[MUSIC PLAYING]
HAL VARIAN: Thank
you all for coming.
I'm Hal Varian.
I'm the chief economist
here at Google.
And we economists like
to stick together,
so I brought you a
reinforcement today.
Professor Ian Goldin
was a founding director
of the Oxford Martin
School from September 2006
to September 2016.
He's currently the Oxford
University Professor
of Globalization and
Development and Director
of the Oxford Martin Program
on Technological and Economic
Change.
And he's also a senior fellow
at the Oxford Martin school
and a professorial fellow
at the Balliol College,
University of Oxford.
From 2003 to 2006, he was Vice
President of the World Bank,
and prior to that, the bank's
Director of Development Policy.
And he served in the bank's
senior management team
and led the bank's
collaboration with the United
Nations and other partners
as well as with key countries
as a Director of the
Development Project,
he played a pivotal role in
the research and strategy
to tend to the bank.
There's much, much more, but
I'm going to stop at that point,
because I know you are anxious
to hear what Ian has to say.
And there will be questions
afterwards, a few questions
from me, a few
questions from the Dory,
and of course,
people who are here.
So Ian.
IAN GOLDIN: Thank you very much.
It's a huge pleasure
to be at Google
and to be able to talk about my
new book, "Age of Discovery,"
in the context of the
tumultuous changes in the world
and try and make sense
of this incredible time
that we live in.
It's a time-- can I have
the first video running--
it's a time of magic,
in many respects.
And just spending the
last couple of hours here
and getting a sense
of some of the things.
And I'm sure there's many,
many others that I'm not
aware of that are
happening here.
One can't but feel that one
is in a period of discovery.
An age of discovery which is
unprecedented in human history,
which will lead to
changes for the better
for many, many people
around the world.
The way I think
about this period
is not as the Fourth
Industrial Revolution,
which I think diminishes, in an
extent, the way in which this
is transforming the world and
the pace and scale of what's
happening.
I think about it more
as a Renaissance moment.
Because that was a
tumultuous moment.
That was a period
that took Europe
from being one of the most
backward places in the world,
in 1450, to by far the
most advanced place
within an 80-year period.
A period that changed everything
in Europe permanently and then
around the world and
that was associated
with the most extraordinary
advances in science,
in arts, in perspective that
the world had ever known.
It was driven, like
our revolution,
by an information revolution.
Then it was the Gutenberg press.
Before that, a very
small number of people,
a very small share of
the European population
could read or write.
Books were extremely expensive
handwritten manuscripts.
And it was really the
clergy, the Catholic church,
that had monopoly of knowledge.
They told people what
to think, how to think,
and of course, in
that environment,
it was impossible to
really do science.
What this revolution did was
allowed an exponential growth
in information flows,
rather similar to what we've
seen in the last 20 years.
Over 25 million books were
printed in a 50-year period.
Billions of political
pamphlets, advertisements,
short treatises, and so on.
And we celebrate,
today, 500 years later,
the outcome of that
information revolution.
Of course, the fundamental
transformation of art,
of Botticelli's,
Michelangelo's, da Vinci's.
They changed perspective
in remarkable ways
and symbolized people from being
objects whose fate was ordained
to creators of their own fate.
And that was the dramatic
change that happened in the way
that philosophy and
art was understood.
But it was also a
time, of course,
of scientific invention
and revolution.
Copernicus discovering that we
went around the sun, not being
the center of the universe.
Fundamental challenges to what
the church and authority had
said, and of course, compass
and other designs which
allowed the voyages
of discovery,
including the discovery
of the Americas
and total circumnavigation.
Changing commerce and
creating globalization 1.0.
[? Descent ?] and mediating,
in very rapid ways,
the old flows in
places like Venice,
which had been at the center
of them, finding their prices
dropped by 50% over a
two to three year period,
as the new ways of getting
to the East were discovered.
Our time is associated with
political and technical
transformation, which is much
more global, much more rapid,
but is having, I think,
an echo of that effect.
The Berlin Wall, for me,
symbolizes this coming down
of barriers.
Physical barriers, political
and ideological barriers, and we
moved to a world which was
very fragmented in the '80s
to a world now which
is hyper-integrated.
And this hyper-integration
brings very many
different possibilities
and is a really, I
believe, an engine
of change which
is more rapid than at
any period in history.
And that's why today is
the slowest day we'll
know for the rest of our lives.
The innovation machine has
been put on a higher level
than it ever has
been in history.
I was living in Paris
when this wall came down.
I'm a South African.
I didn't think I would ever
be able to go to South Africa
again in my lifetime.
I was involved in the
anti-apartheid struggle.
And I was working at
the OECD in Paris,
and I thought it was
an amazing thing,
but I didn't
imagine for a minute
that it would
transform my own life.
Of course, what we
know is that two months
later, as a result
of that process,
Nelson Mandela was
released from prison.
He came to Paris.
He asked me to be
his economic advisor,
to go back to South
Africa and run
the State Bank, which I did.
And recognize in that
process, in retrospect,
that things that seem totally
unconnected to our lives
in this new
hyper-integrated world
will touch them in
intimate new ways.
And that's going to happen at
a global sphere to all of us.
And so where globalization,
by which I mean integration,
flows across national borders,
of goods, services, products,
but most significantly
of ideas, means
that we move into a
different period in history.
And this has been
accelerated greatly
by the parallel
development, of course,
of the web at the same time
as the Berlin Wall came down.
And scientific
discovery, exemplified
in the Hubble
spacecraft, which was
the beginning of a new era in
the same way as the Renaissance
was.
We're now 27 years later in a
world of a total integration.
A new nervous
system of the world,
where we can experience and
empathize and see things
at the other end of
the world in real time,
whether it's a birthday
party celebration,
or whether it's understanding
the impact of a climate event,
or war.
In this extraordinary
exponential growth,
we've lost our innocence.
We know what is
happening everywhere
in dramatic new ways.
And so it's no
accident that we've
become aware of climate change.
We've become aware
of things that
were simply unknown in their
depth and scale before.
And with that comes
new responsibilities,
new potential to unlock some
of the greatest challenges
humanity has ever faced,
but also new potential
to destabilize.
We've become a complex, dynamic
system as a global community.
And that means that attribution,
cause and effect, understanding
what is going to
shape our future
is more difficult than at
any moment in history because
of the number of
actors and participants
and the speed of evolution.
Prediction is more
difficult than ever before.
Part of the
excitement, of course,
is how rapidly these
technologies have spread.
And that's, again,
very different
to all previous
revolutions of technology
and very different to
the Renaissance as well.
So we move from a world of
only about 200 million people
sharing the same data and
information in the '80s,
to a world today of around
6 billion people sharing
information and data.
We move from a world
where there were
only 2 billion people
literate, in the late '80s,
to a world of 6 and 1/2
billion literate people today.
And if you believe in that
literacy and education
capability as a
driver of change,
there are 4 and 1/2
billion more drivers
of change over this very
short period of time.
I believe in the
random distribution
of exceptional talent.
Call it genius if you want.
There's a lot more Mozarts,
Shakespeares, and Einsteins
out there that will emerge
from the streets of Sao
Paolo, [INAUDIBLE],,
Mumbai, or Shanghai,
as well as, of course,
this neighborhood, that
will change our lives.
But it's not individuals
that bring change.
It's people learning
from each other.
It's sparks, it's
learning, which
is a cooking of lots
of different ideas,
and often ingredients
which are surprising,
that is happening in a
totally different way.
Because people are
learning faster,
there's also a lot more of us.
Ideas have traveled,
which are leading people
to live longer, healthy ideas.
Very simple ideas, like smoking
kills you, wearing a condom
protects you from
HIV, ideas like that.
And very complex ideas,
like those embedded
in the vaccines,
cures for cancer,
medicines going
around the world.
With this we have this
extraordinary, most rapid
growth in population that
world has ever known.
2 billion more people.
And it's that as well
which shapes our future.
Because as people
escape poverty,
and the most extraordinary thing
about this period of history
is that despite the increase
in the world's population of 2
billion, there are 300 million
less desperately poor people.
That's never happened
historically before.
This integration of
the world, the spread
of markets, this growth of jobs,
of opportunities and knowledge,
fundamentally, has led to the
most rapid reduction in poverty
the world's ever known.
And with that as well, the most
rapid urbanization process.
When people come together,
they change their lives.
They get the means
to change their lives
and their possibilities.
Far from the world
becoming more flat,
it's becoming much
more mountainous,
meaning place matters
more than ever.
And you see that here
in Mountain View,
and you see it in Mumbai,
you see it in London,
you see it in other
dynamic cities.
The ratio of incomes to house
prices is at record high.
And that's because place
matters more than ever.
In this process, we not only
find huge leaps in development
and possibility, but also
the spillovers of our actions
become more and more acute.
And it's that
spillover effect that
is in tension with markets.
It's the markets and
the opportunities which
have created these
possibilities,
but now the questions are how
do we engage with markets?
How do we tamper, if we
want, with the signals?
How do we hold back to
ensure that the externalities
or spillover effects
of development,
the commons challenges,
don't destroy all the gains.
The unexpected consequences
of globalization
is not a new thing.
We know that the
voyages of discovery
that came to the Americas
led to the death of most
Native Americans.
We know that the voyagers,
when they went back,
brought syphilis and
other diseases that
killed many hundreds of
thousands of the Europeans.
The idea that integration
and globalization
brings risk as
well as opportunity
is one that we
forget at our peril.
And it's not simply that
it brings that risk,
but it also brings
the risk of extremism,
and that's one of the key
lessons of the Renaissance.
Although we celebrate it for
its amazingly rapid advance,
in fact, it was
socially and politically
a disastrous period.
It was associated
with rising extremism.
And after this flourishing
of diversity and tolerance
in a city like Florence, we had
Savonarola, an extremist monk,
deposing the Medicis
and basically creating
a religious republic
of extreme views.
Hounding out diversity,
gays, Muslims, Jews,
that had gone to the city
because it was the place
to be for anyone that
really wanted to be
at the forefront of creativity.
And that creativity happened
because of the diversity.
35% of the population of
Florence in its heyday
was foreign.
This reaction was because of
the corruption of the church.
You could buy your way to
heaven with indulgences.
You could pay for people to
go on pilgrimages for you.
As well as the fact that the
benefits of globalization
were not seen by most people.
The gold that came
back from the New World
did not benefit
most people, nor did
the spices and other things.
And of course, the scribes
were put out of work.
What you had in
that process then
was a pushback, a
fracturing of the church.
Inquisitions and religious wars
that were fought across Europe
and spilled over, indeed,
into the corridors
of my college, Baliol, at
Oxford, where people were
killed in these religious wars.
One of the most terrifying
echoes of that period today
is the hounding of
science and intellectuals.
The arrest, the denunciation
of expertise and of knowledge.
And the recreation of ideology
and religion as being what's
needed to guide us.
Now, fast forward, we
see the similar risks
emerging from globalization
2.0, our time.
The interconnectedness
does not only
connect good things and the most
extraordinary opportunities,
but also new risks.
The swine flu that
starts in Mexico City
is in 160 countries in 30 days.
And the Emerging Infections
group in the Oxford Martin
School, which I founded,
it's a group of 350 faculty
from across the whole
university, medicine, sciences,
social sciences, humanities,
coming out of their disciplines
to work on interdisciplinary
problem solving.
So our group working
on emerging infections
finds the swine
flu spread exactly
replicates airline traffic.
The super spreaders of
the goods of globalization
also the super spreaders
of the bads, in this case,
airport hubs.
Another key lesson of
that Renaissance period
which has a much
amplified echo today
is the role of individuals.
And it was Savonarola
using the printing press
to spread ideas which
challenged authority.
Small groups of individuals.
And that's what
we've seen today.
One area where this
has been exemplified,
as always, finance is at the
frontiers of globalization,
is in the banking system.
Barings Bank was
established in 1762,
and it existed for
over 240 years,
withstanding the most
extraordinary technological,
economic, and political
transformations in the world,
when one day, the management
woke up and discovered
that a kid using new
technology had bankrupted them.
Nick Leeson.
This potential that the
new technologies and this
interconnectedness gives
to new asymmetries,
where small groups
or single individuals
can bring down very,
very complex systems.
The one I worry most
about is biopathogens.
For exponentially
declining prices,
people can build measles,
smallpox, et cetera,
put it in a drone, and
fly it down our streets.
This potential to
cause mass havoc
is one that is
spreading in many areas,
not least in the
cyber sphere, which,
of course, as the nervous
system of our new world,
is absolutely integral.
But it's also being used by
extremist forces, as it was,
in the Renaissance.
ISIS has become the largest
recruiter of foreign fighters
since the Spanish Civil
War using social media.
So how to manage the
freedoms and the integration
in a way that manages
the complexity and builds
a resilience is absolutely key.
Finance, as always, at the
forefront of globalization.
It has the resources to
invest in new technologies,
and it's a
hyper-integrated system.
What we learned from
the financial system,
of course, is that the best
system in the world of expert
management, that's finance.
Just think about our
national governments,
the central banks, like
the Federal Reserve
or the treasury,
in all countries
are the most sophisticated,
best staffed, best paid
of our national institutions.
And at the global level,
the IMF is similarly so
but is in a different
league to the UN
agencies and others in its
expertise, data, and power.
And yet, this expert system,
with over 20,000 PhDs,
many of them coming from
institutions that Hal
and I would be proud
to have given students
to these institutions,
failed dismally.
A very narrow mandate.
Financial stability.
So much brainpower.
So much pay.
No wonder people say, we
don't trust authority.
We don't trust experts.
When the most expert
of the global systems
failed so dismally.
Would we have the
politics in the US today
if there hadn't been
a financial crisis?
Would we have Brexit?
Would we have rising
extremism as we've seen it?
I think not.
I think, as much
as anything, what
we're seeing is a
failure of experts
to be able to anticipate
and understand
this complex dynamic
system, and it's operating
in many, many domains.
Another key failure of
globalization of this period
has been, as in the
Renaissance, rising inequality.
And the reason is that when
things change more rapidly,
people get left
behind more quickly.
When you look at the share
of the top 1% in income
distribution or wealth
across the OECD countries,
there's a rising
trend everywhere.
Most acute in the US,
but also significant
in many, many other countries.
And so a key
question is how do we
have a more inclusive system?
How do we ensure that people see
globalization as good for them,
not as something that's
locking them out?
When you look at
the data that people
like Angus Deaton and Anne Case
have assembled, and others,
you see that in towns in
the Midwest in the US,
the life expectancy of people
is lower than their parents.
Their job mobility is
lower than their parents.
Their unemployment rates are
higher than their parents.
No wonder people don't
believe that the system's
working for them.
They want to go back
to something which
they think will help them.
And this is a global trend,
where place and skill matters
more than ever.
So how we create a society
which is more inclusive,
and how we think about
these issues really
does matter, not
[INAUDIBLE] to the future.
This will become
more and more acute--
it's been a pleasure to be able
to talk to Hal and the people
here about this--
as we move to a
world of automation.
You might have seen work that
a group I created in the Oxford
Martin school has done,
suggesting that 47% of US jobs
are vulnerable to machine
intelligence over the next 20
years.
And a higher share
of countries like
China, where there is more
routine and rural-based jobs.
Now, these numbers
are contested,
and there's a big
debate around them,
and of course, we don't
know about the new jobs.
This is a vital discussion.
But where the jobs
will be, how one
will have the skills, et
cetera, are significant.
And one of the amazing
things that Google
has done in recent
weeks is, of course,
allocate a big, big
assignment of money
to building these
skills and capacities.
For developing countries,
there's a particular challenge.
Because our model
of development is
that countries go from basic
agriculture and raw materials
through a stage of
development which
involves semi-skilled work.
Routine, rules-based
work, whether it's
in manufacturing of
textiles or other products,
or whether it's in call
centers, or whether it's
in back offices.
And the question
is, what happens
if the middle rungs of
a development ladder
are removed by
artificial intelligence?
We don't know the answers
to these questions,
but they're questions
we have to explore.
The sense that the
system is evolving
more rapidly, that there's
growing inequality and growing
risk is based on real concerns.
These are not imagined.
The politicians play
into these and are
able to raise fears and suggest,
I believe, totally falsely,
that a world of higher
protection, of keeping out
foreigners, will
be a better world,
and that we can somehow return
to an imagined past that was
not better, but they say was.
The reason this is
profoundly misguided
is because as we go forward,
we will more and more
have to manage
collectively, together,
these challenges, because
of the spillover effects.
Whether it's examples
like the example
we'll be familiar with of
the North Atlantic cod,
or whether it's the newer
things, like climate
change, which is a
dramatic global threat,
coordination of an
integrated system
becomes more and
more significant.
And working out collective
responses and responsibilities.
Of course, nature
knows no price.
The rhino don't reproduce more
when their horns are worth
more.
What economists call
inelastic supply.
And how we allocate these scarce
resources in a world where
rising incomes gives
people the capabilities
to demand more and more.
One answer that will
not be sustainable
is that if you
have enough money,
you can do what you want.
Buy the rhino horn
or anything else.
Of course, we also know
that ecological systems
have natural thresholds.
It's fine if 200 million people
in the world take antibiotics,
but if 2 billion people
take them, none of them
are likely to be effective.
And so how one
manages in a world
with increasing spillovers,
where our decisions, whatever
they are, affect others, and
others' decisions affect us,
because we're connected,
because we've escaped poverty,
it becomes more and
more significant.
So we're not simply
connected, we are entangled.
There is no optionality
in this world.
There is no wall
high enough that
will keep out climate change,
that will keep out a pandemic.
But what it will keep out is the
cooperative ability to manage,
and of course, the
technologies and the people
that will help us manage.
And so how we go forward with
this is going to be crucial.
I'm optimistic because
we're moving into a world
where we can draw on
the global talent pool,
and this is different
to anything in history.
The Renaissance
and the revolutions
in science and
technology of the past
were largely driven by white
males out of a very small
number of countries.
We're now in a
world where we can
draw on the total capacity
of the human species,
and that is its greatest source
of optimism if you believe,
as I do, in the power
that this unlocks,
and that's why innovation
is accelerating,
and problem solving, change
making, is accelerating.
But it's a battle of ideas.
It's a battle of
ideas which needs
to engage scientists,
technologists, and all
those that believe in progress.
The Oxford Martin
Stem Cell Group
is amongst many, many in
the world who are doing
amazing things that
give me optimism.
This is the lab technician's
skin turned into a heart cell.
And the frontiers of
genetics and others
that can lead us all to believe
that we can live longer,
healthier, and better lives.
There's also massive disruption
happening in politics.
Not only extremism is
growing, the capacity
of people to recreate, as Macron
did, from absolutely nothing,
with no political party at all,
a different alternative view
is a sign of how easy it's
becoming to change and to be
a change maker.
One doesn't need the old
authorities, as one didn't when
the printing press was
developed to create
a revolution in ideas.
And what we've also seen
is encouraging signals
that science does matter
and get listened to,
not least in the
climate agreements.
And of course, we need to
redouble our efforts to make
sure that they're implemented.
Causes for optimism abound.
There's no problem that one
cannot imagine a solution for.
The question is whether we
as change makers, whether we
as developers of new capability
are able to amplify the goods
and dampen the bads to
ensure that as we go forward
on this extraordinary planet,
this will not be as Lord Martin
Rees has suggested,
possibly our final century,
it will be the century
that we celebrate,
as we celebrate the
Renaissance in 500 years' time.
Thank you.
HAL VARIAN: Thank you very much
for that inspirational talk,
I should say.
But I have a question
about the book.
I read your book, and it
has a very nice structure.
I think people enjoy looking
at this with an exploiting
or describing the parallels
between the Renaissance
and today.
And you did this with a
colleague, Chris Kutarna.
Is that right?
IAN GOLDIN: Mhm.
A doctoral student.
HAL VARIAN: Who is a
historian of the Renaissance.
IAN GOLDIN: No, he's
a political science
major focusing on China today.
But I just distracted
him, and his supervisor
didn't like that.
HAL VARIAN: Oh, I see.
So you distracted
him into doing this.
IAN GOLDIN: Yes,
he started as my RA
and ended up as a coauthor
because he's so brilliant
and did so much.
HAL VARIAN: Well, what I was
interested in is your working
style.
I've written coauthored
books, and everybody
develops their own
technique for doing this.
I'm curious as to
how you did this.
IAN GOLDIN: So Chris,
who quite remarkably
managed to get both a
book and his doctorate out
within a year of each other, was
doing his doctorate at Oxford.
I asked around for not this
project, the previous project,
for some professors to
recommend their top students.
We started working together, and
I was deeply impressed by him.
I think the most significant
part of our collaboration
was that we just
sparked off each other.
And this goes back to this
point of how innovation happens.
And we had totally
different views.
I'm an economist.
He's an international
relations major.
He worked on China, mainly.
I knew about other places.
Our areas of knowledge
do not overlap that much.
But we challenged
each other, and I
think that was increasingly
useful, particularly as I began
to respect him more
and more, and he
became more effective at
challenging me in that.
So it was a great process,
and it took a long time,
and it a big worry
for me, because I
was worried that he would
drop out of his doctorate,
and I would be in deep
trouble if that happened.
But he is smart enough
and well-managed enough
to really do both.
And the book took a long time,
five years, and his doctorate
took a long time,
and that was probably
one expression of that.
But his doctorate's actually
a very interesting doctorate
on the Chinese middle class.
And he lived there for two
years while doing that.
HAL VARIAN: Wow.
Involved with the book as well?
IAN GOLDIN: He kept going back.
He'd come back from
his primary research,
but kept going back to Beijing.
HAL VARIAN: Wow.
So let's switch over to the
substance of the book now.
And you alluded to
this in your talk,
the issue of artificial
intelligence and jobs.
Of course, you might
imagine, here at Google,
we're very focused
on this question.
And I would say, from my reading
of the existing literature,
there's no consensus.
But what would it take
to create that consensus?
Or what kind of research
do you think is valuable?
How can we understand
more of what we
might encounter in the future?
IAN GOLDIN:
Remarkably, everything
is changing so rapidly.
This is a new field of work.
We were one of the first
movers in 2013, not long ago,
in bringing out a paper on it.
And there's been a lot
of papers since then,
but it's a very,
very recent area.
One of the great
challenges, of course,
is that we know a lot
about what's vulnerable,
but we don't know that
the vulnerability will
lead to loss.
You can have, for example,
supermarket checkout now
in any supermarket in
the world, but let's say
in the US, done by a machine.
But you still have
over a million people
employed in supermarket
checkout because of preferences,
because of pace of adoption,
because of various other tasks
that these people do.
And so saying that something
can be done by a machine
doesn't mean it will be.
The second thing is we have zero
knowledge about the new jobs,
or very close to.
We're very-- even for the next
five years, let alone 10 or 20
years, and that makes
it very difficult
to come to a consensus.
There's been very few new
jobs actually being created,
but that could be accelerated.
So I think what we need to do,
and it's one of the reasons
I'm here, and it's a
great pleasure to be here,
is we need, I think, to
be creating a community
of scholars and of others
that think about this issue.
It's a global issue.
Most of the work has
been done with the US,
because the data statistics
are the best here.
But if we think it's a
big issue for the US,
it's a much bigger issue
for China or Mexico
or many other countries.
And as we discussed, we've
got to put this together
with the demographics, with
the economic geography,
with the regulatory
environments,
with all sorts of other factors
to try and make sense of it.
So it's a long way
of saying we need
a lot of people working
collaboratively on this
and coming together.
Academics are
competitive, that's good,
but to be creatively
competitive, I think, together.
HAL VARIAN: Over lunch,
we were talking about some
of these demographic issues.
Of course, there's
this huge impact
of China's one child policy.
We have a lot of population now.
The workforce is going
to decline dramatically
in the next couple of decades.
And one example you
mentioned in the book
which I think was very
important was the Black Death.
Now, the Black Death
was a terrible event
that killed a third of
the people in Italy,
but if you were lucky
enough to stay alive,
your wage went way up.
Your living state went way up.
Feudalism was under
pressure, simply
because you went from
a surplus of labor,
really to a dramatic
shortage of labor.
And if you look at China, Japan,
South Korea, Germany, Italy,
Spain, on and on and on,
the developed countries
are going to see declines
in the labor force.
Outright declines.
And maybe they'll have the
same beneficial characteristic
that we thought.
IAN GOLDIN: I
think that's right.
And what the intersection of
these forces is going to be
is interesting.
Interestingly enough,
China's neighbors,
South Korea, Hong Kong, Taiwan,
all that's maybe part of China,
have lower fertility
rates than it does,
with no one child policy.
And Germany has an
even lower rate.
So this is absolutely the case.
I think real wages will double
in China over the next five
years or so, driven
by the intersection
of demographic and
economic forces.
And then you're
going to have AI.
And a key question on the
demographics, of course,
is how long people will work.
I think we'll end--
retirement will
stop, and then you
get in the discussion,
which is a big economics
discussion, about
where's pensions
and savings and retirement
money going to come from,
and what's it going to do to
transfer between the elderly
and the young.
AI has a major role to
play in trying to resolve
some of these tensions.
And the consequences
in China and the US,
depending on what you do with
immigration policy, Europe,
and Africa, will
be very different.
And so I think this
needs, in the end,
to be something we look
at at a country level
and think through in
a much deeper way.
HAL VARIAN: Absolutely.
If you look at Nigeria,
for example, or India,
these countries are
actually growing younger
compared to the
developed world, which
is growing substantially older.
And productivity.
You alluded to that.
Productivity is the key.
If you have a
smaller labor force,
and you have a growing
population, which
is true of many countries,
the only solution
to maintain living standards
is improvement of productivity.
But then we come to the
productivity puzzle.
Even though we think
we're producing
all sorts of great technology
and wonderful gadgets
and services, the economic
statistics disagree.
What's the problem?
IAN GOLDIN: [LAUGHS] Well,
I wish I knew the answer.
Maybe I'll get a
Nobel Prize if I do.
It's one of the toughest
economic questions.
And Bob Gordon has posed
this, and many others,
saying that basically
we don't see--
we argue, I think you
feel as well, I certainly
feel, that innovation
is accelerating,
and yet productivity
is stagnating.
What's going on here?
So this is a major question.
I think there's a whole
series of reasons for this.
One is measurement.
My iPhone has destroyed the
camera industry, the music
industry, the GPS
industry, and a whole lot
of other manufacturing
industries.
I feel better off for it.
But the camera manufacturers,
the film manufacturers, the GPS
manufacturers, are losing out.
So we get negative statistics
out of something like that.
So one is measurement, which
is very, very imperfect
and doesn't cope with the
digital economy at all.
The second issue
is is innovation
being concentrated in just
a small part of the economy.
So where we think innovation
is great in genetics and AI
and everything else, most of
the country is actually dying.
When things change
more rapidly, you
have to renew your stock of
infrastructure, of plant,
of everything more rapidly.
And if you don't, it's
increasingly worthless.
And I think that's happening
in a bigger and bigger share
of businesses.
So actually, they are becoming
less productive more rapidly,
because the pace of
change is so rapid.
Another issue is inequality.
Another issue is aging
and demographics,
because these productivity
numbers are aggregates
for the whole economy.
And this goes back to the
point I made about the Midwest.
There are big parts
of the country
that are not the dynamic cities
where things are really moving.
And I think what we
need is a much more
nuanced understanding,
and then you
get into the question
of, all right, how
do you spread the benefits
of productivity more broadly.
HAL VARIAN: And just
to add to your list,
there are two other
features, which
is the role of intangibles,
software and design,
where all of the software
for the mobile phone and for,
in fact, all the--
it's made here in California.
The hardware, for the
most part, is made abroad.
And splitting those
two pieces out
with respect to productivity
is very, very tricky.
And I think we
have views on this.
The BLS does their best,
but it it's still a problem.
And the related problem
is, of course, services.
80% of GDP in the
US is services.
Very hard to measure quality
improvements or productivity
improvements in that area.
One proposal to deal
with this changing
world and the potential of
having unemployed labor--
I say potential because I
don't think either of us
believes that that's
a likely outcome.
But one proposal has been
a universal basic income.
That's become popular in
Silicon Valley circles.
What's your view on the UBI?
IAN GOLDIN: Well, I do
think there will be people,
by the way, unemployed
because of the pace of change.
I think there really are.
And to me, this is about
economic geography.
It's about people being locked
out of the dynamic cities.
You have very low
unemployment in some places
and very high unemployment
in other places,
but you can't get from--
those people can't move
to where the jobs are,
and that's a big issue.
I think UBI is not a good idea.
I have four main
objections to it.
The first is that unless
it's at a level which
is so high that it becomes
fiscally irresponsible,
in other words, it blows the
budget of the government,
in particular, in austerity,
times like now, that's
difficult to imagine,
it leads to rising
poverty and inequality.
And the OECD has done
great work on this.
And the simple reason is that
you remove targeted transfers,
child benefit, housing
benefit, unemployment benefit,
disability benefit, et
cetera, and you substitute
for that a cash transfer
or a mass transfer
that everyone in the
country is getting.
It's called universal because
even the billionaires get it.
And the numbers
just don't add up.
The poor people and the people
that need transfers most
do worse off, and the
OECD is showing this.
The second reason
I don't like it
is because all the
evidence I've seen
is that when people
are paid to stay home,
they become very depressed.
They become opioid addicts.
They become alcoholics.
They become socially
dysfunctional.
And we do not want a society
where we're basically
paying a significant part of
our society to stay at home.
Because people get
status, network, income,
and many other
things out of work
which is vital for their
own sense of self-worth
and community.
The third reason
I don't like it is
because I think it
postpones a much more
fundamental conversation about
the future of work, which
is the value we give to
social work, to creative work,
to caring, to volunteerism,
to mentoring, and all of that.
And the fourth
reason I don't like
it is because I think the
people that are advocating it
are basically trying to
postpone a deeper debate.
It's their way of
sort of ticking
a box in their consciousness
and their political agenda
and saying, don't worry
about all these issues.
We'll look after you.
And I think that's
both paternalistic and
counterproductive,
because we need something
else for our societies.
We need a deeper
debate about it.
And it goes back to the
measurement question
about well being, about status,
about inclusive globalization,
et cetera.
It's not affordable in the US.
It's even less affordable
in a developing country,
like China or Mexico
or South Africa.
HAL VARIAN: If we look at--
suppose we're right, that we
are seeing a lot of innovation
and more so in the
future, this innovation
that's created mostly in
the developed countries,
how will that fit in to
the kind of resources
available in the less developed
countries, the underdeveloped
countries?
Is this going to be bad
news for India and Nigeria?
IAN GOLDIN: Yeah.
I worry most about Africa.
Rapid population growth.
Very young population.
I don't understand yet,
we need to work on it,
you know, I'd love to
collaborate with you,
what the development ladder is.
What other possibilities are.
The way that our
parents and grandparents
in previous generations
dealt with these challenges
was to move.
A third of Europe migrated.
A third of Sweden.
A third of Ireland.
A third of Italy moved
when they lost their jobs
or there was a famine or a
war or something like that.
That's why the US is what it is
because people who came here,
particularly risk takers.
That option is
being closed down.
So people are locked
in their countries now.
And if they're locked
in a country where
you don't see development--
now, some places
might be lucky and have tourism
or some other opportunity,
but the generalizable
model, some commodities
might become valuable, but we
know there's a resource curse.
I think this is a
really deep question
that we need to think about.
India is so big and diverse,
and it's growing quickly,
it hopefully will get over its
hump before the major effect.
But I think there
are some places,
like Africa, where it's
difficult for me today to see
how this will be beneficial.
Of course, many things
are beneficially
in AI, health,
banking, and all that,
but I'm talking about the
fundamental questions of jobs.
IAN GOLDIN: So one of the--
I'm going to shift to
the Dory questions here.
One of the popular prescriptions
for economic hardship
nowadays is to reverse progress.
To stop globalization.
To limit free trade,
bring jobs back home.
Why haven't we
come up with a more
progressive competing
solution to that narrative?
IAN GOLDIN: I think
we urgently do.
I think there are.
We haven't won the arguments.
You know, Macron was interesting
in the French presidential
election, because
as far as I know,
he's the only global, big
leader that has come up.
He said, no, we want--
this is France.
Globalization is
not a good word.
But he said, I'm
pro-globalization.
I'm pro-Brussels.
I'm pro all these things
that everyone else was saying
were bads, and he
won by a landslide,
which was not predictable.
Maybe with Google Analytics,
it was, but I certainly
didn't predict it.
And so I think you can come up
with a compelling narrative,
but it's a narrative
that we hear, certainly,
from people like
Jeremy Corbyn in the UK
and many others which is
backward-looking in that.
And I think, I hope, there's a
generation of younger leaders.
This woman that's
just won the election
in New Zealand,
Jacinda, 37 years old.
Just completely overwhelming
the old labor party there.
Those are the signs
of real hope for me.
HAL VARIAN: Well, it is amazing,
and particularly Macron.
And not did he manage to
push the globalization
ideas forward, but the
labor liberalization, which
has stymied French leaders
for 20 years, 15 years.
And every economist who looked
at the situation, France
or Italy or Spain, said you
have to liberalize your labor
markets, but it's
extremely difficult to do.
He's managed to make
progress in that area.
IAN GOLDIN: So I think
it does point to the fact
that with these
information technologies,
you can reach people directly.
You don't need big
parties and big machines.
It's different, I
think, in the US,
because of the Congressional
and Senate system,
you need the machine.
And in the UK, we have
constituency politics.
The great thing going in France
is proportional representation,
which allows a much
more direct relationship
between the
candidate and people.
HAL VARIAN: Yeah.
The difficulty in the
US electoral system
is it lasts so long.
I mean, it's going
on and on, and now
people are already doing 2018
and 2020, and money, money,
money, money.
IAN GOLDIN: And money is big.
You need billions.
HAL VARIAN: Yes.
And actually, this
next question, you
mentioned the flow of goods,
services, products, and ideas,
but you did not mention
the flow of people.
I think you did.
You said the [INAUDIBLE].
IAN GOLDIN: Yeah.
If the people who
check me out will
see that I wrote a book called
"Exceptional People, How
Migration Shaped our World and
Will Define our Future," which
Princeton University Press
published, absolutely--
people are absolutely
central to this.
And one of the great
asymmetries in globalization
now is that that fundamental
flow has been locked down.
HAL VARIAN: Yes.
Let me ask a question
about climate change.
That's also come up.
I know you did mention
that in the book.
There is some discussion of
it and in your talk here.
Do we have time to
avert a catastrophe,
or do we have to
start planning ahead?
One suggestion I've
heard is really good
to invest in companies
that build dikes.
IAN GOLDIN: Yeah.
Being near the sea.
A lot of dynamic
cities on the coast.
I think the answer is both.
There already are catastrophes.
Al Gore spoke at
Zeitgeist yesterday,
and as always, he was absolutely
convincing and passionate
about it.
And he linked the
Houston hurricane
and a lot of recent
events, what's
been happening not far from
here in Northern California.
The evidence is mounting
that these things are really
the result of climate change.
And just the heat that I
experienced in Palo Alto today,
every day you have a new record.
So it's happening.
It dramatically impacts
particularly on poor people.
Being in Phoenix
yesterday at Zeitgeist,
that's sort of a desert.
But if you're
wealthy enough, you
pump water from far enough,
you turn the air con enough,
you can live in the desert.
But for most people on the
planet, that is not an option.
And so it will
exacerbate inequality.
It will be particularly
devastating for coastal cities.
And a lot of the most dynamic
places in emerging markets
are coastal, of
course here, too.
And we need to
act more urgently.
So both.
We need to make our societies
much more resilient.
We need to focus
on what we can do
in all dimensions, particularly
in agriculture, energy, et
cetera, but we have to
stop carbon emission.
We basically have
to go to zero carbon
within the next 20 years.
That's dramatic.
It's a revolution.
We've never achieved this sort
of thing economically before.
It's a total revolution.
It won't happen through
market signals alone.
It will be helped by the energy
and technology revolutions
that we're seeing.
But it's going to
require decisive action.
A lot of assets, a lot of
companies have to be revalued.
Stranded assets is a real thing.
You don't want to be an
investor pricing assets
in the Arctic, et cetera.
So I think we need
to do much more,
and I find it a tragedy in
the US what's been happening
in terms of withdrawal.
Two pieces of good news.
One is that actually,
the withdrawal period
is after the next presidential
election in the US.
And secondly, what states,
businesses like your own,
are doing, will really
account for much
of the movement in the US,
despite the federal government
not being as committed
as it was to this.
So I don't think one should
give up in the US at all.
HAL VARIAN: Is there
a question back there?
AUDIENCE: Thanks for your talk.
I would like to hear your
thoughts on income inequality
and drawing parallels
from the Renaissance age.
Was there the same problem
at that time, and how was it
addressed?
Thank you.
IAN GOLDIN: The data is,
I think, pretty clear.
It's not just income inequality,
but health inequality,
inequality generally is rising.
And I think I gave the reasons
for that in general terms.
It's very important to think
about why we care about it.
Why does it matter.
Now, do we care about how
many Ferraris we see on
our street, or do we care
about how many beggars
we see on our streets,
or people starving,
and is there a connection, is
the key question in my mind.
China has experienced very
rapidly rising inequality
from a very flat base.
And I don't think it's
a problem for China,
because very few people
are going backwards.
And even the poorest people are
experiencing significant rises
in income and in the quality
of their lives and health care
and life expectancy and so on.
Where it becomes an issue
is when some part of society
is benefiting hugely, and
others are falling back.
And that's what's happening
to people in some Midwest
towns in the US and in parts
of the North of England, parts
of the countryside in
France, and in other places,
and that explains
rising extremism.
The Renaissance
echo is this tension
between relative and
absolute, and also
whether it's seen that it's
ill-gotten gains or not.
Do the people that are
becoming very wealthy
deserve what they've got?
And what people resented deeply
and what the whole extremeness
movement in the
Renaissance played on
was that it was unfair.
These people captured
the benefits of it
and didn't share them.
And this concept of fairness
and the ethics of it
and whether people are being
seen to pay tax and give back
becomes important.
Medici was tolerated
because he was such a patron
and supported people.
But then when
extremism became great,
and when he was seen as
increasingly corrupt,
he was not tolerated
anymore, and that shifted.
And of course, it was
the information age
that allowed people to
observe, as the transparency
it has now, what was happening.
That information was locked
down before that by the church
and by the princes, then it
suddenly became available.
So information, knowing about
inequality and the reason
for it becomes fundamental.
HAL VARIAN: Absolutely right.
And I think when you look at
attitudes towards inequality,
you survey people,
they don't mind
that athletes make so much or
celebrities or entrepreneurs.
Bankers, on the
other hand, that's
a different story completely.
I think we'll make
this the last question.
AUDIENCE: Thank you for
coming to speak to us today.
I had a question
about divestment.
Divestment in South Africa is
generally seen as successful,
whereas the divestment
around fossil fuels,
there's been a lot
of conversation about
whether it actually
is something that's
going to help us move forward
to zero carbon emissions or not.
And here at Google,
there has been
talk about whether we should
be moving forward and divesting
from fossil fuels within the
things that we invest in.
How do you see this
parallel with divestment
in South Africa in comparison
to divestment in fossil fuels?
IAN GOLDIN: Yeah.
Very good question.
I was absolutely
committed to disinvestment
from South Africa.
I thought it was a good thing.
And I think that,
together with sanctions
and many other things, did
accelerate the transformation
of South Africa.
I have no doubt in my mind that
it made the transition better
and quicker because of that.
I also believe that this should
be very carefully thought
through, divestment
from fossil fuels.
There should be an understanding
that investors are taking risk
when they invest in
strata and assets.
So it's an investment
decision, particularly
for pension funds and
long-term investors,
about whether these
assets are really
what they think they are.
But its a broader one.
It's about political signaling.
So I don't believe, for
example, my own personal view
is that there are
some oil majors who
are the biggest investors in
renewable energy in the world.
I think we should not be
discouraging them from that.
We should be in the
shareholder meetings,
encouraging them to make a
more rapid transformation,
but we should be in there.
On the other hand,
there are people
who are mainly doing things
that are not transforming,
and we should be
discouraging them.
So in a way, it's about
how you incentivize people
to do the right thing
and absolutely penalize
those that are not doing
enough of the right thing.
So it's a gradation.
And of course, that's
difficult politically.
It's difficult to
campaign and say,
don't invest in this
company, invest in that one.
But that's what we should do.
We should also understand
that this is global,
and consumers have
increasing powers.
We don't want to simply
divest from a democratically
accountable company to have
that asset mined or produced
by a company run out of
Russia or some other country.
Just buy the assets cheaply
and do the same thing.
So consumers need
to talk through it.
We should be targeting
through divestment also
the companies that
are not making
the transformation, for
example, to electric vehicles.
Who are lying about the
content of their products.
And also thinking
deeply about some
of the things which
are very difficult,
like steel and cement, which
have a very, very high carbon
footprint.
So cradle to grave analysis.
And this is where data analytics
and a company like Google
can help so much.
These things really matter.
Consumer awareness and
then action around it.
But I'm very proud
that Oxford's divested.
It was a hard
discussion in Oxford.
I'm also absolutely convinced
that we will not lose
any returns as a result of it.
Just like people used
to make the argument
around tobacco, et cetera.
I've looked at the data deeply.
I'm on the investment
committee of my college
and other investment committees,
and there's no premium
that you have to pay by
doing the right thing.
And so we need to
do the right thing.
HAL VARIAN: OK.
On that note, thank
you again for coming.
IAN GOLDIN: Thank
you for having me.
