Translator: Leonardo Silva Reviewer: Ruy Lopes Pereira
Thank you very much.
It's a difficult act to follow someone such as Diogo Costa,
but I will do my best.
I want to address the question of creative destruction
in a somewhat different context.
There's a lot of data that's been presented,
I'll talk about that very briefly,
but I want to look at it in the context of globalization,
just another controversial issue.
Many people start the discussion by assuming
that the term "globalization" has a negative meaning.
I don't think that's good social science.
We should start with a neutral meaning, and then, investigate, in the world,
whether something is having a positive or a negative impact.
So, one common approach to understanding globalization,
that does not tell you if it's a good or a bad thing,
is to refer to the diminution or elimination
of state-enforced restrictions on exchange across political borders -
so between, for instance, Brazil and Argentina,
or the United States and Canada,
or Japan and Kenya -
and then, the increasingly integrated and complex global system of exchange,
commerce, and production that has emerged as a result.
So, this doesn't tell us if it's a good thing or if it's a bad thing,
but it is a trend that we can identify in the world.
It's not a new thing.
People have been talking about globalization for a very long time.
The philosopher Democritus of Abdera told us,
"To a wise man, the whole earth is open,
and for the native land of a good soul is the entire earth."
Now, we can ask, "Is it accelerating?"
And rather than presenting you with data,
I'm going to suggest you can find out on your own.
You can go to the global internet.
For the first time in the history of humanity,
we have an entirely globalized information system.
And here are some of the things you could check through Google,
or other search engines.
International trade in goods, as a percentage of economic output:
has it been rising or falling?
Hint: rising, quite dramatically.
International trade in services?
That's an interesting one because, for most of human history,
services could not be traded internationally.
You could not have your hair cut in a different country, for example,
or get a massage on a different continent,
but now, services increasingly can be traded across international borders.
We can look at cross-border investment,
that is to say, investors in one country
who own assets or businesses in other countries.
International tourist arrivals.
That's one that is rarely talked about in the economic context,
but you'd find an incredibly steep upward curve
in the amount of people traveling around the world.
When I was young, you never saw a Chinese tourist,
unless they were from Taiwan or Hong Kong.
Now, people from the mainland can be seen as tourists all around the world,
a huge increase in international travel.
And then, finally, international telephone calls,
more people connecting with friends, neighbors, families,
all around the planet.
I was just at a conference like this, in Kenya, in Nairobi,
and one of the speakers asked something.
He said, "How many of you here have friends who live in other countries?"
And the majority of their hands went up, of East African students.
He said, "You are the first generation of whom that could be said.
You have friends in Canada, and Korea, and South Africa, and Germany.
That has never happened before."
It's an enormous change in the world,
and we can go and measure it.
Now, I want to put it in a cultural context, though;
not so much about economic data and how this is raising living standards,
but often we hear it said that this is harmful to culture.
I want to tell a little story about Guatemalan women
and the clothes that they wear, the traditional Huipil and Corté.
Huipil is a kind of a shirt for the top part of her body,
and the Corté is a skirt which she wraps around herself and folds over.
I had a tremendous opportunity in Guatemala.
I was teaching at the Francisco Marroquín University,
and one of the professors there is an anthropologist.
He made a great offer, and he said, "You know, next weekend,
I'm going to go visit my family in the Mayan Highlands."
He's an indigenous person, and he's Mayan.
He said, "Would you like to come with?"
And I am really glad I said yes,
because I saw a part of the country I never would have seen otherwise.
I got to see a different way of understanding that complicated country.
It's told me, as we were driving, he takes many foreigners
because he's an anthropologist,
so he has visitors from universities in France, England, America and elsewhere,
who want to go "study" the Indians,
and he speaks the Mayan languages, as well as Spanish and English.
And he said, "Consistently, they complain about one thing,"
which is the Mayan women are wearing their Cortés and Huipils
less often than they used to.
They say, "I was here ten years ago, and all the women had them.
Now, not so many."
They concluded that the Guatemalan women were being robbed of their culture,
that they were victims of globalization.
But what was interesting, he said,
not once had he ever heard a foreigner ask a Guatemalan woman a question,
the simple question: "Why are you not dressed like your grandmother?"
That seems a little strange, and maybe rude,
but increasingly, the indigenous women are wearing clothes for everyday purpose
like the women you would see in Brazilian cities,
and they reserve their Corté for special occasions:
weddings, for going to church, for special family occasions.
He, however, is a scientist, and he speaks the local language.
So, he asked them,
"Why do you not wear the Corté?"
And he said, "I always get the same answer, in one form or another.
They say this has become too expensive.
These are too expensive."
Now, they're handmade, made generally by women,
it's traditionally considered "women's work,"
and they take a long time to make.
They're very elaborate works of art.
What does it mean for her to say these have become too expensive?
Well, what does "expensive" mean?
It means you have to give up more to get it.
Well, it's labors what she has to give up. To get what?
In economic terms, what it means is, for the first time in their history,
the value of the labor of an indigenous woman is rising.
That's what it means.
The value of her labor is rising.
So, she could make a Corté for herself, and wear it, every day.
working in the field, doing her work,
or she could make it and sell it to a lady in France.
They're very expensive.
And with the money she earns, she could by five or six outfits
like Brazilian women wear,
and have enough money also to buy eyeglasses,
so she can see at a distance,
and to buy shoes and school books for her daughter,
so she can go to school and learn to read and write,
so she can buy medicine against dengue fever,
which they don't have in France and America,
where they complain about these things.
So, the question is:
was her life made worse off
by the opportunity to trade with people in France, in the United States,
in Germany, and elsewhere?
She now can buy more with her labor,
and she reserves the Corté for going to church,
not for everyday work.
And the other question is:
from whose perspective has her life been made better or worse?
From the perspective of the foreign tourist, it's worse,
you don't see colorful native people as often,
but maybe, from her perspective, it's an improvement.
I personally have heard, said by foreigners in Guatemala,
complaints when they see indigenous people take out mobile telephones.
"Oh, it ruined the whole experience! It wasn't authentic!"
They're supposed to have "smoke signals," or something.
(Laughter)
They didn't like it, but they didn't think from the perspective
of that indigenous person.
What does it mean to have a mobile telephone?
It means you can call your parents and talk to them.
You don't learn two weeks later that your mother got sick,
and you didn't have time to visit her.
You get a phone call from your dad, saying, "Momma is sick, come home."
Is that a positive thing for your life or not,
from the perspective of that person?
Now, if we want to look at it,
what's happening in the world is this process of creative destruction,
from an economic perspective.
Joseph Schumpeter is one of the most important economists of the last century.
He was really a great genius,
and these are some of the most intelligent words ever written in economics.
It's about a dynamic perspective, not a static perspective,
"The problem that is usually being visualized
is how capitalism administers existing structures,
whereas the relevant problem is how it creates and destroys them,"
a constant process of creative destruction.
It's happening in the economy.
It's also happening in the context of cultural life, artistic life, as well.
If you want to visualize it, let's think first about technology.
Here's something that is disappearing:
phone boxes.
There are a few outside here,
but they're disappearing from Brazilian cities.
You cannot find them anymore in North America,
or Western Europe, or Japan.
The first time I noticed, I was at a hotel I frequently go to, for conference.
Someone who worked at the hotel said,
"Look at that wall. Does it look different?"
It took me a moment. There were no telephones on it.
Why? Everyone has a telephone now.
They have it in their pocket, so why should they invest in these?
So, here we have what's replaced it.
My first mobile telephone was the one on the end.
It was like talking into a giant shoe.
(Laughter)
It was huge and very, very expensive, a gigantic device.
I had to have this put into a special briefcase.
Now, they've become so tiny you can put it in your ear.
This has transformed the world.
Well, here's another one. Some of you may not have ever used these.
When I first started writing, I wrote with a pen on paper,
and then I would type them with one of these.
I had an Underwood 5.
Many people don't know how to use these anymore.
A good friend of mine told me his son, when he was five, came to him, and said,
"Daddy, there's something strange. I want to show you."
He said, "What is it?"
He said, "It's a computer, but there is no screen!"
(Laughter)
He didn't understand; he went and looked,
"Oh, I see, yes. It's a typewriter."
These are now found mainly in museums.
I'll show you a big improvement in my personal life:
my first IBM Correcting Selectric tool.
It could correct your mistakes.
You had to type backwards, and it would take the type off the page.
You have no idea what an improvement this was for people who type a lot.
And, talk about sexy, you could change the type font,
the kind of letters you used.
You bought these expensive little things.
You had to take it out, and put in the other one,
and snap it shut, and then type with it.
So, that's how we got by, but now, I have a Macbook Pro,
and this is better than my typewriter.
Now remember, something was destroyed.
There are no more typewriter factories.
In every town, there were typewriter repair shops.
They're all gone. I haven't seen a typewriter repair shop in years.
When I was a boy, I thought I wanted to become a typewriter repairman.
I thought, "You'll always have work."
I'm glad I didn't choose that career path.
(Laughter)
I can do things with this I couldn't do with my typewriter,
like watch movies.
If I talked to my typewriter, people thought I was crazy.
I talk to my computer all the time,
and it talks back, with someone who's in another country.
Now, we can look at another example.
When I was a boy, I watched Star Trek with my father on television,
the first Star Trek,
and they had these amazing devices called "communicators."
You opened it and you could talk to one person. That's it.
And that's all it could do, talk to one person.
I thought, "Wow! That is so cool!
In the distant future, someone will have those."
(Laughter)
Well, I've got one,
and it's a lot better than they had in these science fiction movies,
flying between the stars.
I can watch movies, I can play music, pay my bills, convert currencies,
I read the newspapers on it,
I can do all kinds of things you could not do
on a Star Trek communicator.
It's not just products that are being replaced.
It's also ways of doing business.
Imagine, 20 years ago, having a discussion of online banking.
"What's that?" People would not have understood you.
Live-streaming media:
your grandparents wouldn't have understood that.
Hub-and-spoke airlines, which have revolutionized travel:
poor people can afford to fly because of this tremendous innovation.
And also firms:
firms are also destroyed and created, on a constant basis.
Standard & Poors measures the largest firms
by "market-capitalization" value of their shares.
How many of those that were in the Top 100 in 1960
were still on it in 2012?
Ten. Only ten.
And 25% of the Top 100 had joined in just the last few years.
So, firms are coming and going,
going out of business, being destroyed, and being created to replace the others.
Now, a lot of people focus on the destructive part
of creative destruction, but how destructive is it?
Is it destructive on balance? I don't think so.
Some value is destroyed, but it's not pure destruction,
because you get something else that adds more value.
That's why it replaced it.
My computer is more valuable than a big typewriter,
it can do a lot more, and it cost less than I paid for my old typewriter.
And I'll conclude: what makes possible value-added creative destruction?
And we have a pretty good idea what that is.
It's entrepreneurial freedom.
Now, what does entrepreneurial freedom mean, though?
Something rather special.
It's liberty for the unknown person;
not for any known person, per se, but for weird people, strange people,
who are called, in English, "geeks."
The boys who created the computer industry
were strange, socially badly-adjusted kids.
They could not get any of the girls to date them,
because they were obsessed with radios, computers, and working in their garage.
This has changed.
They all found that the girls were more interested in dating them
after they became billionaires.
(Laughter)
Friedrich Hayek put it very neatly,
"What is important is not the freedom for what I would personally like to do,
but rather what freedom some person may need
in order to do things beneficial to society.
And this freedom we can assure to the unknown person
only by giving it to everyone."
Now, that is in an economic context,
but it has a deep root in your society.
"Freedom is disruptive because it's about freedom for everyone,"
as Joaquim Nabuco put it very neatly in his book on abolitionism.
He says, "You should love the freedom of other people.
When you love the freedom of other people, you'll live in a great society."
Thank you.
(Applause)