

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sound quality, picture quality, 
theater seats.

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You name it, 
it seems to have improved.

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Well, maybe not the acting.

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- [Edward] Oh no, not the bees!
Not the bees! Ahh!

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- [Narrator] Economists have a term
for this type of improvement --

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"creative destruction."

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- [Tyler] Creative destruction was 
a term in Economics

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coined by an Austrian economist,
Joseph Schumpeter,

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early in the 20th century.

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It's really become 
a central driving idea in Economics.

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- [Narrator] Creative destruction
describes the continual process

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of innovation in which new products
and services replace outdated ones.

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Take photos -- we live in a world

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of smartphones, Instagram,
and augmented reality.

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How we got here reveals
a long and winding path

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of creative destruction.

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- When I was a kid, 
you take a photo,

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and the Polaroid comes out,

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you wave it around 'cause you think
it's going to make it dry faster.

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I don't know 
if that actually worked.

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And it's several minutes later,

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and it probably doesn't 
look very good,

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but you have it!

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And 10 years later, it's all faded, 
and it probably doesn't keep.

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- [Narrator] Before the digital era,
you might have a Polaroid

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or you might buy film,
typically from Kodak.

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You had to pay 
a few dollars for film,

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which got you about 20 pictures,

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and then pay more
to get them developed.

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- [man] Got double prints with mine!

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- [Narrator] If, whoops, 
your eyes were shut -- too bad!

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You didn't know until days later.

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And if you accidentally 
opened your camera,

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poof, your pictures are gone!

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Digital cameras came on the scene
at the end of the 20th century.

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Entrepreneurs quickly improved
the cameras, the software,

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and the accessories.

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People increasingly switched 
away from film.

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It was cheaper, easier 
and more enjoyable.

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These entrepreneurs represent 
the creative side

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of creative destruction.

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But what about the flip side,
the destruction?

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Polaroid employed 
over 20,000 people in their heyday.

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Kodak dwarfed Polaroid,
employing over 120,000 employees

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and being one of the most 
well-known companies in the world.

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The digital age, while rejoiced 
by consumers ushered

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them both into bankruptcy.

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- But let's be clear, the people
that used to make the Polaroids

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and the Kodaks don't like 
that development

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because they just lost jobs.

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Polaroids have had 
a bit of a resurgence lately

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as a retro product,

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but that's actually 
not the same company

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that made the originals.

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That Polaroid is long gone.

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See, there are two sides 
of creative destruction,

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entrepreneurs inventing new products
or ways to save money

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are how we improve 
our standard of living.

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These improvements are 
the foundation of prosperity,

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and positively impact 
generation after generation.

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But the flip side can make jobs
or even whole industries go extinct.

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Unlike the games, 
that pain typically subsides.

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People usually find new jobs.

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Most of those thousands
of employees at Polaroid and Kodak

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went on to other types of work.

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When you take the long view,
these job changes have

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historically been beneficial.

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In the 1800s, more than half 
of the United States

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was employed in farming.

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Because of time-saving inventions
like the tractor,

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farmers now make up less 
than 2 percent of the workforce.

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- Now you might think,
"My goodness! Those poor farmers --

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where did they go? What kind of jobs
could they possibly have had?"

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But by liberating that labor,
we made it possible for people

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to do things, 
like produce automobiles,

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produce airplanes for more people 
to become entertainers

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or movie stars, 
more people to become doctors.

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- [Narrator] So in the long run,
we have more people working

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with film and more building 
photo apps and the like.

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However, in the short run,

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the transition can 
be extremely painful.

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If you've spent your life perfecting 
the craft of developing film,

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you're not walking out of Kodak
and into a sweet gig at Instagram.

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You might just be out of a job
and out of luck.

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Creative destruction comes 
in many forms.

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We often think 
of the transformative technology,

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like the tractor,
or the digital camera,

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or the smartphone,
which fundamentally changes

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how we do things.

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Here's a not so obvious source
of creative destruction -- trade.

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- Trading with another nation,
it is a kind of technology.

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It's a way of getting 
something else more cheaply.

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You're taking things 
you used to produce,

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finding a newer, cheaper way 
of doing it --

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be it with tractors, 
or with robots,

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or with foreign trade.

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And they're all technologies