Tanya Cushman Reviewer:"Petra Petrovic Do me a favor. Close your eyes and imagine what globalization is. No, really. Close your eyes and bring up into your mind a photograph of globalization. How many of you are looking at a cargo ship with lots of containers on it? You can wake up now. Man, that always happens to me. Once I gave this talk in Japan and half the audience went to sleep. What is it about globalization? I just don't know. Are you all back? Today, I'd like to change that image of globalization in your mind. Indeed, I'd like to change the way you think about globalization. And more than that, I'd like to raise your level of anxiety a little bit. But also your level of excitement a little bit. You see, I think future globalization will be very different than the globalization we know today and the globalization we've known in the past. Future globalization will be about things that we do, not just things that we make. Now that sentence sounds rather abstract now, but over the next 12 minutes we'll walk down a path of facts and logic, and at the end of that journey... I hope that sentence makes perfect sense. And I hope that sentence will help you understand why you should be both a little more nervous and a little more excited about globalization. Let's start the journey by getting back to some of your images of globalization. These are some classic ones. What do they all have in common? Well they relate to goods, things we make, things you can touch, feel and see. And there's a very good reason for that. It has to do with the fundamental nature of globalization. Globalization you see is rather easy. Arbitrage drives globalization. Now let me explain what I mean by arbitrage in this context by talking about something other than globalization just for a moment. When people go to Germany, they try the beer because German beer is rather good. And when they go to France, they try the wine because French wine is rather special. The point is that countries are especially good at making some things and less good at making other things. And globalization is driven by companies exploiting these differences. They make things in countries that are especially good at them and they sell them elsewhere. A critical aspect of this selling elsewhere is that it takes place mostly in physical goods, things we make. There's a very good reason for that. It's easier to ship goods across borders, things that we make, than it is to ship the things that we do across borders, what we economists call services. And when I say services, I mean your jobs. If you don't work in a factory or a farm, you're in the service sector, and I'm talking about your job. But ask yourself, why is it easier to ship goods than services across borders? And remember, the reason your job hasn't been globalized yet is because it's hard to ship services across borders harder than goods. The reason services are hard to cross borders has to do with the fundamental reality of services. For many services, the service provider and the service buyer have to be able to provide services to the customer. to be in the same place at the same time. And the technical difficulties of getting service providers from one nation into the room with service buyers of another nation is why globalization up to now has been mostly in goods, not services. That's why globalization has been mostly about things that we make, not things that we do. But here's the thing. Digital technology is changing that reality. Digital technology is making it easier for people who sit in one nation to do things in another nation. Now, before we look at how digital technology makes that possible, I want to look at the economic facts that will make it profitable. Imagine we lived in a Star Trek world where workers could teleport from one country to another costlessly. The economic question is, would they have an advantage? incentive to do so? And the answer is yes, given the absolutely enormous salary differences across countries. A US accountant, for example, costs five times more than a Polish accountant. And in a Star Trek world, Polish accountants would teleport into New York City accounting offices in the morning and teleport back home at night. And in doing so, they would save those New York accounting offices a whole lot of money. Now, we don't live in a Star Trek world. Workers cannot teleport between countries. But digital technology is creating something I like to call telemigration. Telemigration. People sitting in one nation, working in offices in another nation. Arbitrage drives globalization, and up to now, globalization has been mostly in goods, not services, but that's not because there's not an economic incentive to globalize service jobs. It's because there are technical barriers to doing so. The next step is to look at how digital technology is tearing down the barriers to telemigration. I'm going to focus on four. The first is domestic telecommuting. Many of us have switched to telecommuting a little bit. How many people here have telecommuted from working from home, say, a day a week or a day a month? Okay, quite a lot of you. And our companies... are arranging things to make it easy for this telecommuting. Now, up till now, most of this telecommuting has been domestic, but it doesn't take a lot of imagination to realize that this telecommuting will go global. Having arranged things at work to make it easy to slot in remote workers, our companies will find it profitable to hire foreign freelancers online. Now, remote foreign intelligence won't be quite as good as in-person domestic talent, but the foreign talent will be a whole lot cheaper. So what do you think is going to happen? That was my effort to raise your anxiety a little bit. How am I doing? The second is online freelancing platforms. This is how your company will find those freelancers. These are like eBay, but for services, not goods. eBay made it easy for us to buy and sell goods online. These are... making it easy to buy and sell services online. Freelancing. The largest one is Upwork. It's amazing. Millions of freelancers are registered today on Upwork from over 100 countries, and there's many other platforms. The third factor is machine translation. This is amazing. Just a couple years ago, it was like a party trick or a rough first draft. Now it's very good, it's instant, and it's free. It's on your smartphone right now, your tablets and your laptops. You can use it with Skype to talk to people who speak a different language. The option is called Skype Translator. You can use it with YouTube to watch foreign language videos. They put English language captions. The option is called AutoCaption. You can use it with emails. Outlook Mail has an option called Microsoft Translator, which lets you translate emails into or out of French or German or whatever. Now imagine how revolutionary that is in terms of the supply of foreign freelancers. Hundreds of millions of talented, low-cost foreign freelancers who were excluded from telemigrating up to now by poor language skills will soon be speaking good enough English or French or whatever. And some of them will be able to do at least some of your job for less. The last one is advanced telecommunications. These are creating ways to make it seem that service providers from one nation are in the room with service buyers of another nation without actually being there. Here's one. It's called telepresence. People who use these telepresence rooms get the feeling that they're all actually in the same meeting when they're in fact in different countries. Here's another one called telepresence robots. So it's like a Skype screen, but on a very simple robot body. The person on the screen is controlling the robot, so she can drive around the office and look over your shoulder to see if you're playing solitaire or working on that project. She leaves the robot in the field office and lights it up whenever she wants. People say that the physicality of the robot... ...increases the degree of communication. So that's the second realization in our journal. We saw that telemigration is profitable. And we saw that telemigration is possible. The last question is, how fast is it coming? And the answer is... It's coming faster than most believe. Now this is a simple point, but I've had a lot of time getting this point across to people, so today I'm going to try something different. Instead of talking about how digital technology is driven by Moore's Law and the wonders of exponential growth, I'm going to go with an example that shows just how crazy it is that our ability to transmit, store, and process information is doubling every couple of years or so. This is an iPhone 6S. It came out in 2015. It is a very powerful computer. More powerful than the computer that guided Apollo 11 to the moon and back in 1969. But how much more powerful? What would you say? 100 times, 1,000 times, a million times? The answer is it's 120 million times faster than the computer that guided Apollo 11 to the moon and back in 1969. That's amazing. But it gets more amazing. This is an iPhone X. It came out in 2017. And it is two and a half times more powerful than the iPhone 6S. Now when you think about it, that two and a half times means... that there was more progress in processing speed between 2015 and 2017 than there was between 1969 and 2015. And guess what? Every two years, we will see even larger increments in processing speed. And that's why it's coming faster than most believe. It's why things that seem implausible in 2015, like instant free machine translation on your iPhone, are universal in 2018. So, let's get back to our sentence. Future globalization will be about things that we do, not just things that we make. Digital technology is making telemigration possible and it's coming faster than most believe. It means that people sitting elsewhere will be able to do things in other countries. I hope this journey has changed the image of globalization in your mind. And I hope along the way I've managed to raise your level of anxiety a little bit. But your level of excitement should also have been raised because of a very simple fact. Globalization means more opportunities for a nation's most competitive citizens, even though it means more competition for the least competitive citizens. And I look out here and I see a room full of really competitive citizens, so I think you should be... No, that's not a joke, really, it's true. You guys are all winners here. So you should be more excited than nervous. But let's not forget about the least competitive. That's why we should all have a bit more nervousness and a bit more excitement about future globalization. Thank you.