00:00In other news, he was one of the authors of a key report submitted to President Emmanuel Macron last year,
00:05outlining how France could take the lead in the field of artificial intelligence.
00:09Philippe Aguillon on Monday shared honors with Joël Mokir and Peter Howitt for the Nobel Economics Prize.
00:19His explanation of how creative destruction can drive economic growth
00:24is one of those cornerstones that people are talking about in this age of artificial intelligence.
00:32Siobhan Silk has more.
00:35Why do humans live so much better now than our ancestors did?
00:39That's the main question tackled by the trio of academics
00:43who've been awarded the 2025 Nobel Prize in Economics for their work on how innovation drives growth.
00:50American-Israeli Joël Mokir took half the prize for his long-term studies based on historical sources,
00:57while French economist Philippe Aguillon shared the other half with Canadian Peter Howitt
01:05for their mathematical model quantifying creative destruction,
01:10the idea that innovations destroy older technologies and businesses,
01:14but in the long run generate stable growth and improve human welfare.
01:18It's particularly timely amid growing anxiety over the AI revolution
01:23and its potential to make many jobs obsolete.
01:27With the understanding of the mechanisms of creative destruction provided by the laureates
01:33and the follow-up research,
01:35we have a better chance to make sure growth can continue
01:39and be guided in the direction that benefits humankind.
01:44Reacting to their win, Howitt and Aguillon warned against the protectionist policies
01:49of the current U.S. administration, saying they could stifle innovation.
01:54Anything that gets in the way of openness is an obstacle to growth.
01:59So I see their kind of dark clouds currently, you know, accumulating.
02:04The three laureates will each take a share of the one million euro prize.
02:07Philippe Aguillon says he intends to invest his part in his research lab at the Collège de France
02:13and INSEAD Business School, helping to fund young researchers' work on AI and green growth.
02:20He says he still doesn't like seeing himself on camera.
02:23Philippe Aguillon, Nobel Economics Laureate, is with us in our studios.
02:27Thanks for joining us here on France.
02:28Very nice seeing you.
02:29I heard on the radio the other morning, you giving an interview,
02:33where you said that the Nobel Committee actually asked you for the phone numbers of the other winners?
02:37Absolutely.
02:39Tell us what happened.
02:40No, I mean, they were not sure because they tried.
02:43It was not working.
02:43So they wanted to double check, probably.
02:45I think they had some numbers, but they wanted to double check.
02:48So they asked me to look for.
02:50I had the phone number of Peter Howitt, although not at hand, which is true.
02:54And my assistant had the number of Joel Mokir, but I could not tell my assistant what it was for,
03:01that I needed that number.
03:03So I had to call my assistant, ask her for the phone number of Joel Mokir,
03:08without telling her the reason why I needed that number.
03:12And she didn't guess why.
03:14Okay, so you don't like seeing yourself yet on TV, but you've got to brace yourself, right?
03:18Because imagine the next time you're in the faculty lounge at the Collège de France,
03:24are people going to look at you and say, oh, it's Philippe?
03:26Or are they going to say, oh, it's the Nobel Economics Laureate?
03:29Remember that the famous philosopher Jean-Paul Sartre refused the Nobel Literature Prize
03:33because he didn't want to be known as the Nobel winner for the rest of his life all the time.
03:38I think, you know, yeah, I think you can live.
03:43I'm very happy to have received the Nobel because it rewards the whole line of research.
03:50I think it acknowledges, you know, a whole new way of thinking about the growth process.
03:56There was what we used to call the neoclassical growth paradigm.
04:01It was the Solo model, the model of Robert Solo.
04:03It was a wonderful man, Robert Solo.
04:04But it's a model whereby growth is, you know, driven by capital accumulation primarily.
04:11So that was the paradigm.
04:13And capital accumulates, you produce more GDP, more output, you can save more.
04:19And the savings turn into investment, into new increasing capital stock, and you keep growing this way.
04:26That was the Solo model, okay?
04:28Nothing to do with innovation.
04:29It was pure capital accumulation, output, savings, investment, capital accumulation.
04:34And in our paradigm, you know, really the key role is played by enterprises.
04:43You see, I mean, the core of our paradigm are the firms.
04:49The firms that innovate to find new products or to better products or more efficient way to produce.
04:55And that's what, you know, drives productivity growth, is the innovation activities of firms.
05:01So firms that innovate, is it firms that take big risks?
05:06They take, of course, big risks.
05:07They need incentives.
05:08Because you can try and fail.
05:09Of course, and they may fail.
05:10So that's why you need to create a business, a favorable business climate for them to be, you know, to be willing to invest in innovation, which is very risky, rather than, you know, invest in real estate or pension funds.
05:22Or, you know, when someone puts her own funds or own money into a risky undertaking, it's not the same as if you put, you know, your private savings into, you know, a bank account or whatever.
05:36So it's a world, our world is a world where all the time you have new talents, new talents become new startups.
05:44And the new startups come to challenge existing firms.
05:47You see what I mean?
05:48And so it's a model where you want to encourage firms to innovate because they will get innovation grants.
05:53But later on, they may be tempted to use their grants to prevent subsequent innovations because they don't want themselves to be subject to creative destruction.
06:02So, you see, there is this contradiction at the heart of the growth process.
06:06On the one hand, you need innovation grants to induce firms to innovate.
06:10But on the other hand, they are tempted to use their grants to prevent subsequent entry and subsequent innovation because themselves don't want to be subject to creative destruction.
06:19So how do you deal with this contradiction?
06:21And you must have had many years of, I guess I can only call it heartache because 1992 is when you co-author this paper.
06:32But in fact, we started to work on it in 87.
06:34Oh, 87.
06:35We met.
06:35Even earlier.
06:36We worked on it.
06:37We did it in 87.
06:39Nobody in those days had a cell phone or.
06:41It was no, no.
06:42And so 1987 was the year of a big stock market correction.
06:50There was going to be financial crisis that followed.
06:53And yet, you co-author with Peter Howitt this paper in 1992.
06:58And for years, decades afterwards, the jobs that people go to are not the entrepreneurial innovation jobs.
07:05They're things like working in the city of London for a big trading firm or for a bank.
07:11It's true that whenever you have waves, you know, when you have new technological waves, people tend to go too much into the financial sector.
07:19So we need finance, of course.
07:21You need venture capital, institutional investors to finance innovation.
07:26But sometimes what happens is that there is too much, you know, you know, attraction for finance at the expense of the real economy.
07:36And so you now have this model.
07:40When you talk about innovation, do you understand how some of our viewers might be a little bit intimidated, dare we say scared?
07:48This notion of because, you know, people feel intimidated when they see new gizmos and.
07:55Because they are afraid of losing their jobs, for example.
07:57And that's why it's so important.
07:59And that's why I advocate a lot, kind of Danish system of flex security.
08:03When you lose your job, you get, you know, 90 percent of your salary for two years.
08:07You are retrained and the state helps you find a new job.
08:10I think it's very important, you know, to make creative destruction socially acceptable.
08:16And to make sure that nobody is left out of the process.
08:19It's very important to have this kind of flex security system that they have in Denmark.
08:23And it's also very important to have a good education system, because at school you learn to learn.
08:29At school you learn to be adaptable.
08:31If you don't go to good schools, you don't know how to adapt.
08:34So I think the combination of good schools, of a very good equation for everybody, you know, like in Finland, like in Korea.
08:40If you have a good education system combined with a good flex security system, then there will be less reluctance to the creative destruction, you see, which is the driver of growth.
08:51Growth is really economies that are dynamic, are those economies where you all the time you have new talents, new firms that come in, grow and challenge existing firms.
09:00And existing firms, if they want to survive, they need to innovate again.
09:04Or if they don't, well, they have to, they are driven out of the market.
09:08You see what I mean?
09:09And that's the, that's what drives growth.
09:12But then you first, you need new talents.
09:13Where do new talents come from?
09:14From schooling.
09:15So if you don't have good schools, you have very few new talents.
09:18Excuse me, Philippe Aguillon, you're French, right?
09:21And in France, the schooling is very top down.
09:24You probably endured like I did, sitting on the benches of big amphitheaters where the professors who are then called mandarins sometimes.
09:34Yeah, that's right.
09:36That's not a recipe for innovation, is there?
09:37No, but there are two things.
09:38You talk about universities.
09:39I talk about, you know, primary, secondary schools.
09:42Right.
09:42We need primary, secondary schools that deliver good test scores.
09:46You see, good PISA tests.
09:48So I mean, very much at school in favor of going back to calculus, reading, dictations.
09:56It's very important that, you know, high school students really master the basic knowledge.
10:02You see, I think that's very important.
10:04And then on top of that, you can study history, geography.
10:07But calculus, reading, basic literature, they need manuals.
10:12They need, you know, books.
10:13Books, don't use books, read paper books.
10:17And I think that's very important.
10:19And we used to have a school like that in France, and we lost it.
10:24We've lost it.
10:25We lost, well, yeah, the school.
10:27We have very good teachers.
10:28We have really devoted, fully dedicated teachers in high schools in France, in primary and secondary schools.
10:36But the system is organized in such a way that the public school system in France no longer delivers the promise of opportunity.
10:44And why is that?
10:45Why is that?
10:46Is it because, well, the decision is that the private sector is good and we shouldn't be putting our money?
10:52No, no, no, no.
10:52I mean, it's good to have the private sector.
10:54But I think, you know, we had migrations.
10:56We had new ways of migration.
10:57We needed classes with, you know, 15 students at most.
11:03We had excessively numerous classes, you know.
11:08So lack of funding for education.
11:10Then if there were students left behind, the teacher doesn't have time to care about them.
11:15So we need schools where there is nobody left behind.
11:18When anybody is left behind, she or he can have tutorship, can be helped, the homework done at school.
11:25All this we didn't have, you see.
11:27We need to invest in schools so that we can really make sure that nobody is left out.
11:33The problem with the French schooling system, there are a lot of wastes, a lot of children who get out of it, barely knowing how to read and write.
11:41And that's not right.
11:42That's not good.
11:43That's not good.
11:43So there may be...
11:43They should, no.
11:44It should be maybe cold comfort.
11:46But you compare the United States to Europe and you say the U.S. does poorly on inequality on the social safety net that you're describing there.
11:55And Europe does poorly on innovation.
11:58Exactly.
11:59You know, that's right.
12:00And so is this trend going to continue?
12:04Well, I hope not.
12:05There is a Draghi report.
12:06You know, Mario Draghi recommends that we wake up and we try to revert trend.
12:12I mean, the European per capita GDP is declining compared to the U.S. per capita GDP.
12:18We need to get our acts together and become a frontier innovator space.
12:25So we need a single market, a truly single market, you know, for goods and services, which we don't have.
12:31There are too many gold plating.
12:33Each country, each member state in Europe has its own regulation on top of the European regulation.
12:38We need a good financial ecosystem of innovation, venture capital, institutional investors.
12:43We don't have like in the U.S.
12:44And we don't have the equivalent of the DARPA, Defense Advanced Project Agency, this very pro-competition way of doing industrial policy.
12:51You have that in the U.S.
12:52You don't have that in Europe.
12:53So I think on all those dimensions, we can improve a lot in Europe to become more innovative.
12:59And on top of that, I would add the education and the flex security to make sure that, you know, the creative destruction that we generate is socially acceptable.
13:09But that's where Europe needs to wake up.
13:11All right.
13:12Creative destruction, that term sounds a little bit like when Mark Zuckerberg talked about move fast and break things to people.
13:20Yeah, but break things in a way which does not endanger social, you know, social safety.
13:27We need social safety nets.
13:29We want to make sure that people feel comfortable with it.
13:32Right now?
13:32Like in Denmark, in Denmark, there is no negative effect on health of losing your job.
13:37There's been studies on that by my friend, Alexandra Roulet.
13:40No negative effect on health in Denmark of losing your job.
13:43In U.S., you have the death of despair phenomenon, which Anne Case and Angus Ditton have pinpointed so well.
13:48So that's the big difference is that we need, on top of the Draghi recommendation, we need to have good education system and good flex security system to really make sure we don't run into populism.
14:00You see, you see, why do you have Trump or Pope or Mrs. Le Pen on the doorsteps of the Elysees and Matignon?
14:07Because there were many people in France or in our countries left out of the process.
14:12You see, abandoned, that felt abandoned.
14:14Nobody should be left abandoned.
14:17Should be left out of this, you know, quest for more innovation and more innovation based growth.
14:25More innovation, one final question, Philippe Aguillon.
14:28We're talking about artificial intelligence now, and you've argued that it can be a factor for that innovation.
14:36Absolutely. It's a big driver.
14:38You know, this interview, if there's a transcript of it, AI will eat it, will digest it.
14:44And for some, that's not innovation.
14:47That's theft.
14:48And they're taking people's…
14:50Ah, I know.
14:51That's right.
14:51There is a good and bad use.
14:52But the good use of AI…
14:54Taking people's content, their copyright…
14:56Of course.
14:57That's why you need regulations.
14:59So you do need more regulations.
15:00But too many regulations can get in the way of competition.
15:02So you need the right regulation.
15:04But avoid over-regulating, because when you have too many regulations, incumbent firms know how to cope with them.
15:10New entrants don't.
15:11So you want to make sure you have the right regulations, but not too many regulations, because then it stifles competition.
15:19And we know that the big problem with IT is that IT boosted growth initially, but then you had a growth decline because you had the emergence of superstar firms that discouraged new entry, you see.
15:32And because competition policy was not adequate, we let those firms grow unboundedly through merger and acquisition.
15:39And now we have to be very careful.
15:41Competition policy has to be there to make sure that the AI revolution will not end up having two or three dominant firms that will deter any innovation by anybody else, you see.
15:52It's always this thing.
15:53I need to have always newcomers.
15:55I don't want some kings, a few superstars, to just discourage all potential new entrants.
16:02And that's where competition policy is so important.
16:04Competition, education, flex security, those are pillars of a successful growth through creative destruction.
16:11And we look forward to hearing your speech in Stockholm on December the 10th.
16:15Congratulations again to Nipa Guillaume, your Nobel Economics Prize.
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