Actually, the world isn't flat
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0:00 - 0:05I'm here to talk to you about how globalized we are,
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0:05 - 0:08how globalized we aren't,
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0:08 - 0:11and why it's important to actually be accurate
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0:11 - 0:14in making those kinds of assessments.
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0:14 - 0:18And the leading point of view on this, whether measured
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0:18 - 0:22by number of books sold, mentions in media,
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0:22 - 0:25or surveys that I've run with groups ranging from
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0:25 - 0:29my students to delegates to the World Trade Organization,
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0:29 - 0:32is this view that national borders
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0:32 - 0:36really don't matter very much anymore,
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0:36 - 0:40cross-border integration is close to complete,
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0:40 - 0:42and we live in one world.
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0:42 - 0:44And what's interesting about this view
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0:44 - 0:48is, again, it's a view that's held by pro-globalizers
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0:48 - 0:53like Tom Friedman, from whose book this quote is obviously excerpted,
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0:53 - 0:57but it's also held by anti-globalizers, who see this giant
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0:57 - 1:01globalization tsunami that's about to wreck all our lives
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1:01 - 1:04if it hasn't already done so.
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1:04 - 1:08The other thing I would add is that this is not a new view.
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1:08 - 1:12I'm a little bit of an amateur historian, so I've spent
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1:12 - 1:16some time going back, trying to see the first mention
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1:16 - 1:20of this kind of thing. And the best, earliest quote
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1:20 - 1:24that I could find was one from David Livingstone,
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1:24 - 1:30writing in the 1850s about how the railroad, the steam ship,
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1:30 - 1:34and the telegraph were integrating East Africa perfectly
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1:34 - 1:38with the rest of the world.
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1:38 - 1:40Now clearly, David Livingstone
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1:40 - 1:43was a little bit ahead of his time,
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1:43 - 1:46but it does seem useful to ask ourselves,
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1:46 - 1:48"Just how global are we?"
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1:48 - 1:51before we think about where we go from here.
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1:51 - 1:56So the best way I've found of trying to get people
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1:56 - 2:00to take seriously the idea that the world may not be flat,
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2:00 - 2:04may not even be close to flat, is with some data.
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2:04 - 2:08So one of the things I've been doing over the last few years
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2:08 - 2:12is really compiling data on things that could either happen
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2:12 - 2:16within national borders or across national borders,
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2:16 - 2:19and I've looked at the cross-border component
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2:19 - 2:22as a percentage of the total.
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2:22 - 2:26I'm not going to present all the data that I have here today,
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2:26 - 2:29but let me just give you a few data points.
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2:29 - 2:34I'm going to talk a little bit about one kind of information flow,
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2:34 - 2:38one kind of flow of people, one kind of flow of capital,
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2:38 - 2:42and, of course, trade in products and services.
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2:42 - 2:47So let's start off with plain old telephone service.
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2:47 - 2:52Of all the voice-calling minutes in the world last year,
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2:52 - 2:56what percentage do you think were accounted for
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2:56 - 2:59by cross-border phone calls?
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2:59 - 3:03Pick a percentage in your own mind.
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3:03 - 3:06The answer turns out to be two percent.
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3:06 - 3:10If you include Internet telephony, you might be able
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3:10 - 3:13to push this number up to six or seven percent,
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3:13 - 3:18but it's nowhere near what people tend to estimate.
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3:18 - 3:22Or let's turn to people moving across borders.
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3:22 - 3:25One particular thing we might look at, in terms of
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3:25 - 3:29long-term flows of people, is what percentage
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3:29 - 3:32of the world's population is accounted for
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3:32 - 3:35by first-generation immigrants?
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3:35 - 3:39Again, please pick a percentage.
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3:39 - 3:42Turns out to be a little bit higher.
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3:42 - 3:45It's actually about three percent.
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3:45 - 3:50Or think of investment. Take all the real investment
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3:50 - 3:53that went on in the world in 2010.
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3:53 - 3:56What percentage of that was accounted for
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3:56 - 4:00by foreign direct investment?
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4:00 - 4:03Not quite ten percent.
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4:03 - 4:06And then finally, the one statistic
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4:06 - 4:09that I suspect many of the people in this room have seen:
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4:09 - 4:12the export-to-GDP ratio.
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4:12 - 4:15If you look at the official statistics, they typically indicate
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4:15 - 4:18a little bit above 30 percent.
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4:18 - 4:23However, there's a big problem with the official statistics,
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4:23 - 4:28in that if, for instance, a Japanese component supplier
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4:28 - 4:32ships something to China to be put into an iPod,
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4:32 - 4:34and then the iPod gets shipped to the U.S.,
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4:34 - 4:38that component ends up getting counted multiple times.
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4:38 - 4:41So nobody knows how bad this bias
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4:41 - 4:45with the official statistics actually is, so I thought I would
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4:45 - 4:47ask the person who's spearheading the effort
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4:47 - 4:51to generate data on this, Pascal Lamy,
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4:51 - 4:53the Director of the World Trade Organization,
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4:53 - 4:56what his best guess would be
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4:56 - 4:59of exports as a percentage of GDP,
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4:59 - 5:01without the double- and triple-counting,
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5:01 - 5:06and it's actually probably a bit under 20 percent, rather than
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5:06 - 5:09the 30 percent-plus numbers that we're talking about.
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5:09 - 5:14So it's very clear that if you look at these numbers
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5:14 - 5:17or all the other numbers that I talk about in my book,
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5:17 - 5:22"World 3.0," that we're very, very far from
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5:22 - 5:26the no-border effect benchmark, which would imply
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5:26 - 5:33internationalization levels of the order of 85, 90, 95 percent.
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5:33 - 5:36So clearly, apocalyptically-minded authors
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5:36 - 5:39have overstated the case.
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5:39 - 5:43But it's not just the apocalyptics, as I think of them,
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5:43 - 5:47who are prone to this kind of overstatement.
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5:47 - 5:50I've also spent some time surveying audiences
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5:50 - 5:52in different parts of the world
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5:52 - 5:56on what they actually guess these numbers to be.
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5:56 - 5:59Let me share with you the results of a survey
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5:59 - 6:02that Harvard Business Review was kind enough to run
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6:02 - 6:06of its readership as to what people's guesses
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6:06 - 6:10along these dimensions actually were.
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6:10 - 6:16So a couple of observations stand out for me from this slide.
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6:16 - 6:21First of all, there is a suggestion of some error.
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6:21 - 6:24Okay. (Laughter)
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6:24 - 6:29Second, these are pretty large errors. For four quantities
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6:29 - 6:32whose average value is less than 10 percent,
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6:32 - 6:37you have people guessing three, four times that level.
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6:37 - 6:40Even though I'm an economist, I find that
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6:40 - 6:42a pretty large error.
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6:42 - 6:46And third, this is not just confined to the readers
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6:46 - 6:48of the Harvard Business Review.
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6:48 - 6:51I've run several dozen such surveys in different parts
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6:51 - 6:55of the world, and in all cases except one,
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6:55 - 6:57where a group actually underestimated
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6:57 - 7:02the trade-to-GDP ratio, people have this tendency
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7:02 - 7:05towards overestimation, and so I thought it important
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7:05 - 7:08to give a name to this, and that's what I refer to
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7:08 - 7:13as globaloney, the difference between the dark blue bars
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7:13 - 7:16and the light gray bars.
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7:16 - 7:20Especially because, I suspect, some of you may still be
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7:20 - 7:24a little bit skeptical of the claims, I think it's important
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7:24 - 7:27to just spend a little bit of time thinking about
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7:27 - 7:31why we might be prone to globaloney.
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7:31 - 7:34A couple of different reasons come to mind.
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7:34 - 7:38First of all, there's a real dearth of data in the debate.
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7:38 - 7:42Let me give you an example. When I first published
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7:42 - 7:44some of these data a few years ago
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7:44 - 7:47in a magazine called Foreign Policy,
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7:47 - 7:50one of the people who wrote in, not entirely in agreement,
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7:50 - 7:54was Tom Friedman. And since my article was titled
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7:54 - 7:59"Why the World Isn't Flat," that wasn't too surprising. (Laughter)
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7:59 - 8:03What was very surprising to me was Tom's critique,
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8:03 - 8:08which was, "Ghemawat's data are narrow."
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8:08 - 8:11And this caused me to scratch my head, because
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8:11 - 8:14as I went back through his several-hundred-page book,
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8:14 - 8:19I couldn't find a single figure, chart, table,
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8:19 - 8:22reference or footnote.
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8:22 - 8:26So my point is, I haven't presented a lot of data here
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8:26 - 8:30to convince you that I'm right, but I would urge you
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8:30 - 8:33to go away and look for your own data
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8:33 - 8:36to try and actually assess whether some of these
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8:36 - 8:41hand-me-down insights that we've been bombarded with
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8:41 - 8:43actually are correct.
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8:43 - 8:46So dearth of data in the debate is one reason.
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8:46 - 8:50A second reason has to do with peer pressure.
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8:50 - 8:53I remember, I decided to write my
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8:53 - 8:56"Why the World Isn't Flat" article, because
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8:56 - 8:59I was being interviewed on TV in Mumbai,
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8:59 - 9:03and the interviewer's first question to me was,
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9:03 - 9:07"Professor Ghemawat, why do you still believe
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9:07 - 9:11that the world is round?" And I started laughing,
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9:11 - 9:15because I hadn't come across that formulation before. (Laughter)
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9:15 - 9:17And as I was laughing, I was thinking,
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9:17 - 9:20I really need a more coherent response, especially
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9:20 - 9:24on national TV. I'd better write something about this. (Laughter)
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9:24 - 9:27But what I can't quite capture for you
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9:27 - 9:30was the pity and disbelief
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9:30 - 9:33with which the interviewer asked her question.
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9:33 - 9:37The perspective was, here is this poor professor.
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9:37 - 9:42He's clearly been in a cave for the last 20,000 years.
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9:42 - 9:45He really has no idea
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9:45 - 9:48as to what's actually going on in the world.
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9:48 - 9:51So try this out with your friends and acquaintances,
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9:51 - 9:55if you like. You'll find that it's very cool
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9:55 - 9:58to talk about the world being one, etc.
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9:58 - 10:01If you raise questions about that formulation,
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10:01 - 10:05you really are considered a bit of an antique.
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10:05 - 10:08And then the final reason, which I mention,
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10:08 - 10:12especially to a TED audience, with some trepidation,
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10:12 - 10:16has to do with what I call "techno-trances."
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10:16 - 10:19If you listen to techno music for long periods of time,
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10:19 - 10:22it does things to your brainwave activity. (Laughter)
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10:22 - 10:26Something similar seems to happen
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10:26 - 10:31with exaggerated conceptions of how technology
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10:31 - 10:35is going to overpower in the very immediate run
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10:35 - 10:39all cultural barriers, all political barriers,
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10:39 - 10:42all geographic barriers, because at this point
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10:42 - 10:45I know you aren't allowed to ask me questions,
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10:45 - 10:48but when I get to this point in my lecture with my students,
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10:48 - 10:51hands go up, and people ask me,
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10:51 - 10:54"Yeah, but what about Facebook?"
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10:54 - 10:57And I got this question often enough that I thought
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10:57 - 10:59I'd better do some research on Facebook.
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10:59 - 11:03Because, in some sense, it's the ideal kind of technology
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11:03 - 11:07to think about. Theoretically, it makes it
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11:07 - 11:10as easy to form friendships halfway around the world
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11:10 - 11:13as opposed to right next door.
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11:13 - 11:19What percentage of people's friends on Facebook
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11:19 - 11:22are actually located in countries other than where
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11:22 - 11:26people we're analyzing are based?
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11:26 - 11:29The answer is probably somewhere between
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11:29 - 11:3210 to 15 percent.
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11:32 - 11:36Non-negligible, so we don't live in an entirely local
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11:36 - 11:41or national world, but very, very far from the 95 percent level
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11:41 - 11:44that you would expect, and the reason's very simple.
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11:44 - 11:48We don't, or I hope we don't, form friendships at random
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11:48 - 11:53on Facebook. The technology is overlaid
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11:53 - 11:58on a pre-existing matrix of relationships that we have,
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11:58 - 12:01and those relationships are what the technology
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12:01 - 12:04doesn't quite displace. Those relationships are why
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12:04 - 12:08we get far fewer than 95 percent of our friends
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12:08 - 12:12being located in countries other than where we are.
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12:12 - 12:17So does all this matter? Or is globaloney
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12:17 - 12:23just a harmless way of getting people to pay more attention
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12:23 - 12:25to globalization-related issues?
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12:25 - 12:28I want to suggest that actually,
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12:28 - 12:32globaloney can be very harmful to your health.
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12:32 - 12:35First of all, recognizing that the glass
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12:35 - 12:40is only 10 to 20 percent full is critical to seeing
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12:40 - 12:43that there might be potential for additional gains
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12:43 - 12:45from additional integration,
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12:45 - 12:48whereas if we thought we were already there,
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12:48 - 12:51there would be no particular point to pushing harder.
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12:51 - 12:55It's a little bit like, we wouldn't be having a conference
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12:55 - 12:59on radical openness if we already thought we were totally open
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12:59 - 13:02to all the kinds of influences that are being talked about
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13:02 - 13:04at this conference.
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13:04 - 13:08So being accurate about how limited globalization levels are
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13:08 - 13:11is critical to even being able to notice
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13:11 - 13:15that there might be room for something more,
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13:15 - 13:19something that would contribute further to global welfare.
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13:19 - 13:22Which brings me to my second point.
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13:22 - 13:26Avoiding overstatement is also very helpful
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13:26 - 13:31because it reduces and in some cases even reverses
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13:31 - 13:36some of the fears that people have about globalization.
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13:36 - 13:39So I actually spend most of my "World 3.0" book
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13:39 - 13:44working through a litany of market failures and fears
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13:44 - 13:49that people have that they worry globalization is going to exacerbate.
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13:49 - 13:53I'm obviously not going to be able to do that for you today,
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13:53 - 13:56so let me just present to you two headlines
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13:56 - 13:59as an illustration of what I have in mind.
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13:59 - 14:03Think of France and the current debate about immigration.
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14:03 - 14:07When you ask people in France what percentage
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14:07 - 14:09of the French population is immigrants,
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14:09 - 14:13the answer is about 24 percent. That's their guess.
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14:13 - 14:18Maybe realizing that the number is just eight percent
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14:18 - 14:22might help cool some of the superheated rhetoric
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14:22 - 14:26that we see around the immigration issue.
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14:26 - 14:30Or to take an even more striking example,
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14:30 - 14:32when the Chicago Council on Foreign Relations
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14:32 - 14:35did a survey of Americans, asking them to guess
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14:35 - 14:40what percentage of the federal budget went to foreign aid,
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14:40 - 14:43the guess was 30 percent, which is
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14:43 - 14:49slightly in excess of the actual level — ("actually about ... 1%") (Laughter) —
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14:49 - 14:52of U.S. governmental commitments to federal aid.
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14:52 - 14:55The reassuring thing about this particular survey was,
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14:55 - 14:58when it was pointed out to people how far
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14:58 - 15:01their estimates were from the actual data,
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15:01 - 15:04some of them — not all of them — seemed to become
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15:04 - 15:08more willing to consider increases in foreign aid.
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15:08 - 15:12So foreign aid is actually a great way
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15:12 - 15:15of sort of wrapping up here, because
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15:15 - 15:18if you think about it, what I've been talking about today
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15:18 - 15:22is this notion -- very uncontroversial amongst economists --
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15:22 - 15:25that most things are very home-biased.
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15:25 - 15:28"Foreign aid is the most aid to poor people,"
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15:28 - 15:32is about the most home-biased thing you can find.
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15:32 - 15:35If you look at the OECD countries and how much
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15:35 - 15:38they spend per domestic poor person,
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15:38 - 15:40and compare it with how much they spend
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15:40 - 15:44per poor person in poor countries,
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15:44 - 15:49the ratio — Branko Milanovic at the World Bank did the calculations —
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15:49 - 15:53turns out to be about 30,000 to one.
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15:53 - 16:00Now of course, some of us, if we truly are cosmopolitan,
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16:00 - 16:03would like to see that ratio being brought down
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16:03 - 16:05to one-is-to-one.
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16:05 - 16:08I'd like to make the suggestion that we don't need to aim
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16:08 - 16:13for that to make substantial progress from where we are.
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16:13 - 16:18If we simply brought that ratio down to 15,000 to one,
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16:18 - 16:21we would be meeting those aid targets that were agreed
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16:21 - 16:24at the Rio Summit 20 years ago that the summit
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16:24 - 16:28that ended last week made no further progress on.
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16:28 - 16:32So in summary, while radical openness is great,
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16:32 - 16:34given how closed we are,
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16:34 - 16:37even incremental openness could make things
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16:37 - 16:41dramatically better. Thank you very much. (Applause)
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16:41 - 16:44(Applause)
- Title:
- Actually, the world isn't flat
- Speaker:
- Pankaj Ghemawat
- Description:
-
It may seem that we're living in a borderless world where ideas, goods and people flow freely from nation to nation. We're not even close, says Pankaj Ghemawat. With great data (and an eye-opening survey), he argues that there's a delta between perception and reality in a world that's maybe not so hyperconnected after all.
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 17:03
Thu-Huong Ha edited English subtitles for Actually, the world isn't flat | ||
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