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- [Narrator] "Infinity War" is known for its spectacular special effects.
But we can pretty certain that in a couple of decades.
they'll look old and outdated.
That's just the way it goes with movies.
- [Ian] The first adult movie
that I ever saw was the original "Jaws" in summer camp.
It was terrifying,
and now you go back and look at the mechanical shark
that jumped onto the boat,
the great white, over 20 feet long, thrashing about,
and you go that is a ridiculous, stupid-looking thing.
So, I feel pretty clear that we have come a long way
since the '70s in terms of graphics.
- [Narrator] This constant improvement is not limited
to special effects --
sound quality, picture quality, theater seats.
You name it, it seems to have improved.
Well, maybe not the acting.
- [Edward] Oh no, not the bees! Not the bees! Ahh!
- [Narrator] Economists have a term for this type of improvement --
"creative destruction."
- [Tyler] Creative destruction was a term in Economics
coined by an Austrian economist, Joseph Schumpeter,
early in the 20th century.
It's really become a central driving idea in Economics.
- [Narrator] Creative destruction describes the continual process
of innovation in which new products and services replace outdated ones.
Take photos -- we live in a world
of smartphones, Instagram, and augmented reality.
How we got here reveals a long and winding path
of creative destruction.
- When I was a kid, you take a photo,
and the Polaroid comes out,
you wave it around 'cause you think it's going to make it dry faster.
I don't know if that actually worked.
And it's several minutes later,
and it probably doesn't look very good,
but you have it!
And 10 years later, it's all faded, and it probably doesn't keep.
- [Narrator] Before the digital era, you might have a Polaroid
or you might buy film, typically from Kodak.
You had to pay a few dollars for film,
which got you about 20 pictures,
and then pay more to get them developed.
- [man] Got double prints with mine!
- [Narrator] If, whoops, your eyes were shut -- too bad!
You didn't know until days later.
And if you accidentally opened your camera,
poof, your pictures are gone!
Digital cameras came on the scene at the end of the 20th century.
Entrepreneurs quickly improved the cameras, the software,
and the accessories.
People increasingly switched away from film.
It was cheaper, easier and more enjoyable.
These entrepreneurs represent the creative side
of creative destruction.
But what about the flip side, the destruction?
Polaroid employed over 20,000 people in their heyday.
Kodak dwarfed Polaroid, employing over 120,000 employees
and being one of the most well-known companies in the world.
The digital age, while rejoiced by consumers ushered
them both into bankruptcy.
- But let's be clear, the people that used to make the Polaroids
and the Kodaks don't like that development
because they just lost jobs.
Polaroids have had a bit of a resurgence lately
as a retro product,
but that's actually not the same company
that made the originals.
That Polaroid is long gone.
See, there are two sides of creative destruction,
entrepreneurs inventing new products or ways to save money
are how we improve our standard of living.
These improvements are the foundation of prosperity,
and positively impact generation after generation.
But the flip side can make jobs or even whole industries go extinct.
Unlike the games, that pain typically subsides.
People usually find new jobs.
Most of those thousands of employees at Polaroid and Kodak
went on to other types of work.
When you take the long view, these job changes have
historically been beneficial.
In the 1800s, more than half of the United States
was employed in farming.
Because of time-saving inventions like the tractor,
farmers now make up less than 2 percent of the workforce.
- Now you might think, "My goodness! Those poor farmers --
where did they go? What kind of jobs could they possibly have had?"
But by liberating that labor, we made it possible for people
to do things, like produce automobiles,
produce airplanes for more people to become entertainers
or movie stars, more people to become doctors.
- [Narrator] So in the long run, we have more people working
with film and more building photo apps and the like.
However, in the short run,
the transition can be extremely painful.
If you've spent your life perfecting the craft of developing film,
you're not walking out of Kodak and into a sweet gig at Instagram.
You might just be out of a job and out of luck.
Creative destruction comes in many forms.
We often think of the transformative technology,
like the tractor, or the digital camera,
or the smartphone, which fundamentally changes
how we do things.
Here's a not so obvious source of creative destruction -- trade.
- Trading with another nation, it is a kind of technology.
It's a way of getting something else more cheaply.
You're taking things you used to produce,
finding a newer, cheaper way of doing it --
be it with tractors, or with robots,
or with foreign trade.
And they're all technologies enabling us to produce
new and better things more cheaply.
- [Narrator] For example, roses used to be grown in the U.S.
raised in heated greenhouses.
Now instead of burning fuel to keep the roses warm,
most of our roses come from warm weather climates.
This creative destruction has produced a plentiful supply
of affordable roses.
But just like with Kodak, not everyone benefits.
That rose farmer in Pennsylvania isn't thrilled
by the introduction of foreign roses.
She might be out of a job.
More than ever, better education and training programs are needed
so that people can transition to new types of work.
- Why is this so important now? 613