WEBVTT

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In System D, this

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is a store,

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and what I mean by that is that this is a photograph

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I took in Makoko, shantytown in Lagos, Nigeria.

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It's built over the lagoon, and there are no streets

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where there can be stores to shop,

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and so the store comes to you.

NOTE Paragraph

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And in the same community,

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this is business synergy.

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This is the boat that that lady was paddling around in,

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and this artisan makes the boat and the paddles

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and sells directly

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to the people who need the boat and the paddles.

NOTE Paragraph

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And this is a global business.

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Ogandiro smokes fish in Makoko in Lagos,

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and I asked her, "Where does the fish come from?"

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And I thought she'd say, "Oh, you know,

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up the lagoon somewhere, or maybe across Africa,"

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but you'll be happy to know she said

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it came from here, it comes from the North Sea.

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It's caught here, frozen, shipped down to Lagos,

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smoked, and sold for a tiny increment of profit

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on the streets of Lagos.

NOTE Paragraph

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And this is a business incubator.

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This is Olusosun dump, the largest garbage dump in Lagos,

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and 2,000 people work here, and I found this out

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from this fellow, Andrew Saboru.

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Andrew spent 16 years scavenging materials on the dump,

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earned enough money to turn himself into a contract scaler,

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which meant he carried a scale and went around and

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weighed all the materials that people had scavenged

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from the dump. Now he's a scrap dealer.

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That's his little depot behind him,

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and he earns twice the Nigerian minimum wage.

NOTE Paragraph

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This is a shopping mall.

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This is Oshodi Market in Lagos.

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Jorge Luis Borges had a story called "The Aleph,"

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and the Aleph is a point in the world

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where absolutely everything exists,

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and for me, this image is a point in the world

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where absolutely everything exists.

NOTE Paragraph

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So, what am I talking about when I talk about System D?

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It's traditionally called the informal economy,

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the underground economy, the black market.

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I don't conceive of it that way.

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I think it's really important to understand that something like

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this is totally open. It's right there for you to find.

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All of this is happening openly, and aboveboard.

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There's nothing underground about it.

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It's our prejudgment that it's underground.

NOTE Paragraph

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I've pirated the term System D from the former French colonies.

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There's a word in French that is débrouillardise,

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that means to be self-reliant,

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and the former French colonies have turned that into

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System D for the economy of self-reliance,

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or the DIY economy.

NOTE Paragraph

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But governments hate the DIY economy,

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and that's why -- I took this picture in 2007,

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and this is the same market in 2009 --

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and I think, when the organizers of this conference

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were talking about radical openness,

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they didn't mean that the streets should be open

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and the people should be gone.

NOTE Paragraph

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I think what we have is a pickle problem.

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I had a friend who worked at a pickle factory,

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and the cucumbers would come flying down

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this conveyer belt, and his job was to pick off the ones

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that didn't look so good and throw them in the bin

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labeled "relish" where they'd be crushed and mixed

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with vinegar and used for other kinds of profit.

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This is the pickle economy.

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We're all focusing on — this is a statistic from

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earlier this month in the Financial Times —

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we're all focusing on the luxury economy.

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It's worth 1.5 trillion dollars every year, and that's

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a vast amount of money, right?

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That's three times the Gross Domestic Product of Switzerland.

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So it's vast. But it should come with an asterisk,

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and the asterisk is that it excludes two thirds of the workers

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of the world.

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1.8 billion people around the world work

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in the economy that is unregulated and informal.

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That's a huge number, and what does that mean?

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Well, it means if it were united in a single political system,

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one country, call it

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"The United Street Sellers Republic," the U.S.S.R.,

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or "Bazaaristan,"

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it would be worth 10 trillion dollars every year,

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and that would make it the second largest economy

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in the world, after the United States.

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And given that projections are that the bulk

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of economic growth over the next 15 years will come

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from emerging economies in the developing world,

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it could easily overtake the United States

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and become the largest economy in the world.

NOTE Paragraph

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So the implications of that are vast, because it means

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that this is where employment is — 1.8 billion people —

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and this is where we can create a more egalitarian world,

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because people are actually able to earn money and live

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and thrive, as Andrew Saboru did.

NOTE Paragraph

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Big businesses have recognized this,

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and what's fascinating about this slide,

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it's not that the guys can carry boxes on their heads

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and run around without dropping them off.

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it's that the Gala sausage roll is a product that's made

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by a global company called UAC foods

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that's active throughout Africa and the Middle East,

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but the Gala sausage roll is not sold in stores.

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UAC foods has recognized that it won't sell if it's in stores.

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It's only sold by a phalanx of street hawkers

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who run around the streets of Lagos at bus stations

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and in traffic jams and sell it as a snack,

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and it's been sold that way for 40 years.

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It's a business plan for a corporation.

NOTE Paragraph

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And it's not just in Africa.

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Here's Mr. Clean looking amorously at all the other

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Procter & Gamble products,

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and Procter & Gamble, you know,

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the statistic always cited is that Wal-Mart

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is their largest customer, and it's true, as one store,

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Wal-Mart buys 15 percent, thus 15 percent

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of Procter & Gamble's business is with Wal-Mart,

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but their largest market segment is something that they call

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"high frequency stores," which is all these tiny kiosks

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and the lady in the canoe and all these other businesses

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that exist in System D, the informal economy,

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and Procter & Gamble makes 20 percent of its money

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from that market segment,

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and it's the only market segment that's growing.

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So Procter & Gamble says, "We don't care whether a store

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is incorporated or registered or anything like that.

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We want our products in that store."

NOTE Paragraph

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And then there's mobile phones.

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This is an ad for MTN,

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which is a South African multinational

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active in about 25 countries,

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and when they came into Nigeria —

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Nigeria is the big dog in Africa.

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One in seven Africans is a Nigerian,

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and so everyone wants in to the mobile phone market

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in Nigeria. And when MTN came in, they wanted

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to sell the mobile service like I get in the United States

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or like people get here in the U.K. or in Europe --

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expensive monthly plans, you get a phone,

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you pay overages,

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you're killed with fees --

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and their plan crashed and burned.

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And they went back to the drawing board, and they retooled,

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and they came up with another plan:

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We don't sell you the phone,

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we don't sell you the monthly plan.

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We only sell you airtime.

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And where's the airtime sold?

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It's sold at umbrella stands all over the streets,

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where people are unregistered, unlicensed,

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but MTN makes most of its profits,

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perhaps 90 percent of its profits,

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from selling through System D, the informal economy.

NOTE Paragraph

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And where do the phones come from?

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Well, they come from here. This is in Guangzhou, China,

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and if you go upstairs in this rather sleepy looking

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electronics mall, you find the Guangzhou Dashatou

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second-hand trade center,

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and if you go in there, you follow the guys with the muscles

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who are carrying the boxes, and where are they going?

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They're going to Eddy in Lagos.

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Now, most of the phones there are not second-hand at all.

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The name is a misnomer.

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Most of them are pirated. They have the name brand

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on them, but they're not manufactured by the name brand.

NOTE Paragraph

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Now, are there downsides to that?

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Well, I guess. You know, China has no —

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(Laughter) — no intellectual property, right?

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Versace without the vowels.

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Zhuomani instead of Armani.

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S. Guuuci, and -- (Laughter) (Applause)

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All around the world this is how products

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are being distributed, so, for instance,

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in one street market on Rua 25 de Março

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in São Paulo, Brazil,

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you can buy fake designer glasses.

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You can buy cloned cologne.

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You can buy pirated DVDs, of course.

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You can buy New York Yankees caps

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in all sorts of unauthorized patterns.

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You can buy cuecas baratas, designer underwear

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that isn't really manufactured by a designer,

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and even pirated evangelical mixtapes. (Laughter)

NOTE Paragraph

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Now, businesses tend to complain about this,

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and their, they, I don't want to take away from their

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entire validity of complaining about it,

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but I did ask a major sneaker manufacturer earlier this year

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what they thought about piracy,

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and they told me, "Well, you can't quote me on this,

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because if you quote me on this, I have to kill you,"

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but they use piracy as market research.

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The sneaker manufacturer told me that if

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they find that Pumas are being pirated, or Adidas

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are being pirated and their sneakers aren't being pirated,

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they know they've done something wrong. (Laughter)

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So it's very important to them to track piracy

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exactly because of this, and the people who are buying,

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the pirates, are not their customers anyway,

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because their customers want the real deal.

NOTE Paragraph

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Now, there's another problem.

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This is a real street sign in Lagos, Nigeria.

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All of System D really doesn't pay taxes, right?

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And when I think about that, first of all I think that

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government is a social contract between the people and

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the government, and if the government isn't transparent,

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then the people aren't going to be transparent either,

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but also that we're blaming the little guy

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who doesn't pay his taxes, and we're not recognizing

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that everyone's fudging things all over the world,

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including some extremely respected businesses,

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and I'll give you one example.

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There was one company that paid 4,000 bribes

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in the first decade of this millennium, and

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a million dollars in bribes every business day, right?

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All over the world. And that company

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was the big German electronics giant Siemens.

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So this goes on in the formal economy

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as well as the informal economy,

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so it's wrong of us to blame — and I'm not singling out

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Siemens, I'm saying everyone does it. Okay?

NOTE Paragraph

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I just want to end by saying that if Adam Smith

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had framed out a theory of the flea market

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instead of the free market, what would be some

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of the principles?

NOTE Paragraph

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First, it would be to understand that it could be

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considered a cooperative, and this is a thought

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from the Brazilian legal scholar Roberto Mangabeira Unger.

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Cooperative development is a way forward.

NOTE Paragraph

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Secondly, from the [Austrian] anarchist philosopher Paul Feyerabend,

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facts are relative, and what is a massive right

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of self-reliance to a Nigerian businessperson

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is considered unauthorized and horrible to other people,

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and we have to recognize that there are differences

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in how people define things and what their facts are.

NOTE Paragraph

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And third is, and I'm taking this from

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the great American beat poet Allen Ginsberg,

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that alternate economies barter and

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different kinds of currency, alternate currencies

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are also very important, and he talked about

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buying what he needed just with his good looks.

NOTE Paragraph

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And so I just want to leave you there, and say that

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this economy is a tremendous force for global development

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and we need to think about it that way.

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Thank you very much. (Applause)

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(Applause)