0:00:01.359,0:00:06.456
Our ability to create[br]and sustain economic growth

0:00:06.480,0:00:09.216
is the defining challenge of our time.

0:00:09.240,0:00:11.776
Of course there are other challenges --

0:00:11.800,0:00:14.936
health care, disease burdens[br]and pandemics,

0:00:14.960,0:00:16.760
environmental challenges

0:00:17.400,0:00:20.080
and, of course, radicalized terrorism.

0:00:20.800,0:00:22.016
However,

0:00:22.040,0:00:26.616
to the extent that we can actually[br]solve the economic growth challenge,

0:00:26.640,0:00:27.976
it will take us a long way

0:00:28.000,0:00:30.600
to solving the challenges[br]that I've just elucidated.

0:00:31.400,0:00:33.056
More importantly,

0:00:33.080,0:00:37.576
unless and until we solve economic growth

0:00:37.600,0:00:41.616
and create sustainable,[br]long-term economic growth,

0:00:41.640,0:00:44.056
we'll be unable to address

0:00:44.080,0:00:49.416
the seemingly intractable challenges[br]that continue to pervade the globe today,

0:00:49.440,0:00:53.840
whether it's health care,[br]education or economic development.

0:00:54.680,0:00:56.880
The fundamental question is this:

0:00:57.520,0:01:00.136
How are we going to create economic growth

0:01:00.160,0:01:04.736
in advanced and developed economies[br]like the United States and across Europe

0:01:04.760,0:01:06.816
at a time when they continue to struggle

0:01:06.840,0:01:09.640
to create economic growth[br]after the financial crisis?

0:01:10.480,0:01:13.256
They continue to underperform

0:01:13.280,0:01:17.400
and to see an erosion in the three[br]key drivers of economic growth:

0:01:18.040,0:01:21.360
capital, labor and productivity.

0:01:22.120,0:01:23.576
In particular,

0:01:23.600,0:01:28.536
these developed economies[br]continue to see debts and deficits,

0:01:28.560,0:01:33.416
the decline and erosion[br]of both the quality and quantity of labor

0:01:33.440,0:01:35.720
and they also see productivity stalling.

0:01:36.600,0:01:38.296
In a similar vein,

0:01:38.320,0:01:41.736
how are we going to create[br]economic growth in the emerging markets,

0:01:41.760,0:01:45.016
where 90 percent[br]of the world's population lives

0:01:45.040,0:01:46.576
and where, on average,

0:01:46.600,0:01:50.120
70 percent of the population[br]is under the age of 25?

0:01:50.640,0:01:52.096
In these countries,

0:01:52.120,0:01:56.296
it is essential that they grow[br]at a minimum of seven percent a year

0:01:56.320,0:01:58.416
in order to put a dent in poverty

0:01:58.440,0:02:01.640
and to double per capita incomes[br]in one generation.

0:02:02.520,0:02:04.576
And yet today,

0:02:04.600,0:02:06.696
the largest emerging economies --

0:02:06.720,0:02:09.416
countries with at least[br]50 million people --

0:02:09.440,0:02:12.920
continue to struggle to reach[br]that seven percent magic mark.

0:02:13.760,0:02:14.976
Worse than that,

0:02:15.000,0:02:19.616
countries like India, Russia,[br]South Africa, Brazil and even China

0:02:19.640,0:02:22.136
are falling below[br]that seven percent number

0:02:22.160,0:02:25.000
and, in many cases, actually regressing.

0:02:25.800,0:02:27.720
Economic growth matters.

0:02:28.440,0:02:29.896
With economic growth,

0:02:29.920,0:02:34.096
countries and societies[br]enter into a virtuous cycle

0:02:34.120,0:02:38.720
of upward mobility, opportunity[br]and improved living standards.

0:02:39.240,0:02:43.056
Without growth,[br]countries contract and atrophy,

0:02:43.080,0:02:46.296
not just in the annals[br]of economic statistics

0:02:46.320,0:02:49.840
but also in the meaning of life[br]and how lives are lived.

0:02:50.600,0:02:54.320
Economic growth matters[br]powerfully for the individual.

0:02:55.120,0:02:56.736
If growth wanes,

0:02:56.760,0:02:58.776
the risk to human progress

0:02:58.800,0:03:03.216
and the risk of political[br]and social instability rises,

0:03:03.240,0:03:07.800
and societies become dimmer,[br]coarser and smaller.

0:03:08.600,0:03:10.296
The context matters.

0:03:10.320,0:03:11.936
And countries in emerging markets

0:03:11.960,0:03:15.800
do not need to grow at the same[br]rates as developed countries.

0:03:17.240,0:03:21.680
Now, I know some of you in this room[br]find this to be a risky proposition.

0:03:22.680,0:03:24.536
There are some people here

0:03:24.560,0:03:27.096
who will turn around[br]and be quite disillusioned

0:03:27.120,0:03:28.896
by what's happened around the world

0:03:28.920,0:03:31.520
and basically ascribe that[br]to economic growth.

0:03:32.240,0:03:35.736
You worry about the[br]overpopulation of the planet.

0:03:35.760,0:03:38.656
And looking at the UN's[br]recent statistics and projections

0:03:38.680,0:03:41.376
that the world will have[br]11 billion people on the planet

0:03:41.400,0:03:43.976
before it plateaus in 2100,

0:03:44.000,0:03:47.816
you're concerned about what that does[br]to natural resources --

0:03:47.840,0:03:51.960
arable land, potable water,[br]energy and minerals.

0:03:52.800,0:03:56.120
You are also concerned about[br]the degradation of the environment.

0:03:56.760,0:03:59.896
And you worry about how man,

0:03:59.920,0:04:02.536
embodied in the corporate globalist,

0:04:02.560,0:04:05.600
has become greedy and corrupt.

0:04:06.560,0:04:09.936
But I'm here to tell you today[br]that economic growth

0:04:09.960,0:04:13.336
has been the backbone[br]of changes in living standards

0:04:13.360,0:04:15.320
of millions of people around the world.

0:04:15.960,0:04:17.776
And more importantly,

0:04:17.800,0:04:22.280
it's not just economic growth[br]that has been driven by capitalism.

0:04:24.280,0:04:27.736
The definition of capitalism,[br]very simply put,

0:04:27.760,0:04:29.816
is that the factors of production,

0:04:29.840,0:04:33.216
such as trade and industry,[br]capital and labor,

0:04:33.240,0:04:37.160
are left in the hands[br]of the private sector and not the state.

0:04:37.680,0:04:40.416
It's really essential here[br]that we understand

0:04:40.440,0:04:45.456
that fundamentally the critique[br]is not for economic growth per se

0:04:45.480,0:04:47.536
but what has happened to capitalism.

0:04:47.560,0:04:51.576
And to the extent that we need to create[br]economic growth over the long term,

0:04:51.600,0:04:56.280
we're going to have to pursue it[br]with a better form of economic stance.

0:04:57.320,0:05:00.216
Economic growth needs capitalism,

0:05:00.240,0:05:01.920
but it needs it to work properly.

0:05:02.840,0:05:05.136
And as I mentioned a moment ago,

0:05:05.160,0:05:11.120
the core of the capitalist system[br]has been defined by private actors.

0:05:11.720,0:05:15.776
And even this, however,[br]is a very simplistic dichotomy.

0:05:15.800,0:05:18.720
Capitalism: good; non-capitalism: bad.

0:05:19.120,0:05:21.776
When in practical experience,

0:05:21.800,0:05:24.256
capitalism is much more of a spectrum.

0:05:24.280,0:05:26.536
And we have countries such as China,

0:05:26.560,0:05:28.976
which have practiced[br]more state capitalism,

0:05:29.000,0:05:31.096
and we have countries[br]like the Unites States

0:05:31.120,0:05:32.720
which are more market capitalist.

0:05:33.160,0:05:36.296
Our efforts to critique[br]the capitalist system, however,

0:05:36.320,0:05:39.536
have tended to focus[br]on countries like China

0:05:39.560,0:05:42.960
that are in fact[br]not blatantly market capitalism.

0:05:43.600,0:05:47.256
However, there is[br]a real reason and real concern

0:05:47.280,0:05:51.936
for us to now focus our attentions[br]on purer forms of capitalism,

0:05:51.960,0:05:54.680
particularly those embodied[br]by the United States.

0:05:55.280,0:05:57.056
This is really important

0:05:57.080,0:05:59.536
because this type of capitalism

0:05:59.560,0:06:02.816
has increasingly[br]been afforded the critique

0:06:02.840,0:06:05.256
that it is now fostering corruption

0:06:05.280,0:06:06.656
and, worse still,

0:06:06.680,0:06:09.320
it's increasing income inequality --

0:06:10.120,0:06:14.840
the idea that the few are benefiting[br]at the expense of the many.

0:06:16.760,0:06:19.976
The two really critical questions[br]that we need to address

0:06:20.000,0:06:22.696
is how can we fix capitalism

0:06:22.720,0:06:25.496
so that it can help create economic growth

0:06:25.520,0:06:28.880
but at the same time[br]can help to address social ills.

0:06:29.720,0:06:33.096
In order to think about that framing,[br]we have to ask ourselves,

0:06:33.120,0:06:34.840
how does capitalism work today?

0:06:35.760,0:06:37.360
Very simplistically,

0:06:37.960,0:06:43.736
capitalism is set on the basis[br]of an individual utility maximizer --

0:06:43.760,0:06:48.056
a selfish individual[br]who goes after what he or she wants.

0:06:48.080,0:06:51.216
And only after they've[br]maximized their utility

0:06:51.240,0:06:53.736
do they then decide it's important

0:06:53.760,0:06:56.840
to provide support[br]to other social contracts.

0:06:57.360,0:07:00.776
Of course, in this system[br]governments do tax,

0:07:00.800,0:07:04.536
and they use part of their revenues[br]to fund social programs,

0:07:04.560,0:07:07.416
recognizing that government's role[br]is not just regulation

0:07:07.440,0:07:10.720
but also to be arbiter of social goods.

0:07:11.320,0:07:12.616
But nevertheless,

0:07:12.640,0:07:13.976
this framework --

0:07:14.000,0:07:15.976
this two-stage framework --

0:07:16.000,0:07:17.976
is the basis from which we must now start

0:07:18.000,0:07:20.600
to think about how we can[br]improve the capitalist model.

0:07:21.520,0:07:24.920
I would argue that there are[br]two sides to this challenge.

0:07:25.520,0:07:26.736
First of all,

0:07:26.760,0:07:29.696
we can draw on the right-wing policies

0:07:29.720,0:07:31.576
to see what could be beneficial for us

0:07:31.600,0:07:33.720
to think about how[br]we can improve capitalism.

0:07:34.440,0:07:35.696
In particular,

0:07:35.720,0:07:37.456
right-leaning policies

0:07:37.480,0:07:40.936
have tended to focus on things[br]like conditional transfers,

0:07:40.960,0:07:43.976
where we pay and reward people[br]for doing the things

0:07:44.000,0:07:47.456
that we actually think[br]can help enhance economic growth.

0:07:47.480,0:07:48.696
For example,

0:07:48.720,0:07:50.336
sending children to school,

0:07:50.360,0:07:52.576
parents could earn money for that,

0:07:52.600,0:07:55.976
or getting their children[br]inoculated or immunized,

0:07:56.000,0:07:57.880
parents could get paid for doing that.

0:07:58.360,0:08:00.456
Now, quite apart from the debate

0:08:00.480,0:08:02.776
on whether or not[br]we should be paying people

0:08:02.800,0:08:05.496
to do what we think they should do anyway,

0:08:05.520,0:08:08.696
the fact of the matter[br]is that pay for performance

0:08:08.720,0:08:11.136
has actually yielded some positive results

0:08:11.160,0:08:12.856
in places like Mexico,

0:08:12.880,0:08:14.136
in Brazil

0:08:14.160,0:08:16.760
and also in pilot programs in New York.

0:08:17.520,0:08:19.016
But there are also benefits

0:08:19.040,0:08:23.400
and significant changes underway[br]on left-leaning policies.

0:08:23.880,0:08:28.136
Arguments that government should[br]expand its role and responsibility

0:08:28.160,0:08:30.376
so that it's not so narrowly defined

0:08:30.400,0:08:32.895
and that government should be[br]much more of an arbiter

0:08:32.919,0:08:34.296
of the factors of production

0:08:34.320,0:08:36.720
have become commonplace[br]with the success of China.

0:08:37.400,0:08:39.696
But also we've started to have debates

0:08:39.720,0:08:41.976
about how the role of the private sector

0:08:42.000,0:08:44.576
should move away[br]from just being a profit motive

0:08:44.600,0:08:48.096
and really be more engaged[br]in the delivery of social programs.

0:08:48.120,0:08:51.336
Things like the corporate[br]social responsibility programs,

0:08:51.360,0:08:53.336
albeit small in scale,

0:08:53.360,0:08:55.240
are moving in that right direction.

0:08:55.960,0:09:01.176
Of course, left-leaning policies[br]have also tended to blur the lines

0:09:01.200,0:09:03.880
between government,[br]NGOs and private sector.

0:09:04.800,0:09:08.776
Two very good examples of this[br]are the 19th-century United States,

0:09:08.800,0:09:10.416
when the infrastructure rollout

0:09:10.440,0:09:13.536
was really about[br]public-private partnerships.

0:09:13.560,0:09:14.976
More recently, of course,

0:09:15.000,0:09:18.616
the advent of the Internet[br]has also proven to the world

0:09:18.640,0:09:22.480
that public and private can work together[br]for the betterment of society.

0:09:24.240,0:09:27.296
My fundamental message to you is this:

0:09:27.320,0:09:32.736
We cannot continue to try and solve[br]the world economic growth challenges

0:09:32.760,0:09:36.920
by being dogmatic[br]and being unnecessarily ideological.

0:09:37.800,0:09:41.616
In order to create sustainable,[br]long-term economic growth

0:09:41.640,0:09:45.936
and solve the challenges and social ills[br]that continue to plague the world today,

0:09:45.960,0:09:48.256
we're going to have to be[br]more broad-minded

0:09:48.280,0:09:49.800
about what might work.

0:09:50.280,0:09:51.856
Ultimately,

0:09:51.880,0:09:56.016
we have to recognize[br]that ideology is the enemy of growth.

0:09:56.040,0:09:57.256
Thank you.

0:09:57.280,0:09:59.520
(Applause)

0:10:03.160,0:10:06.056
Bruno Giussani: I want to ask[br]a couple of questions, Dambisa,

0:10:06.080,0:10:08.216
because one could react[br]to your last sentence

0:10:08.240,0:10:10.056
by saying growth is also an ideology,

0:10:10.080,0:10:12.416
it's possibly the dominant[br]ideology of our times.

0:10:12.440,0:10:14.536
What do you say[br]to those who react that way?

0:10:14.560,0:10:17.016
DM: Well, I think that that's[br]completely legitimate,

0:10:17.040,0:10:19.616
and I think that we're already[br]having that discussion.

0:10:19.640,0:10:21.856
There's a lot of work[br]going on around happiness

0:10:21.880,0:10:25.376
and other metrics being used[br]for measuring people's success

0:10:25.400,0:10:27.216
and improvements in living standards.

0:10:27.240,0:10:29.296
And so I think that we should be open

0:10:29.320,0:10:32.296
to what could deliver improvements[br]in people's living standards

0:10:32.320,0:10:34.576
and continue to reduce[br]poverty around the world.

0:10:34.600,0:10:37.416
BG: So you're basically pleading[br]for rehabilitating growth,

0:10:37.440,0:10:39.016
but the only way for that happen

0:10:39.040,0:10:41.376
without compromising[br]the capacity of the earth,

0:10:41.400,0:10:42.936
to take us on a long journey,

0:10:42.960,0:10:44.616
is for economic growth

0:10:44.640,0:10:47.336
somehow to decouple[br]from the underlying use of resources.

0:10:47.360,0:10:48.656
Do you see that happening?

0:10:48.680,0:10:53.216
DM: Well, I think that I'm more optimistic[br]about human ability and ingenuity.

0:10:53.240,0:10:55.416
I think if we start to constrain ourselves

0:10:55.440,0:10:58.496
using the finite, scarce[br]and depleting resources

0:10:58.520,0:10:59.776
that we know today,

0:10:59.800,0:11:01.136
we could get quite negative

0:11:01.160,0:11:03.376
and quite concerned[br]about the way the world is.

0:11:03.400,0:11:05.696
However, we've seen the Club of Rome,

0:11:05.720,0:11:08.136
we've seen previous claims

0:11:08.160,0:11:10.496
that the world would be[br]running out of resources,

0:11:10.520,0:11:13.096
and it's not to argue[br]that those things are not valid.

0:11:13.120,0:11:15.776
But I think, with ingenuity[br]we could see desalination,

0:11:15.800,0:11:17.736
I think we could reinvest in energy,

0:11:17.760,0:11:19.896
so that we can actually[br]get better outcomes.

0:11:19.920,0:11:21.136
And so in that sense,

0:11:21.160,0:11:23.536
I'm much more optimistic[br]about what humans can do.

0:11:23.560,0:11:24.976
BG: The thing that strikes me

0:11:25.000,0:11:28.376
about your proposals[br]for rehabilitating growth

0:11:28.400,0:11:30.016
and taking a different direction

0:11:30.040,0:11:35.096
is that you're kind of suggesting[br]to fix capitalism with more capitalism --

0:11:35.120,0:11:38.736
with putting a price tag[br]on good behavior as incentive

0:11:38.760,0:11:42.936
or developing a bigger role[br]for business in social issues.

0:11:42.960,0:11:44.456
Is that what you're suggesting?

0:11:44.480,0:11:46.616
DM: I'm suggesting[br]we have to be open-minded.

0:11:46.640,0:11:48.856
I think it is absolutely the case

0:11:48.880,0:11:51.336
that traditional models of economic growth

0:11:51.360,0:11:53.776
are not working the way[br]we would like them to.

0:11:53.800,0:11:55.696
And I think it's no accident

0:11:55.720,0:11:59.016
that today the largest[br]economy in the world, the United States,

0:11:59.040,0:12:00.336
has democracy,

0:12:00.360,0:12:03.456
liberal democracy,[br]as it's core political stance

0:12:03.480,0:12:05.656
and it has free market capitalism --

0:12:05.680,0:12:07.256
to the extent that it is free --

0:12:07.280,0:12:09.456
free market capitalism[br]as its economic stance.

0:12:09.480,0:12:11.616
The second largest economy is China.

0:12:11.640,0:12:13.776
It has deprioritized democracy

0:12:13.800,0:12:16.976
and it has state capitalism,[br]which is a completely different model.

0:12:17.000,0:12:19.736
These two countries,[br]completely different political models

0:12:19.760,0:12:21.736
and completely different economic models,

0:12:21.760,0:12:24.176
and yet they have the same[br]income inequality number

0:12:24.200,0:12:25.696
measured as a Gini coefficient.

0:12:25.720,0:12:27.856
I think those are the debates[br]we should have,

0:12:27.880,0:12:30.016
because it's not clear at all

0:12:30.040,0:12:31.856
what model we should be adopting,

0:12:31.880,0:12:34.216
and I think there needs to be[br]much more discourse

0:12:34.240,0:12:37.656
and much more humility[br]about what we know and what we don't know.

0:12:37.680,0:12:41.056
BG: One last question.[br]The COP21 is going on in Paris.

0:12:41.080,0:12:42.576
If you could send a tweet

0:12:42.600,0:12:45.896
to all the heads of state[br]and heads of delegations there,

0:12:45.920,0:12:47.296
what would you say?

0:12:47.320,0:12:49.976
DM: Again, I would be very much[br]about being open-minded.

0:12:50.000,0:12:51.216
As you're aware,

0:12:51.240,0:12:53.336
the issues around[br]the environmental concerns

0:12:53.360,0:12:55.336
have been on the agenda many times now --

0:12:55.360,0:12:57.616
in Copenhagen,[br]'72 in Stockholm --

0:12:57.640,0:12:59.936
and we keep revisiting these issues

0:12:59.960,0:13:03.536
partly because there is not[br]a fundamental agreement,

0:13:03.560,0:13:04.816
in fact there's a schism

0:13:04.840,0:13:07.576
between what the developed[br]countries believe and want

0:13:07.600,0:13:09.936
and what emerging market countries want.

0:13:09.960,0:13:13.176
Emerging market countries need[br]to continue to create economic growth

0:13:13.200,0:13:16.616
so that we don't have political[br]uncertainty in the those countries.

0:13:16.640,0:13:18.776
Developed countries recognize

0:13:18.800,0:13:21.056
that they have a real,[br]important responsibility

0:13:21.080,0:13:23.896
not only just to manage[br]their CO2 emissions

0:13:23.920,0:13:27.096
and some of the degradation[br]that they're contributing to the world,

0:13:27.120,0:13:28.896
but also as trendsetters in R&D.

0:13:28.920,0:13:31.176
And so they have to come[br]to the table as well.

0:13:31.200,0:13:33.656
But in essence, it cannot be a situation

0:13:33.680,0:13:37.816
where we start ascribing policies[br]to the emerging markets

0:13:37.840,0:13:39.696
without developed countries themselves

0:13:39.720,0:13:42.096
also taking quite a swipe[br]at what they're doing

0:13:42.120,0:13:44.896
both in demand and supply[br]in developed markets.

0:13:44.920,0:13:48.016
BG: Dambisa, thank you for coming to TED.[br]DM: Thank you very much.

0:13:48.040,0:13:51.483
(Applause)