00:00hi everyone welcome to the a 6nc podcast
00:03I'm sonal and today Michael and I are
00:05talking to Parag Khanna who's a global
00:07contributor on CNN he's a senior fellow
00:09at a school of public policy at the
00:11National University of Singapore and
00:12most interesting to us is he recently
00:15has a book out a new book out called
00:17connect ography which is about mapping
00:19the future of global civilization but
00:21more concretely Parag it's about how
00:24connectivity and the supply chain you
00:26argue are really the driving forces more
00:29than geography more than anything else
00:30for the world absolutely well thank you
00:33for having me on well I guess I did kick
00:35things off I think it'd be great for you
00:37know we have a tendency when we talk
00:39about the topics these topics to be very
00:41grandiose like we got to connect the
00:42world and technology can break down
00:45these barriers and I think we'd like to
00:46take a step away from that and and
00:48really dive into what's been happening
00:50like what's the evolution that we're
00:52talking about the supply chain for
00:53example like I think when the most
00:54interesting ideas you put forth is that
00:56this historical evolution of the supply
00:58chain can you talk a little bit more
00:59about that sure and there's no reason
01:01not to be grandiose I write books with
01:03neologisms and were terms like global
01:05civilization so I'm hardly one to shy
01:07away I aim at the hundred-year
01:09perspective but also there is lots of
01:11granularity in the argument I think you
01:13know it is true that though when you're
01:15in the valley and you're talking about
01:16connectivity of course your first
01:18instinct is to think about digital
01:19connectivity and the internet your
01:21mobile phone and all that is true but
01:23the Internet is actually been only the
01:25newest layer of global infrastructure
01:27elective 'ti and you know the
01:30fundamental argument is there is the
01:31most most powerful force of this century
01:34is connectivity but that connectivity is
01:37calls are the three categories there's
01:39transportation energy and communications
01:41and that evolution that you asked about
01:43begins in the late 19th century with
01:46intercontinental or in cross-border
01:48highways and then of course railway is
01:51built by empires such as the British
01:53even the Ottomans had railways that
01:54spanned across the Middle East and of
01:56course the Russians did too that's just
01:59transportation then came energy we
02:01didn't have international oil and gas
02:03pipelines 100 years ago today we have
02:05about 2 million kilometres of them right
02:08not to mention the 4 million kilometres
02:10of railways and so on top of
02:14of energy you have communications and
02:16communications the third and most recent
02:19layer of global infrastructure
02:21connecting we've got the Telegraph and
02:23along some of the same maritime routes
02:26where we where the British lay Telegraph
02:28cables a century ago we now have
02:31fiber-optic submarine cables across the
02:34continent there's about 1 million
02:35kilometres of fiber optic cables under
02:38the ocean floor we're building more and
02:40more all the time and then of course
02:41we've got the satellites and the data
02:43centers and and you know the ISPs and
02:45all of the ways in which digital
02:47connectivity takes like so it is a data
02:50supply chain we have a supply chain for
02:52moving cargo a supply chains removing
02:54energy for moving ourselves now we have
02:57a full on global layering of a digital
03:00supply chain which we call the Internet
03:03so as I say the Internet is only the
03:04newest kind of supply chain it's the 3rd
03:06and freshest and newest and obviously
03:08among the most powerful that when it
03:11passing that idea for a minute it was
03:12eye-opening for me to think about the
03:14Internet as the one in this continuum
03:16versus like this discrete theme that's
03:18just randomly layered on top why does
03:21that distinction matter so much lie
03:23that's important what the implications
03:24of that is we think we live in a world
03:27in which the most fundamental layer of
03:29human organization is the political
03:31state you know it's my nation in your
03:33nation and the borders between us States
03:35and borders what happens when you have
03:37the volume of infrastructural
03:39connectivity between cities and
03:40communities so drastically exceed the
03:44the utility and the length of global
03:47borders is that you change the entire
03:48nature of the system and of course we're
03:51not old enough to remember and you know
03:53only those who are steeped in kind of
03:55geopolitical history would think back to
03:58the last period of what's called AG
04:00major systems change from the Middle
04:02East the Middle Ages to the modern state
04:04system that was 500 years ago and once
04:06every 500 years we have this kind of
04:10systemic transformation in how human
04:12society is organized and so you know
04:16we're moving from the world of nations
04:17and borders to what I call the world of
04:19flow and friction in which
04:20infrastructure and supply chains
04:22fundamentally matter more than nations
04:25and borders because again there's so
04:27then there is borders so instead of
04:30thinking about things stopping at
04:32borders we should think of the only ways
04:34in which we slow down you know the
04:37movement of goods of people of resources
04:40of knowledge of ideas of technology is
04:42through various kinds of frictions the
04:44Great Firewall of China and the things
04:46that are flowing through these systems
04:47are technology goods capital people
04:51human capital as well I mean it could be
04:53all of those things ideas it's literally
04:56everything because the world becomes not
04:58a world of the Westphalian political
05:00borders but it becomes a supply chain
05:02world in which the supply chain connects
05:05everything every supply in the world
05:07every resource every commodity every
05:09idea can reach any other place or person
05:13in the world through these
05:14infrastructures so the world becomes
05:16completely organized according to
05:18connectivity that which is connected in
05:20that which is not connected and
05:22everything becomes fungible right any
05:24resource can be moved and transferred
05:26from one place to the other and so that
05:28is a supply chain world and that is
05:30totally unprecedented in human history
05:33not to mention that it is global so the
05:35supply chain it just makes me think of
05:38Europe and Russia and natural-gas where
05:40the politics haven't gotten in the way
05:43of the flow of natural gas to Europe but
05:45they certainly could I'm just wondering
05:48it sounds to me like you're arguing that
05:49the supply chain kind of supersedes the
05:52political but does it I can see it
05:55situations where the gas does stop
05:57flowing oh I'm so glad you brought up
05:59this example it's a perfect one because
06:02interestingly enough once Russia that is
06:05that one of the largest builders of gas
06:07and oil pipeline infrastructure through
06:10a company called Transneft there's a
06:12state-owned like a Kremlin backed
06:13company that builds most of the
06:15pipelines over that that flow between or
06:17that connect Russia and Europe so even
06:19though it's a Kremlin run company you
06:22would think that when Russia wants to
06:24cut off supplies to Ukraine in Europe it
06:26would just flick a switch and do that
06:28and punish them right right
06:29instead Transneft wants to make money
06:31and Transneft can't make money if it's
06:34not selling oil and gas so it is a
06:36Kremlin backed own the company that is
06:39actually doing the most to undermine
06:41oops foreign-policy because it doesn't
06:44want to lose money off the plug I have a
06:46whole map of this in the book where I
06:48point out that the more pipelines you
06:50build between Russia and Europe and the
06:51more a natural gas that Europe can
06:54import through turkey from North Africa
06:56from the United States the United States
06:57now ships and liquid natural gas to the
07:00Baltic countries so the more resilience
07:02you have in the system because even if
07:04Russia were to turn off one tap it's got
07:05all these other taps that are still
07:07flowing so here's the crazy part this is
07:09the punch line the target country for
07:11Russia is of course Ukraine but now that
07:13Russia has built so many is building so
07:15many new pipelines to Europe that
07:16circumvent Ukraine Europe is building
07:19what are called reverse pipelines that
07:21take the gas that goes from Russia to
07:23Germany and feeding it back through
07:25Poland to Ukraine so even if Russia
07:27wanted to cut off Ukraine it Russian gas
07:30is still going to through Ukraine
07:31through Western Europe it's one of the
07:33kind of arcs that I try and argue is
07:35that the more connectivity you build
07:37even if it seems redundant even if it
07:38seems superfluous even if you think why
07:41do we need 10 in our 17 internet
07:42junctions in Singapore for example this
07:45tiny island you know what because the
07:47other 16 may one day get cut off that's
07:49also just really good engineering
07:50practice a design of any good system the
07:53philosophy is that you want to have as
07:54many redundancies as possible so you can
07:56reroute if something breaks if you know
07:58whether it's a printer or circuit or you
08:00know any mass autonomous system you want
08:02to be able to have multiple pathways and
08:05ability to reroute on demand it's it's
08:07super fascinating you just talked about
08:09with that example how does that play out
08:11with like say technology companies and
08:13applications so you know earlier I
08:15mentioned a company that most people
08:16have never heard of and yet it's the
08:17most powerful builder of energy
08:20infrastructure in the world Transneft
08:22now the technology companies the
08:24technology infrastructure companies that
08:26lay all of these fiber cables many of
08:28many people haven't heard of Tata
08:29Communications and the others that build
08:32own and operate these millions of
08:34kilometres of undersea internet cables
08:35and they are the silent agents of
08:38digital connectivity around the world
08:40now of course many people have heard of
08:41Vodafone Vodafone is the largest telecom
08:43operator in the world
08:44nominally British company but really a
08:46global telecom superpower these telecom
08:49and technology and kind of you know data
08:51industry companies invest
08:55about you know it's estimated that
08:56between now and 2020 let alone all the
08:58trillions that we've done so far we'll
09:00spend another four trillion dollars just
09:03on the physical infrastructure of
09:06digital connectivity around the world
09:07that's the internet cables that's the
09:09data fence that sort of telecoms relay
09:11stations mobile infrastructure all of
09:13those things all over the world the
09:15point I want to emphasize is this is a
09:17physical thing it's a physical
09:19investment it has this transformative
09:21impact on like the nature of the
09:23organization of the world because you
09:26can actually touch and feel these things
09:28of course we think of the you know sort
09:29of the Internet is something so ethereal
09:31but it is such a physical thing and all
09:33of this infrastructure becomes more
09:36tangible and more relevant to our lives
09:38than invisible quarters so in that world
09:42and that's our world Vodafone becomes
09:45what I mean it's certainly a
09:46multinational corporation but how is its
09:49influence and it's kind of gravity felt
09:52everywhere it is what I call a stateless
09:55superpower so you think of like a
09:57commodities trader like Glencore a
09:59company that can buy you know mining
10:01assets copper zinc mines you know
10:03whatever the case we can get it anywhere
10:04in the world through its shipping
10:05networks that's a stateless superpower
10:07operates everywhere and is nominally
10:10registered as a Swiss company
10:12Switzerland has a large share of these
10:14stateless super powers as the Singapore
10:16and some of the offshore British
10:17jurisdictions think of McKinsey is
10:19another example you know where is
10:21McKinsey where is Accenture they have
10:23hundreds of thousands of employees but
10:24no one knows where their headquarters is
10:26sometimes their own staff don't know so
10:28you know I recently wrote a long essay
10:30that was just analyzing how 2025 years
10:32ago in a pre connectivity sort of world
10:35in a world where there was not all of
10:37these connected nodes that had all of
10:39the full services of a legal sort of you
10:43know domicile of a quality regulation of
10:45technological connectivity of good
10:47airports even all of these things you
10:49only had a few companies that were
10:51really leveraging this globally
10:52connected system now people companies
10:54are everywhere - Vodafone is a British
10:57company but how what share of its
10:58revenue do you think really comes from
11:00the United Kingdom right very very small
11:02yeah in fact it as a giant global
11:04footprint and so all telecom companies
11:07are angry if you're a Spanish
11:08company you are aiming to boost your
11:11market in Latin America
11:12Tata communicant our alliance all of
11:14these Indian telecommunications
11:16companies where is their biggest growing
11:18footprint besides their home market it's
11:19Africa and this applies now to all
11:21sectors I mentioned consulting I mention
11:24energy I mentioned now technology most
11:26fortune 500 companies now earn more
11:28revenue abroad than at home
11:30so to become a stateless superpower you
11:32want to have you know you want to have
11:34the globally distributed revenue you
11:35want to have your management distributed
11:37in different jurisdictions you want to
11:39be a bit decentralized you want to have
11:41you know diverse kind of you know
11:42management structures all of these kinds
11:44of tools in a way that company is using
11:47and people always think that you know
11:48these are American companies they were
11:50created by American Telenor immigrant
11:52talent they thrive on the the air of
11:55entrepreneurship that that sort of you
11:58know pervades Silicon Valley that ultra
12:00high oxygen content air you know that
12:03people in a step ahead of the rest of
12:06the world but in the present these same
12:09companies are saying whoa you know we
12:10can we can grow faster in India there's
12:13great technology workers and programmers
12:15and coders in emerging markets who cost
12:17less and it works we can't get enough
12:19talent into the borders for all of these
12:21reasons a lot of large companies Cisco
12:23to say nothing of obviously companies
12:26that are leveraging just coding talent
12:28in the cloud want to locate and be just
12:31about everywhere and so they are in a
12:33way de territorial izing themselves it's
12:36really interesting to watch this all
12:37plan at a macro scale but at a very
12:39mundane kind of detail level what
12:42happens to the individual employees in
12:43these companies how does that affect
12:44them and and I'm thinking you know about
12:47like the next set of workers the people
12:50whose jobs are changing like how are how
12:53are things playing out for for them in
12:55this world that you're painting which is
12:56a probably reality you're describing
12:57what already is in many ways exactly I
13:00get called a futurist sort of all the
13:01time but I wouldn't be writing about any
13:03of this stuff if it weren't sort of you
13:05know deeply grounded in everything that
13:06I observed today as I'm just traveling
13:08around the world and talking to people
13:09and seeing things there's nothing
13:11particularly futuristic about all of
13:13this and I think there's two answers to
13:14to your question one is on the level of
13:16the workers and workplace practices and
13:19the other is the level of identity who I
13:22both the nature of identity is actually
13:23really an interesting one we're at the
13:25point now where there are more people
13:27surviving on the sharing economy you
13:29know so is the apart time workers
13:31digital workforce Giga know mists
13:33whatever term you want to use you know
13:35freelancers as a whole some estimated 40
13:37million of them more people employed or
13:40self-employed in that way then there are
13:42manufacturing workers in America which
13:44is less than 10% of the labor force and
13:46only about you know 10 or 12 million
13:47people and obviously dwindling very fast
13:49let's fast-forward to where Americans
13:51are self-employed and are living off of
13:53various tasks that they get through
13:56connected work through large companies
13:58to each other and so forth and that is
14:00of course changing the nature of you
14:02know how the individual relates to the
14:05economy there's no more stable
14:06employment for generations on end
14:08instead you have to be much more
14:09self-reliant and your degree of
14:10connectivity is going to shape your
14:12prosperity your ability to be mobile
14:14sort of digitally so that you can
14:16continue to work in different ways over
14:18the course of your career and get by
14:20financially so connectivity and
14:22mastering connectivity on an individual
14:24level actually matters profoundly for
14:26each and every American that's one angle
14:28then there's identity when looking at
14:30stateless superpowers I looked at you
14:32know hundreds of thousands of employees
14:33used to be less than the 1% the elite
14:36global travelers or bankers and
14:38consultants now it's so many people who
14:41are always moving from one place to the
14:42other I look at for example the number
14:44of expatriates in the world there used
14:46to be about a hundred in the 60s and
14:48only 100 million people living outside
14:49their country of origin now it's over
14:51300 million people who are expats and
14:54they might be permanent expats they
14:56belong to what I call in the book the
14:57independent Republic of the supply chain
14:59oh that's an interesting what is their
15:01primary identity and as someone who's
15:03migrated lot my life are very
15:05sympathetic to this I I've made young
15:06Russians and Brazilians and Indians and
15:08Saudis who say you know my passport is
15:11such a drag you know I don't have visa
15:12free entry around the world like you
15:14know someone from Norway but thank
15:16goodness I work for Goldman Sachs or
15:17Accenture or McKinsey or Google I get to
15:20move all around the world and any
15:22country will take me because of my
15:24employer and their loyalty is much more
15:27to their company than to their country
15:29and this is a particular you know with
15:32with Generation Y and Millennials and
15:34certainly Generation
15:36z you know with my kids because they
15:38will feel increasingly like they will go
15:39wherever the work takes them and they
15:42will identify with you know whatever
15:44their their source of employment is
15:46whoever gives them not only
15:47technological assets but all obviously
15:49skill building all of the things that
15:50governments are getting worse and worse
15:52at doing so I think that we're gonna see
15:54more identification with the supply
15:57chain which is a way of saying cloud
15:58communities you know these virtual
16:00communities that are facilitated by who
16:03you work for and where you travel but
16:05also obviously just on a day-to-day
16:07level you know what are the Facebook
16:08groups you're in and you know who are
16:10you dialoguing with online that gives
16:12you a sense of identity - big shift from
16:14500 years ago right your primary
16:16identity was religion or state and now
16:19it's anything you want it to be and so I
16:21think again connectivity total
16:23connectivity enables this you know one
16:26of our partners he's now I'm running a
16:28startup full-time wrote a really
16:30interesting op-ed which I added it
16:32actually a few years ago called software
16:33as we organize in the world and his
16:35premise was pretty much what you're
16:37talking about but more interestingly the
16:39connection of the two which is what
16:41happens when online communities that are
16:44organizing is now kind of becoming more
16:46physical in certain ways and one of the
16:49things that I was thinking about in that
16:50frame is it's great that communities and
16:53tribes whatever we want to call them
16:55groups can sort of sell sort I mean it's
16:57even a form of tebow sorting in a way
16:59what does that mean in terms of people
17:03being exposed to different ideas not
17:06being in an echo chamber are they
17:09getting exposed to more diverse ideas
17:10are we over micro sorting and all this
17:13like I mean I'm kind of curious about
17:14your views on it I'm a big fan of his
17:17work on your question of what does it
17:19mean in terms of the future of sort of
17:21how would you phrase it you say digital
17:24yeah like tribal ization for better or
17:26worse yeah so I there's a lot of
17:28Mythology around this idea that oh we
17:30used to you know huddle around the the
17:32NBC Evening News and what we were
17:35exposed to lots of diverse ideas
17:37watching our monochrome television
17:39everyone going to the same old office
17:41every day like a Japanese worker let's
17:43say and working 60 years for the same
17:45company that world is not coming back
17:48world ever really exist let's embrace
17:50the reality of the fact that first of
17:52all were exposed to a zillion times more
17:54ideas than we were a report from every
17:57corner of the world I can't possibly
17:59imagine the feedback in the diversity
18:02and the geographic you know diversity of
18:04feedback that I get on every syllable
18:06that I write coming from everywhere were
18:08it not for this connectivity just
18:10because you can choose to switch on a
18:13filter bubble and isolate yourself with
18:16totally nationalist ideas or ideological
18:18ideas political ideas that doesn't mean
18:20that you do in fact do that if you look
18:22the number of for example international
18:23friends that people have on Facebook it
18:25used to be only you know four or five
18:27percent of an average person's friends
18:29were from another country and now it's
18:31risen to like fifteen or sixteen percent
18:33now of course we can debate the meaning
18:35of the word friend I think the fact is
18:37that we have Global Connections most
18:39people in the world will still never
18:40leave the country in which they were
18:42born so I'm very you know sympathetic to
18:45the idea that you can be a prisoner of
18:47the kind of you know the values the
18:49identity that are imposed on you by the
18:51place by the government by the religion
18:54of the country that you're in and
18:55without digital connectivity how would
18:58you ever have those options as to you
19:00know who you identify yourself with what
19:02you believe in and so on the fact is
19:04that more connectivity is better for
19:05everyone where does this world that you
19:07describe and and I'm sort of thinking
19:09about the stateless superpower and then
19:11the rest of us I mean it is their only
19:13room for the very giant that gets bigger
19:16and bigger before it comes super like
19:18where is the room for innovation and and
19:20for what Silicon Valley does best right
19:23you know birth these things and put them
19:25out into the world or is the network
19:28effect of these stateless super powers
19:30so powerful that there isn't room for
19:33anything else oh no not at all the
19:35global economic pie is still expanding
19:37there's plenty of growth in the world
19:39and I think the answer might sound
19:41mundane but its scale I mean a lot of
19:43the things that we're talking about
19:45are happening but aren't happening fast
19:47enough you know we do have the next
19:48three billion the next five billion that
19:50need to be connected so that's kind of a
19:52long way to go right and I think you
19:54know again the answer is in scaling
19:55supply chains getting people more access
19:57to markets whether it's technology
19:59capital mobility whatever the case may
20:02and I think tech companies have a lot of
20:04a big role to play let me give you a
20:06very concrete example it's very
20:08expensive to access global shipping and
20:11transportation networks to move cargo
20:13and goods around the world that is
20:15something that big companies can do and
20:16the cost of access are very often
20:18bureaucratic paperwork and bribes
20:20so of course aetherium you know in
20:22blockchain technologies really reduce
20:24the transaction cost and the
20:26transparency in the security of
20:28participating in global economic
20:30transactions in getting your goods from
20:32you know the village and country X to
20:34the big city and countrywide and so what
20:37I'm seeing in my research is that
20:38through all of these cloud-based digital
20:41technologies for you know just call them
20:43for lack of a better terms global trade
20:45enterprise apps whether they use
20:47blockchain or otherwise now just about
20:49anyone can participate in global supply
20:52chains you know you can make parts for
20:54the global supply chain for
20:56manufacturing or be part of a digital
20:58kind of coding ecosystem unlike you know
21:00nitrous or github whatever the case may
21:02be you can participate in the financial
21:03transactions in the digital transactions
21:05in the economic transactions through all
21:07of these increasingly lower-cost
21:09platforms so to me scale is still the
21:13real big issue and this is where all of
21:14the inventiveness and innovation of
21:17Silicon Valley meets the frictions you
21:19know to go back to the earlier term of
21:21the real world and we have to continue
21:23to fight and push to overcome those
21:25frictions I wanted to go back to when
21:26the point you brought up earlier in the
21:27echo-chamber bit so one of the things I
21:29think is interesting is you talked about
21:31how we have this nostalgia for this time
21:32that never really was the way it was
21:34before and that you're arguing never
21:35really was and I think many people agree
21:37that it's just sometimes a hindsight
21:39view of the world I think one of the
21:40things that's happening is that those
21:42systems that evolved became containers
21:45for practices that are associated with
21:47taking care so for the example that you
21:48cited like you know you work at one
21:50company for 60 years that's no longer
21:53happening anymore but because that was
21:55the system that was where health care
21:57was located that was where people's
21:59financial security was located and now
22:01we're in this place where we haven't
22:03quite built out this other ecosystem of
22:05third-party services that can support
22:07like you know we have in the US we have
22:09now Obamacare so that helps take care of
22:12health care but then you know other
22:13third-party services to help the
22:15employees who are no longer
22:16captive to a single company so we're
22:18kind of in this in-between place and the
22:20world hasn't quite settled into this
22:22place we're in the middle of this
22:23friction so Jimmy thoughts on what's
22:25changing what needs to change there
22:27because we can't also dismiss the real
22:29concerns of people who are moving in
22:31these systems and trying to live their
22:33lives and and make their way oh yeah no
22:36to the contrary I think that simply
22:38harping nostalgically for that world
22:40that ever was is not exactly a
22:42constructive solution to this dilemma of
22:44you know people feeling disrupted by
22:47transitions I think part of the
22:49transition and disruption is also the
22:51solution to the problems that we found
22:53from the previous era that that gave us
22:55the financial crisis and then
22:57freelancers Union which used to be when
22:59I lived in New York five years ago I was
23:01a member of freelancers Union I was
23:03getting my health insurance when there's
23:04worth now it's really growing and
23:05growing at a massive rate and they're
23:08looking at portable insurance schemes
23:09and workers rights and all of these
23:11kinds of new types of political
23:13arrangements and negotiations and social
23:15contracts with their members with
23:18insurance companies with the state of
23:20New York and so on so these are the
23:23solution to this transition of where
23:25they are the future and they are also
23:28scaling rapidly right now so the more
23:30cities we can have and there's very good
23:32rankings around this city group and The
23:34Economist Intelligence Unit did this
23:35research on which cities in North
23:37America and around the world are doing
23:39the most to create ecosystems that allow
23:42Millennials to you know get new skills
23:45and you know which which cities have
23:46General Assembly you know which cities
23:48have incubators which cities have have
23:50lots of low-cost co-working spaces which
23:52schools have kind of which cities have
23:54like Apollo technics or like vocational
23:56schools and night schools all of these
23:57things people need in order to make it
24:01through this transition period in the
24:02global economy and any ready for a
24:04digital kind of global economy and it's
24:07cities like Chicago like New York like
24:09Toronto like Hong Kong like Singapore
24:11and I think that we need to look at
24:13those cities and see how in fact those
24:14are the places where these kinds of
24:16freelancer communities that provide
24:18insurance services and so forth for
24:20people are thriving we have to encourage
24:22much more of that it also goes back to
24:24your point about the skill set for this
24:26world is to have connectivity and then
24:29what to do with it when you have it and
24:31these are all the things that grow up
24:32around that so on that note let's
24:35actually take a turn for a moment and
24:36talk about smart cities in general so
24:39obviously you're talking about
24:40ecosystems and cities but we're talking
24:42about smart cities in the sense of
24:43cities that have technology embedded
24:45into their very physical fabric so let's
24:47talk about that trend what are some of
24:49the more interesting things that you've
24:50seen and how this is playing out with
24:51the themes of your book absolutely I
24:53have this line in the book where I said
24:55I spent much of the last 10 years in
24:57places that don't exist because there's
24:59lots of cities that are not on the map
25:00yet and yet they're places where
25:02governments are investing and developing
25:04new kinds of you know modern
25:05infrastructure a special economic zone
25:08supply chain hubs if you will instead of
25:10just cities which are our oldest
25:12political unit of organization we've had
25:14cities for 5000 years we've had modern
25:17nations for a couple of hundred years
25:19the city is the organizing unit of
25:21humanity and the sort of top 300 cities
25:24in the world represent most of the world
25:26economy and so countries around the
25:28world are saying what can we do to get
25:30in on this global network of connected
25:33cities that are driving that were
25:34economy forward that dominates supply
25:36chains and so forth they're building
25:38these special economic zones and hubs
25:39for supply chains and I noticed that you
25:41know in 50 years ago they're only a
25:44couple of special economic zones in the
25:45world today we have 4,000 of them so
25:47you're talking about Shenzhen or I mean
25:49named some places exactly yeah so
25:53Shenzhen or you know what started out as
25:54a Shenzhen Dominican Republic Mauritius
25:57phenomenon has now become these pockets
26:00and enclaves whether they're port cities
26:02or the Dubai international financial
26:03center or the Bangladesh textile export
26:06processing zone or the Malaysia
26:08multimedia supercar eater it's the
26:10transformation of an existing place or
26:13it's literally breaking ground in
26:15building entire new cities from scratch
26:17like Songdo new economic city in south
26:19korea which a lot of people look at ma
26:21star City and Abu Dhabi these places are
26:23not on our maps and what I've been doing
26:25is the traveling to them and trying to
26:26understand what are the technologies
26:28that they're investing in the most in
26:30order to leapfrog basically to the 21st
26:33century what are the industries that
26:35they want to capture and compete in so
26:38LED lighting right for example or
26:40digital animation of clean tech
26:42we're in programming I'll give you one
26:44example Business Process Outsourcing we
26:46think of it as being dominated by like
26:48Bangalore and in India right but now
26:50because outside of Manila in the
26:52Philippines there's a whole city that's
26:54like basically BPO city the Philippines
26:57now has more workers and more revenues
26:59from call centers than India does
27:01because they physically made a plan
27:02let's physically get connected let's
27:05leverage our english-speaking population
27:06and let's capture this industry from
27:08India we've got 4,000 such special
27:11economic zones around the world that are
27:13getting into this global economic
27:15competition to leverage connectivity and
27:18attract industries and investment and
27:19technologies that help build their their
27:21workers and raise wages and obviously
27:23build a better life and that's why you
27:25know the Philippines and India and
27:26Vietnam these countries that have the
27:28most of special economic zones are among
27:30the fastest-growing countries in the
27:32world I've been traveling to them one by
27:34one over the last five ten years and a
27:36lot of the stories are included in this
27:39it's funny because Marc Andreessen wrote
27:41a really interesting op-ed a few years
27:43ago in Politico where he argued that
27:45regions whether it's a city a state you
27:47know whatever can essentially relax
27:49their laws or change certain things to
27:52tweak that they can attract a certain
27:54type of investment so for example
27:56Detroit could decide to focus on drones
27:58and another region could focus on
28:01biopharma and in doing so become
28:03specialists in a certain thing and more
28:05importantly cities could compete with
28:07each other and it's a form of regulatory
28:09arbitrage it sounds like what you're
28:10describing is not dissimilar to that in
28:12many ways the question I have is that
28:14the link between the existence of those
28:17special zones and the fast growth has
28:21that really been firmly established or
28:22what's the arc of what's a connection
28:24between the two really first of all I
28:25totally agree with Marc's argument and
28:28that's exactly what's happening is
28:30regulatory arbitrage with one caveat we
28:32used to call it the race to the bottom
28:34we used to believe that countries would
28:36relax all sorts of regulations in order
28:38to attract investment of any kind and
28:40that was the kind of 1970s 1980s of Asia
28:42but in fact I I argue and it's actually
28:45a race to the top because this is how
28:47countries ascend the value chain this is
28:48not how they make soccer balls with
28:51their hands for the next 50 years this
28:54is how they get jobs they get investment
28:56they get technology and they gradually
28:57move up the value change sometimes they
28:59move up very very quickly we used to
29:00think of this as a derisively end but
29:04it's actually a very positive trend and
29:06I'll tell you why and this was one of
29:07the hardest areas of data gathering for
29:09me to do for this book but it's all
29:10embodied in one map that I have in the
29:13very early part of the book about
29:14especially economic zones and what it
29:16shows is the share of exports of each
29:19major country in the world or even small
29:21countries that is derived from the
29:23economic activity in those zones so for
29:25example you know 50% of the GDP of
29:28Central American countries is derive
29:30from the manufacturing and textile
29:32exports that are produced in those zones
29:35so if they didn't have them if they
29:37didn't participate in that arbitrage if
29:39they didn't set up these new regulatory
29:41areas how would they have attracted the
29:43investment and how would where would 50
29:44percent of their GDP
29:46come from it would not and we don't even
29:48people didn't realize until this data
29:51was gathered and I put it prominently in
29:53books like 25% of China's GDP still
29:57comes from the exports generated in the
30:00special economic zone so a huge huge
30:03contribution we used to think of these
30:05places as the islands so this is where a
30:07few lucky few people get to work and all
30:10the rest suffer and wither but now you
30:12see the incredible spillover effect I'll
30:14give you just one more example because
30:16it's a couple of miles from where I'm
30:17sitting but it's the island of bottom
30:19which is just across the Straits of
30:21Malacca from Singapore the island of
30:23bottom is an impoverished Indonesian
30:25island that's exactly 2.7 kilometres
30:28away across the Straits and there
30:30Singapore has set up its like
30:31shipbuilding operations in these special
30:33economic zones so I got my mountain bike
30:35I stuck it on a ferry and I went across
30:37the strait and it was started cycling
30:38around and I saw these like
30:40single-family homes and very nicely
30:42paved streets and you know fast-food
30:44restaurants none of this would have been
30:46here were it not for global supply
30:48chains for for you know prominent you
30:51know companies going locating their
30:53operations there employing thousands of
30:54workers and allowing them to build a
30:56better life so again what we thought of
30:58as being a sort of race to the bottom
31:00and an exploitation of workers it
31:03doesn't really look that way on the
31:04ground it looks very much like the
31:06opposite when you're really there that's
31:08actually really a great point to bring
31:10up because one of the things that I had
31:11argued with mark about I'm not argued
31:13but when I was probing him about the
31:15idea on Twitter before I actually came
31:17here to work here was that I didn't want
31:18it to become this model for where poorer
31:21countries would have to essentially
31:22suffer in order to get ahead but what
31:24you're arguing is the exact opposite
31:26which is quite refreshing and hopeful
31:27well prog this is really interesting I
31:30think people should read your book
31:32connect ography and see the immense
31:34amount of research and analysis and
31:36thinking that you've done at scales both
31:38grand and in micro levels as well thank
31:40you for being a success a podcast thanks
31:43for a thank you thanks so much
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