Seiko, Swatch, and the Swiss Watch Industry (with Aled Maclean-Jones)

How did an industry survive a technology that should have made it obsolete? Aled Maclean-Jones explains to EconTalk's Russ Roberts how Japanese quartz watches nearly wiped out Swiss watchmaking with cheaper, more accurate alternatives--and how the Swiss redefined the value of a watch to recover market dominance. Maclean-Jones discusses the Japanese innovations that led to the Swiss industry's collapse; the brilliant decision by a pair of Swiss mavericks to change the narrative around mechanical watches; and the consolidation and standardization of Swiss watchmaking undertaken by Swatch founder Nicolas Hayek.

• 0:02Speaker 00

  Welcome to Econ Talk, Conversations for the Curious, part of the Library of Economics and Liberty. I'm your host, Russ Roberts of Shalem College in Jerusalem and Stanford University's Hoover Institution. Go to EconTalk.org where you can subscribe, comment on this episode, and find links to other information related to today's conversation. You'll also find our archives with every episode we've done going back to 2006. Our email address is [email protected]. We'd love to hear from you. Today is December 29, 2025, and my guest is the writer Aled Maclean Jones. His Substack

• 0:44Speaker 00

  is Rake's Digress, which is a play on rake's progress, I hope. Our topic today is a wonderful essay of his on how Japanese innovation disrupted the watch industry, particularly the Swiss watch industry, and yet somehow Swiss entrepreneurs found a way to stay alive. Aled, welcome to Econ Talk.

• 1:07Speaker 01

  Thanks very much, Russ. I've been a listener for a long time, so it's a real pleasure to be here.

• 1:12Speaker 00

  Great to have you. Your essay appeared in the publication Works in Progress, which listeners can also explore. We'll link to it. The title of your essay is "The Survival of Swiss Watches." And the essay and the story you tell begins in 1984 with two men sleeping in their car. Who are they and why do they matter?

• 1:33Speaker 01

  Yeah, so I chose that year, I suppose, that period, the early 1980s, was the kind of scene certainly within the Swiss watch industry as the kind of pivotal moment. So it's also probably the moment of the Swiss watch industry's lowest ebb. So certainly for the last 30 years prior, they essentially had a dominance over the global watch market. Watches meant Swiss. I think this was something they assumed would carry on forever. But obviously, what then had happened was the quartz watches.

• 2:10Speaker 01

  This new technology and it's interesting, you know, a quartz watch, we call it a watch, but ultimately it's a completely different technology. The only reason they share the same, like the same name is simply because they they have, I suppose, the same function. But this whole new technology entered the market and was really spearheaded by the Japanese. And very, very quickly, as these things often do, you know, the industry went from a position of global dominance to one of quite profound weakness. So I think it's around half of half of kind of Swiss watchmaking companies went bankrupt in the years prior. And and also, you know, two thirds of jobs within the industry also ceased to exist. So I begin the essay in

• 2:53Speaker 01

  this car park in Basel with these two figures, Jacques PJ and Jean Claude Beaver. And these were two slight sort of renegades and mavericks who had just sort of bought a new kind of watch brand called Blancpain. And they were kind of ready to sort of lead the fight back against quartz and try and save the industry. The problem was they didn't really have any cash. So they basically had, I think, a borrowed Volkswagen Westphalia, which is an excellent camp of ant bowl sounds. But and they were there for the Basel Fair, which was sort of at the time, the kind of the main event of the watchmaking calendar that happened once a

• 3:36Speaker 01

  year in Basel. And they were there to sort of make their make their make their big debut and sort of, you know, shake up the industry a little bit.

• 3:44Speaker 00

  So hold the story there. We're going to come back to them. I just want to point out two things. One, that as far as I know, Blancpain is French for white bread, which means generic and uninteresting. That is not the essence of that brand. We'll we'll come back to the brand in a little bit. But the other thing that that I want to point out, which you point out in passing, is comes from Clayton Christensen's The Innovator's Dilemma. And he makes the point that a lot of times, your competitor is not a better version of what you do. It's a radically different version. His, the classic example that I used to think about a lot, because I'm a weird, strange person, is the slide

• 4:27Speaker 00

  rule. So the slide rule is this extraordinary innovation that helps people make complex calculations, logarithms and other things.

• 4:36Speaker 00

  And you'd think the competitor to the slide rule would be somebody building a better slide rule. A slide rule is more accurate, the lines are thinner, maybe it slides better. But of course, the slide rule gets destroyed, almost. You can still find them, but it's basically destroyed. Their market dominance is destroyed by the calculator, which is nothing like a slide rule. It just does the same thing. And this phenomenon of an unexpected competitor, I think is a very important lesson for business and economics, and maybe we'll refer to it later on. But let's go. You want to comment on that?

• 5:18Speaker 01

  Yeah, yeah, I think there's two elements. Firstly, I was laughing a little bit because you mentioned slide rule, because the book I've got next to me, we're recording this, is called Slide Rule. It's a memoir of a very niche English writer called Neville Shute. I've had lots of loving references to slide rules. But I think also, I totally agree with that. And I think what's also very interesting about the Swiss watch story is that the largest, the kind of incumbents, the really big players, for example, like Rolex, and I suppose Patek Philippe as well, who are dominant today, they had this sort of, you'd expect, I think, I was thinking about, you know, Andy Grove's idea of like the inflection point, and where there is a industry disruption, and you're going to

• 5:58Speaker 01

  get a very quick response. What's very interesting about this story is, I think Rolex and Patek and Patek had the firepower to almost sort of stay put and kind of wait it out a little bit. And so the impetus for change and renewal had to come kind of elsewhere.

• 6:14Speaker 00

  Yeah, and, you know, in just so many industries, it's just emotionally, I think, comes back to a story we told in an earlier episode of ECON Talk with David Marquette, where, I think, I hope I'm pronouncing his name correctly, where the Intel folks, Andy Grove and Gordon Moore had to

• 6:39Speaker 00

  Decide whether to stick with chips or go over to processors and they just couldn't leave chips. It just was emotionally, that's where they'd made their mark. It's where they'd been successful. It's their identity in many ways. And the way they get out of that, this is David's wonderful theme of his book, is they had to step outside. And in this case, it was a literal thought exercise of saying, well, if we got fired and a new team came along, what would they do? And the other guy says, well, they do processors, of course. Why don't we, instead of getting fired, why don't we go outside and then come back in and pretend we're the new guys? And I think that's just an incredibly emotionally, psychologically

• 7:21Speaker 00

  difficult thing to do, right? If you've made, in this case, what's fun about your story is that the Swiss watch industry is going to do both. They're going to get into courts and they're going to stick with what they did. Because partly because they can't help themselves emotionally. But anyway, that's just to the side. So let's do a little bit of history on the quartz watch. So Seiko, the Japanese company, figures out, somebody figures out the science of using a vibrating crystal to power a watch. And it starts off,

• 8:00Speaker 00

  I think you, well, let me, I want to just say one other example. I love this data point. In 1870, again, I don't know if this is accurate, the Swiss are making 1.6 million watches and France is second at 300,000. So it's kind of an example, it's an old example, but of just how dominant the Swiss watchmaking industry is. And when this quartz watch comes along, at first, it's not much of a threat because it's really expensive. So it comes out in 1969, Seiko produces a quartz watch that's $1,250, which was the same price as the original

• 8:41Speaker 00

  Toyota Corolla, which I just love that. So they make a watch that's as expensive as a car. And on the surface, who cares? Not useful. It's expensive and.

• 8:55Speaker 01

  Yeah, no, totally. It's, it's, um, yes, it's interesting one because it sort of started. I mean, the first kind of experiments happened in Bell and it's like a classic Bell Labs series of everything story as well in that you had a team in the 1920s and sort of came up with the, the kind of original way of doing it. And then there was this just, you know, race for kind of militarization. And you can see, and it's very interesting that, you know, the Japanese took it so seriously. And you see it begins with, it goes then into chronometers. And then you have, I think it's the Tokyo Olympics, then it's used as a sort of timing mechanisms. And then very quickly then the team at Psycho come up with this sort of quantum leap. It's not as if other, it's not as well as if, um, you know, other, other people aren't working on it. Like one thing that is very commonly told within

• 9:38Speaker 01

  the Swiss side of the story is that, you know, there was a, there was certainly a team there who were working on those watches, you know, on quartz mechanisms very early. And there was a sort of center, it's called CEH. And that center was sort of experimenting and working on it. And the watchmakers were all paying in. It's just, you know, nobody took it quite as seriously as, um, as Japanese. And also, you know, when, when the Astron came up, again, it was a classic thing about, you know, market sizing and so on, so forth. Again, the market for a watch, there's a little bit of a gimmick with the size, you know, that costs the same as a Toyota. That's not going to be great, but it's, it's very, very fast. The innovations come thick and fast, you know, in, in 1970s. And they're very good at commercializing them, them, um, as well. So it's one of those things

• 10:23Speaker 01

  where I think it just, you know, things happen slowly, but then very quickly. And this was a good example of that in practice.

• 10:29Speaker 00

  So I gave you the, these are all taken from your article. The, the Swiss had, were the number one watchmaker of the world in the early 1870s, 1.6 million to second France, 300,000, Great Britain, 200,000, the United States, 100,000. In 1945, Switzerland still had 80% of the global watch market. So on the surface, this is not that threatening at first. Uh, it is quote, 100 times more accurate than any existing watch, but really, is it really that important? And here I'm going to quote Adam Smith, an opportunity you missed, Alan, in your article, um, in the Theory of Moral Sentiments, he makes this fantastic observation, which is actually quite relevant for your insights. He says,

• 11:14Speaker 00

  "A watch that falls behind above two minutes in a day," meaning it's, you're going to be off by at least two minutes or more.

• 11:23Speaker 00

  And I'm taking the quote, "is despised by one curious in watches. He sells it perhaps for a couple of guineas and purchased another at fifty, which will not lose above a minute in a fortnight." So it's incredibly accurate. He goes on to say, "The sole use of watches, however, is to tell us what o'clock it is and to hinder us from breaking any engagement or suffering any other inconveniency by our ignorance in that particular point. But the person so nice with regard to this machine will not always be found either more scrupulously punctual than other men or more anxiously concerned about, concerned upon any other account to know precisely what time of day it is. What interests him is not so much

• 12:07Speaker 00

  the attainment of this piece of knowledge as the perfection of the machine which serves to attain it." End of quote. So what Smith is saying is that, you know, these people will pay a huge premium for a more accurate watch, but they're not really using it for its purpose, or at least it's alleged purpose of being more punctual. They just love the idea that there's a more accurate piece of mechanical art on their arm.

• 12:35Speaker 01

  I think that certainly, yeah, okay, I'm absolutely gutted to have found that I'm a Smith quote. I miss that particularly theory of moral sentiments. I think it's interesting, of course, because, yeah, it's an interesting quote. I mean, when Smith is writing that, it's an interesting quote where you have, you do, because ultimately, you know, the quest for a really accurate watch comes from essentially seafaring, right? It's, you know, that's, that's the whole, whole value of it. Because, I mean, when Smith is, at that time, you know, Smith is, that's, Smith is writing fifty, you know, or so years before there begins to be this, this push towards the idea of a kind of unified time, right? So at that point, you know, where Smith, there would have been like an Edinburgh time and there would have been, that would be very different to a Glasgow

• 13:17Speaker 01

  time and so on, so forth, you know? And it was sort of like, again, it's, it's a fascinating reading, you know, from that period. And, you know, the watch is this kind of communal kind of coordination problem solver. There, that was what it was first and foremost.

• 13:32Speaker 01

  And that kind of bleeds into the, even in 19th century, you know, like the idea, the world that we have today where in front, so in front of me recording this, I've got, I've got three ways of telling the time, two of them essentially, you know, the, the monitor on my phone are both linked automatically. You know, this is a much more kind of casual approach to time, which is essentially the default for the vast majority of, uh, of kind of, you know, the last, the last half, half, half millennia. Um, and so, yeah, so Smith is right in many, in many ways that it, uh, even then you can see as well, the, the kernel of the idea that watches are, are not just about telling time, they're about kind of, there's something innate about the craft that is very, very important as well.

• 14:16Speaker 00

  Yeah, we'll get to that. Before I forget, are you wearing a watch this, at this moment?

• 14:20Speaker 01

  So I am. So I'm not actually a watch person. So, um, I basically, I had never worn a watch until writing this article. So, um, the way I came to this article was, I was interested in kind of questions of human work. And, you know, in a time that we're sort of slightly anxious about automation and so on and so forth, what, what was a really good example, it's a bit more, uh, sophisticated than like talking about horses or typewriters or stuff, um, about how people actually adapted. And so I wasn't to start, but then it does kind of, does kind of catch you a bit, you know what I mean? I was thinking about that, like Susan Sumit quote, like a writer, someone who's interested in everything. So, uh, and this is definitely one of the everthings that sort of pulled me in. So, no, I do now, I do now wear a watch, um, mainly, and it is a mechanical watch as well, but mainly.

• 15:04Speaker 01

  So, so some sort of, I thought, if I write this article about, about, you know, the, the majesty of the watch industry, I'd better have some, uh, some skin in the game or a watch on my hand.

• 15:14Speaker 00

  Watch on your skin, yeah. Um, I, I also returned to watches, even though I, for so, you know, forever I kept my, I used my iPhone as a, as my watch, but I don't like to take it out in a meeting. I'd rather surreptitiously glance at my wrist if I can. And it is something pleasurable is what we're talking about, about the idea that someone could craft something on my wrist. Uh, I'm wearing a stern glass, by the way, and I have at home my other watch, which is an Omega pocket watch, which I bought in an antique store, got it fixed, and it kind of works. It does not, the problem is you can't keep it in the same pocket as your

• 15:55Speaker 00

  AirPods, because the magnet on the AirPod messes up the mechanical. So I got, I got issues, but let's move on. So in 1869, in 1969, 1969, Seiko launches this watch, and then Citizen and Casio come along with quartz watches in 1974, and you say, "Japanese watch production tripled during the 70s, going from 24 million in 1970 to nearly 90 million by decades end." Quote, "By 1977, Seiko had become the world's largest watch company by revenue. By 1980, Japan had overtaken Switzerland as the world's largest watch producer.

• 16:37Speaker 00

  Between 74 and 83, Swiss, Swiss, watch production plunged from 96 million to 45 million units, and employment collapsed from 89,000 in 1970 to just 33,000 by 1985." So we have a, a, an industry here, and a technology that's about to go out of business, and reasonably, it would have been a reasonable prediction, as you quote David Landy, the economic historian, it's on its way to oblivion. And so what, what changes? What happens?

• 17:10Speaker 01

  Yeah, I suppose the other point to make there as well, I think it's important to get into the mindset of, of the Swiss industry at the time, right? I mean, the Swiss watch industry has always been really the winner on price. That's kind of, you know, it was, it was the British and the French watchmakers who were the ones that focused on quality in the, the 18th and 19th century. And, you know, I think the whole, the whole sort of point around, you know, Switzerland and the watchmakers, the jurors, is that they were able to kind of arbitrage, they were able to provide extreme quality at a much lower, lower price. And that was really, you know, the last real challenge that I would say the Swiss watchmakers had would have been in the 1870s and 18- Eighties, which was from like American manufacturers who were able to basically do

• 17:54Speaker 01

  the ultimate good enough watches, but get them down for the cost of a dollar and so on, so forth. And so, um. And so, you know, it was interesting that as well, it it undercut sort of the idea.

• 18:05Speaker 01

  Because they were being outcompeted on um on value. And so um the Japanese, obviously, so you have Psycho. Cassio obviously follow as well. And um, you know, what basically essentially happens in Switzerland is you have a a sort of moment of desperation. So um, so firstly, you end up with companies that are stuck. So some companies will basically respond by trying to do the whole quartz thing and doing it very heavily or like expanding the number of models. So actually, Omega is the real example of this that like um that um that is often given where they expand their number of models to almost a thousand, apparently. Um, and they sort of, you know, have a sort of like just a moment of kind of

• 18:46Speaker 01

  of kind of spasm. And then you have um, then you have the kind of larger companies who have the brand that is going to last. And I think about Rolex here, which today is, you know, the the kind of dominant Swiss watch company. You know, they sort of enter a sort of a defensive crouch, I would say, where they they make one oyster, they what they make a sort of they do some dabbling with quartz. You can still get these Rolex oyster quartzes that are quite popular. They're kind of a quite a niche um niche line, but that was kind of it. They were like, you know what we're going to do? We're going to wait it out and and see how things go. Um, so what then happens is ultimately the companies kind of run out of money and you get this very large consolidation play. So you end up with, because at this point, there's a very strange relationship between the fact that the

• 19:30Speaker 01

  that you have the movement makers. So you have the the people that make what's inside the watch. And then you have essentially the kind of the brands, right? And they're the ones who, you know, focus on the casings and and selling the watch as well. And so you'd have a strange situation where um if, say, a movement manufacturer is going to go bust, the watch manufacturer would be like, well, we're going to buy, we'll, we'll, we'll, we'll, we'll take you on and vice versa as well. And so you ended up with these um two very large kind of conglomerations, basically.

• 19:59Speaker 01

  Two very large lifeboats that were reliant on loans from, that were sort of backstopped by the Swiss government, I think, to basically survive. And so that was kind of, when we entered the 1980s, that's kind of the situation. You have some manufacturing, the large players have gone into a defensive crouch, and then you have these two very large, very unwieldy lifeboats that are ones like, not orderly lifeboats, they're like the ones in the Titanic, where you've got like lots of people clinging on to them and everyone's pushing each other off.

• 20:29Speaker 00

  And we'll come back to the, how this gets turned around in a minute, but I want to just note something you said that I'm surprised to hear, that historically, Swiss watches were a bargain. They were the low-cost producer, they had these, this enormous, I guess you'd call it intergenerational, specific knowledge about how to make these complex movements inside the watch. And it reminds me a little bit of the Japanese, right? I'm older than you are, and when I was a boy, Japanese electronics were considered junk. They were just really cheap. You could buy a,

• 21:09Speaker 00

  you know, a Japanese transistor radio, which would be very, very inexpensive, very, very low quality. And over time, Japanese electronics got this reputation for excellence and Japanese engineering for excellence. And similarly, the Swiss watch, you know, for centuries is this innovative, but mainly price conscious, for the price conscious consumer, is how they're fending off competition. But when the Japanese quartz movement is a threat to them, they go in the other direction. They end up specializing and changing what the watch is. And you use these two guys sleeping in their car,

• 21:53Speaker 00

  Bev and PK, as examples of that and their brand Blancpain. What happens to them? What did they, what's their innovation? And talk about that, that watch fair that they're sleeping out of their car and going to every day.

• 22:08Speaker 01

  No, totally. Yeah. So they basically, at this point, they bought a, they bought like a slightly dormant brand and they have sort of created a little bit of, I think Beaver in particular has created a little bit of history around it that lots of people on the internet will argue about how old it is and so on and so forth. But it was very much positioned as a, and so they, they sort of working on watches together. And most importantly, I think they were positioning their watches as kind of like the antidote to quartz. So this idea of that these are kind of made by human hands and kind of of, you know, that there were these kind of makers in the mountains and what you are buying is not a device to tell the time, but you are solely buying a device that is kind of, there's a tribute to,

• 22:51Speaker 01

  to human craftsmanship. And they come out with lots of quite enjoyable slogans around kind of quartz and around, and around the company. And, you know, and ultimately, of course, the problem is, is that early on, they don't actually have, they actually, they don't really have any product. So there's some really wonderful marketing gimmicks, you know, they, they, because of course, these what these, these watch fairs are, these stands will have loads of watches. I mean, I've talked about Omega that have got a thousand models or whatever at the time. So, but they don't have, I think they only had two when they went in 1984. And so they were like, you know what we'll do, we'll just, we'll create some mystique and an allure here and we'll just, all the cases will be empty. And you just have to kind of come and speak to us about it rather than, you know, have sort of two, a smack

• 23:35Speaker 01

  two watches sitting in the middle of nowhere. We'll do that. And, and so, yeah, there was a whole kind of a story that they were telling. And I think that was the real innovation here was, was, was the storytelling less, you know, a new technology entering the market, just a new way of positioning the product.

• 23:50Speaker 00

  I, I'd like to, I hope to get all of the good slogans in your article into the conversation because I, I enjoy them all. So the Blancpain one that you quoted was since 1735, and again, whether that's accurate or not, I suppose is probably under dispute. Since 1735, there has never been a quartz Blancpain watch and there never will be. Of course, there is a one, it's mostly human history, but after 735, there weren't any quartz watches, let alone a Blancpain one. So it's such a great, it's such a great slogan.

• 24:24Speaker 01

  No, totally. Yeah, there's a lot of debate online about that that that day in particular. But I mean, again, it just it just sort of, um, yeah, again, it just kind of unlocked a lot, I think. And, um, uh, yeah, I'm trying to think of a few others, but, um,

• 24:39Speaker 00

  Oh, I've got them all. Don't worry. I've got I've got them here. I'm not gonna you don't have to remember them. But but I want to add one other thing, because when you talked about the emptiness of the of their kiosk or stand at the at the watch fair, it reminded me of this Nissan commercial where you didn't see the I think you didn't see the car. And a lot of people hated this ad. And but of course, one of the virtues of this ad was everybody talked about it. And it did spread the brand name. But what most people don't remember because they're not as old as I am, is that Nissan used to have a sister brand called

• 25:14Speaker 00

  Datsun. And just like Toyota had Toyota and Lexus and many all the Japanese carmakers had a luxury model and a everyday model. And they tried to maintain Nissan didn't, but most of them tried to maintain a two tiered product line, the luxury, really high quality, expensive brand, which had all kinds of lifestyle things around it, and the more utilitarian brand. And at first, the Swiss tried this too, right? They tried to innovate into into courts and they failed. And so they really only had this choice of of trying to somehow reposition themselves.

• 25:56Speaker 01

  No, totally. Yeah. And I think as well, you know, it's interesting as well, what the luxury watch market kind of looked like before, um, before, um, like before Blanc Pon, in that, you know, ultimately, they were still watches that had like a luxury element to them. But they were normally like luxury, for example, because of like, the number of jewels, right? And and that kind of thing. And, you know, and also, a lot of the watches that we would now see is like luxury watches, like the Aurora Locust, you know, good example. Or even at the Rolex Daytona, right? I mean, they were around before this, they just never had quite managed to to land the kind of messaging and positioning because they were still always a With utility at the heart of it, you know, the all these were sort of like,

• 26:38Speaker 01

  you know, the watch I've got, it's like an Explorer Rolex Explorer one, right? I mean, that whole thing was around that the story they generated there was around the fact that it it went up Everest allegedly, you know, and that was the and this was the Washington climbers, or I think I have a bit in the article, I think it made it in, which was around, you know, James Bond's watch in the novels where he has a has a has a Rolex and uses it, you know, he uses it for many, many purposes, including a knuckle duster at one point as well, you know, with these, yeah, there was an element of prestige to them, that's very important to flag, but they were not sort of, yeah, they just hadn't quite found the the marketing, it was still pegged in some way to use use and to the way they were used.

• 27:20Speaker 00

  Yeah, I love that. And here's another nice quote. The Rolex

• 27:28Speaker 00

  is General Eisenhower, the kind of the name of the watch? Or is him? It was him.

• 27:36Speaker 01

  Yeah.

• 27:37Speaker 00

  He was an ambassador for Rolex. And the quote, the tagline was, when a man has the world in his hands, you expect to find a Rolex on his wrist. So it's for active people like the fact that that thing went up Mount Everest, it's not that practical. Most of us are not aspiring to that level of watch, but there was a little bit of glamour, but all the glamour was around its usefulness, that it could still operate at that altitude and or below, you know, underwater, as a diver, you'd need a watch, even though most people who bought the the Rolex submariner did not dive in it.

• 28:16Speaker 01

  No, that's totally right. And I think the Eisenhower and the kind of the Rolex president is a really good example there, the kind of, you know, the kind of day day and the relationship with presidents. Again, it's not really, it's not really the craft that they're leaning on there, it's the fact that you just get end up with this very prestigious set of, you know, like set of you're just in great company, aren't you, when you when you've got yourself a gold day date, you know, whether it's presidents or now, of course, Tony's probably more well known for Tony Soprano, but at that point, it was it was president throughout.

• 28:47Speaker 00

  Okay, so now we get a figure enters the scene who I happen to like his name, but it's not the one I know. It's Hayek. It's not Salma and it's not F.A. Hayek. It's Nicholas. So who was Nicolas Hayek and how did he bring us to the next stage of the story?

• 29:07Speaker 01

  Yes, so I think Nicolas Hayek is a wonderful, wonderful figure. And he was essentially like a management consultant specializing in engineering works and built his own kind of management consultant company. And was a relatively, and he sort of got himself onto the radar of the kind of just the Swiss banks in particular for various pieces of work. I can't remember exactly, but it was something to do with the Swiss military and some tanks or something. I can't remember exactly, but it was something excellent. And he was asked, you know, so I mentioned these two very large lifeboats. And so he was sort of, you know, he'd come in and kind of asked, you know, would you take a look basically at what we can do with these companies because we're kind of

• 29:48Speaker 01

  sick of being in a situation where we are, you know, ultimately having to issue more debt, no guarantees and so on and so forth to keep them afloat.

• 29:57Speaker 00

  And these two lifeboats are two separate conglomerations of well-known brands of watches that are under two umbrellas at this point.

• 30:07Speaker 01

  Exactly right, yes. And one is more leaning towards like the, like the kind of movements and the other one is like slightly more brand-facing. And so he essentially is sent, is told to go away and basically come up with a report. This is actually slightly earlier than the legendary Basel car park sort of incident. So I think this is 1982 off the top of my head, but he basically is...

• 30:31Speaker 00

  That's what your article says, yeah.

• 30:33Speaker 01

  He's asked to get this report and I tried to get it. I tried so hard to get it, but it's very hard to get it. I think... But anyway, the report essentially, in a classic kind of, yeah, he sort of rewrites the brief essentially and says basically, you know, I think it's much better actually that we have one company and one company leads. And they're quite reluctant to do this. So I think he said it takes a couple of goes to get this. He proposes it and they say, we're not ready for it. And then I think on go two or three, they say, yes, okay. And so essentially, a new large kind of company is created, basically. And eventually they ask, and with Hayek very much involved, his involvement increases over time. But

• 31:15Speaker 01

  and this is kind of meant to be the sort of, you know, a sort of new start for Swiss watchmaking, by which you can sort of rationalize a lot of the things that need to be rationalized.

• 31:26Speaker 00

  So they standardize a bunch of things. When you say rationalize, they, this, it's basically a cartel. It's a Swiss cartel. The government encourages it instead of, usually it stops it. But in this case, it's a cartel with a lot of foreign competition that's about to destroy it. So they take this conglomerate of brands and movements and they do a lot of standardization to bring costs down, correct?

• 31:51Speaker 01

  Yes, exactly right. Yeah. I mean, so Hayek is such an interesting figure because he's sort of like, it is interesting, the name, because he is slightly like a business philosopher. And it's very interesting watching his interviews is that he treats this whole thing very philosophically. And, you know, I think he, this, for him, I mean, there's a quote, I think that might still be in the article, but, you know, the idea, he was obsessed with the idea of using this as a model to prove that Europe could build and Europe could compete essentially with, at this stage, this obsession with offshoring and so on and so forth. And it's upsetting as a Brit, because he always chooses the way to do things badly is the British automotive industry, which was, you know, which is extraordinarily good. And then sort of tried to kind of, tried to do manufacturing and just didn't get

• 32:34Speaker 01

  it right, lost, had lost the quality, lost the reputation. And so there's that quote where, you know, we must build where we live. When a country loses know how and expertise to manage, manufacture things, it loses its capacity to create wealth, its financial Independence, when it loses its financial dependence, it starts to lose political sovereignty. And as you say, the way he basically did that was he he kind of sort of inverted the way things were done at this time, where you had.

• 33:01Speaker 01

  The brand stuff was was and the marketing stuff was very, very centralized within these lifeboats. And he was very much like, the way to solve that problem is to is to is to decentralize that and so to push it out. And again, he has a wonderful quote that's not in the article, which is, you know, each brand is difficult, so each message is different. So each brand is different, so each message is different. My job is to sit in the bunker with a machine gun, defending the the distinct messages of all my brands. That was his kind of, that was the first part of it.

• 33:31Speaker 00

  That that's kind of an insane idea, because each each watch is different. No, they're not. They're they're all Swiss made watches. Swiss made watches with fancy names that have iconic associations, but are struggling to compete against this dramatically cheaper Japanese alternative that is also more accurate. So if you've been selling utility the whole time, and now you've got a more utilitarian watch, it's more accurate. And it's cheaper, so you're cooked. So it's hard to understand what he meant by by different, they're all different with different. They have different names, I understand that, but they're all kind of in the same niche in a way, aren't they?

• 34:11Speaker 01

  I suppose, but I think it's interesting as well, because in one way, I was thinking about writing this, you know, you could frame it as almost like you have two. You have the kind of romantic and the rationalist, you know, you have you have Beaver as the romantic and Hayek as the rationalist. But I think, you know, Hayek himself was, you know, he was a huge. You know, there was definitely like a sense of a real love for a real love for for the romance of it all. And and, you know, when I think for him, he felt there was a much better way of you have. If you think about some of the brands that they then inherited, you think about Omega, well, okay, we can position Omega in one way. And, you know, you've got other luxury brands that you can position in in other ways and so on, simple.

• 34:50Speaker 01

  And that's kind of how the modern watch market works today, right? So you'll have like, aside from, aside from like a few. Of the standalone players, you think about Rolex or Cartier. You know, you have essentially a number of groups who will have within them. They sort of often paint it as a triangle where you'll have the, you know, you have the ultra premium at the top. You'll have the high premium, the low, the medium premium, the low premium. A lot of them will share movements, for example. Um, a lot of them will share movements and they'll. And again, that was the second piece of what Hayek wanted to do, right? Was bring all of the kind of the movement making and kind of consolidate all of that. Which is interestingly like a play that is still developing today, right?

• 35:31Speaker 01

  So, um, Roca sister company Tudor, you know, that's really led into the movement side of it. And it's still a live debate about movements in watches that, you know, buying movements from other watches. What does that do to the quality of the watch? But for him, it was all about survival and just, you know, there was a huge amount of automation that could be done.

• 35:51Speaker 00

  But it's the example, I think, you know, the quality is pretty constant across all those. Even when there were different movements, you know, there was a certain level of technology. And most of the innovation at the, in the luxury market is on the face, right? The style, the bracelet or the band.

• 36:13Speaker 00

  Let me get in our, my other quote I love, which is 1996 from Patek Philippe, which I think they still use. You never actually own a Patek Philippe. You merely look, look after it for the next generation. It's an unbelievable bit of marketing. It's just fabulous. If you try, if you didn't, if you didn't memorize it, I tried to reconstruct it a couple of times for, in sharing that. It's perfectly worded. It's very artfully done. Uh, you know, you, you're, you're keeping track of it. You're the guardian. You're steward. No, no, no. You merely look after it for the next generation. It's perfect, right? And it says something

• 36:54Speaker 01

  Totally.

• 36:54Speaker 00

  Implicit about who you are to own that watch. And that, it was brilliant.

• 37:00Speaker 01

  Yeah, no, it totally was. And I think it's, because for me, that's the sort of, that's the real genius of Beaver and Piguet and Blanc and Blancpain. Is that they essentially kind of sort of showed this way and then other companies picked this up and did it in incredible ways. Like you think about Patek and the real winners of the luxury watch market today, they are the ones that sort of really took the lessons and learned it so well. And so I think about Rolex and Patek and actually kind of Cartier now are doing really, are doing really well. And again, it's sort of taking the, taking the lessons from those two blokes in the van and applying it basically. And it's always wonderful to see, you know, like watch advertising done well is a really wonderful thing.

• 37:45Speaker 01

  Done badly, it can be excruciating, but when they do it well, and you know, you're, you're, you're walking through the airport in Switzerland on travel eight when you're getting bombarded. And it's the one that's really good. You're like, okay, hang on. Okay. Yeah, okay. Well, God, I'm a custodian. God, it's like, it's like my birkin inheritance. You know what I mean? This is, you know, it's, I'm not buying it for me. I'm buying it for some indistinct future me. It's just, it's just, you know, there's, there's so much that can be, you know, it's interesting, isn't it as well? Like, you, you see a lot of people now who are working technology and stuff, I think. And traditionally, you know, it's always been about discussions of companies like, you know, like, like, like big tech and, you know, Meta and Amazon and so on and so.

• 38:29Speaker 01

  But now the conversation is often about luxury companies now, you know, one of the most enjoyable podcasts last three years in tech was about, you know, LVMH and the lessons from there as well. And you will see a lot of, a lot of, a lot of people now really turning to, to luxury for the kind of the lessons on how to market.

• 38:48Speaker 00

  Yeah, it's fascinating because.

• 38:52Speaker 00

  On the surface, if you'd asked me the story without having read your article, I would have said, "Well, it's obvious, you know, what happened." I didn't know that. I assumed, actually, that all along, Swiss watches were luxury brands for lifestyle self-expression, and it's a way to, um, you know, I used to make the remark that it's very hard for a man to brag about how wealthy he is. So it's awkward to hand out your tax return to people you want to impress. So you just wear an expensive watch and drive an expensive car. Those are the two ways that a man can at least look wealthy. Might not be wealthy, but he can look wealthy. But there's another piece to

• 39:35Speaker 00

  the story, which is quite surprising. So in this report that Hayek writes, Nicholas Hayek writes in 1982, so I know it's hard to hear the numbers sometimes in a podcast. So think about it this way. There's 500 million, 1982, there's 500 million watches being sold worldwide in a year. 500 million, half a billion. 90% of those watches are under $75. So 450 million of the 500 that are sold are, quote, "inexpensive." And Switzerland has none of that. It has none of that market share. And I would have thought the answer would be, "Well, that's great. We don't want to degrade our brand." You know, we're talking

• 40:20Speaker 00

  before earlier about the two-tiered thing. We're not going to have this two-tiered thing. We don't compete in that market. It doesn't work with our attempt to reposition ourselves as a lifestyle and heirloom, fill in the blank, master of the universe mystique. So we don't play in that sandbox. But Switzerland does, and we get the Swatch. And I'm going to confess, Aled, I had never thought about that. Two really embarrassing things, that the word "watch" is inside Swatch, because I think of Swatch as a word by itself, and

• 41:02Speaker 00

  it kind of stands for Swiss watch. So I'm an idiot. Talk about what the Swatch is. It's an incredibly story. How did that happen?

• 41:10Speaker 01

  Yeah, so I think I totally agree with firstly, if I was if I was in Hayek's shoes and I had sort of put the pyramid and I was like, there's this whole market here that we're not touching, I would be like, stay away, stay away, stay away. Good. You know, I think, but I think I think this comes to the kind of philosopher within him, I think, because he saw this as a challenge and for him, he wants to prove. And in a lot of interviews he gave, this was this kind of thing, he wants to prove as well that that, you know, that the West could manufacture cheaply. That was kind of, that's, I think that was one of the big things behind it. And so he comes in, he's very keen to be like,

• 41:46Speaker 01

  okay, well, I want us to enter this market. I want us to create a, you create a kind of cheap watch that can sort of out courts courts, that can kind of take, you know, to show that we can take on Japanese manufacturers. And fortunately for him, there's a team within with the ETO, I think, which is the sort of one of the main, the main movement manufacturer that have been working on this. And the story behind how they get there is very interesting. So they are, there's a team who were first asked by a American businessman to basically create for for distribution to the American market, the world's thinnest watch, the world's thinnest watch called the Delirium. And they managed to do it and it's an incredibly thin watch. It's like a matter of millimeters, but

• 42:30Speaker 01

  they kind of come up with this kind of innovation, which is that you can incorporate a lot of the the movement into the into the casing of the watch itself, into the case back. And so then there's a team.

• 42:43Speaker 01

  And I think there's a few, there's a few people in there that I mentioned, so El Marmoq and I think Jack Mulloy, I can't remember the name off the top of my head, but they essentially are like, well, you know, surely we could do that with a plastic watch and it would reduce the number of parts, it would reduce the complexity of the movement. And I mean, it could be a lot cheaper. And they'd kind of been trying this a little bit off the off the books. There was a little bit of a wild westiness to it, which I think indicates why why they brought in Hayek, why Hayek, you know, sort of was so keen to consolidate a lot of the manufacturing stuff if there were all these experiments happening. But but anyway, so they come to him with kind of a bit of a ready-made proposal for a for like a cheap watch.

• 43:24Speaker 01

  And so they they kind of begin with it. So get to name the swatch and stuff and they do some testing and it doesn't really land particularly well. So the interesting thing about this watch is So they start by testing it in, I think it's in Texas. They test it in San Antonio, I think, and it doesn't go down that well. And at that point as well, the Swatch is, you buy it from, I think they're mainly buying it from pharmacies or something, or no, I think it was a jeweler's, I think, I can't remember. But it wasn't in very exciting colors. And it's a good bit, I mean, Swiss watch manufacturing is amazing for apocrypha. And I think the one, the one there is that, that they were very worried about whether it would succeed or not, but they had to essentially approve the manufacturing beforehand.

• 44:08Speaker 01

  So it was in very neutral colors, like almost army colors. And the idea was that if the, if the, the public didn't buy it, they could sell it to the Swiss army, I think, was the, was the, again, like, again, I'm pretty sure it's apocrypha, but I enjoyed, I enjoyed that one a lot when I was reading it.

• 44:22Speaker 00

  I do too.

• 44:23Speaker 01

  And so, and so it took a while for them to, so I think it took a few goes, a few iterations of the Swatch, but then when it took off, and I think they figured out the bright colors and, and when it took off, it really took off. And it was a real phenomenon, right, of the, of the late eighties.

• 44:40Speaker 00

  I, I've never had one. Do you, have you ever had a Swatch?

• 44:44Speaker 01

  I think I did when I was a kid. I think I did, yes, I think I did. I think it might be, and it might have been my first watch. I think maybe, you know, there was something in there that was seeding me, seeding my, my watchless, my brain, despite my watchlessness into, into returning to it.

• 44:59Speaker 00

  Now, I can't, I want to find the, the quote here, hang on.

• 45:07Speaker 00

  It says, so by 1985, Swiss watch production had gone from 45 to 60 million. So that nice recovery. Remember, it's a 500 million unit market at this point. By 1992, ETA, which doesn't stand for, it's ETA, but it doesn't stand for expected time of arrival, it's just the name of it. This is the movement company you mentioned, ETA. By 1992, they had produced their 100 millionth Swatch. Three years later, it's 200 millionth. And as one designer put it, quote, "What we were selling was fashion that ticks." What a great line.

• 45:52Speaker 01

  It's true, it's true.

• 45:54Speaker 00

  Yeah, talk about that. What is that?

• 45:56Speaker 01

  Yeah. Yeah, so I suppose, I mean, because it's interesting then, the other innovation that kind of occurred with Swatch as well. So there's an interesting live question about whether, what was the impact of Swatch? Because frankly, today, ultimately, the way the market is settled, maybe we can talk about this in a bit, but the market, the way the market is settled is, it has been the luxury bit of the market that has been the most enduring. And if you look at

• 46:22Speaker 00

  kind of Of the Swiss.

• 46:23Speaker 01

  Yeah, of the Swiss. Yeah. If you look at kind of revenue today, you know, it's almost exclusively, it's almost exclusively luxury. And there's always this interesting live question about what did, what did sort of Swatch, you know, what did Swatch do, right? But I think it's, it's really important to not understate the kind of halo effect that Swatch had for the overall sort of cause of Swiss watches, because they had this quite radical, you know, like the marketing was quite radical and like, it was very like, sort of experiential marketing before Red Bull and so on, so forth. Did it? You know, I think they arranged like the world's first, like, I think it was the world's first breakdancing competition, I think. They did like a national breakdancing competition. There was like a hip hop tour, again, very early. And then they did

• 47:08Speaker 01

  these sort of stunts. The one I remember is the one with the image of it is they hung like, they hung off the side of the, of the Commerzbank building in Frankfurt. They hung a 13 ton watch off the side of it, right? And, yeah, they did that. But also, they sort of began as well, the kind of enthusiast trend, the whole trend, the whole point of the Swatches was Hyatt, because they're big on this, you don't buy one. You've got to buy lots, you know, buy lots. They're all different and you can buy one depending on how you feel every single day. And so, again, you know, I think that's for me where the Swiss, where the role that Swatch plays in the story is that it kind of had this, it kind of had this halo effect that kind of like, you know,

• 47:50Speaker 01

  companies that, the teams that stay winning, keep winning. And it was just another example of, of kind of Swiss watch manufacturing winning in the late 80s, early 90s.

• 48:00Speaker 00

  So I just want to say one thing about the industrial structure. Usually, when you centralize, so Hyatt, Nicholas Hyatt did something a little bit create, not a little bit, very creative. He centralized into one company or one conglomerate or umbrella, but then he decentralized and let them all, are they all competing against each other freely?

• 48:26Speaker 01

  Yeah, so I think so there was a lot of so there was a lot of internal there was a lot of internal competition for movements. So there was definitely some there was you get this a little bit reading some of the later histories. There was a little bit of tension around like competition for for like movements, particularly for meta. So you'd have brands getting allocations and so on and so forth. So there was like a little bit of internal discord. And I suppose the other point, yes, I mean, I think the way that Swatch was constructed is that they tried to kind of keep spaces clear. So you'd have a brand within a niche, you know, for example, like, you know, Omega was the only Omega brand within that within that section, for example. But I think I would say that a little bit of competition is worth it for the

• 49:09Speaker 01

  for the benefit that comes from kind of decentralizing, you know, decentralizing marketing, right?

• 49:15Speaker 00

  But is that the way this is his this central conglomerate? Is this still the how the Swiss watch industry exists today?

• 49:24Speaker 01

  So I think so certainly that's the way the Swatch Group does it now today works. You still have quite centralized it's mind stunning anyway, you still have quite centralized manufacturing and decentralized marketing, I suppose. The way it works today, you obviously have you will have you know, some of the very large companies that are their own thing. So Rolix is a whole other strange thing. It's not even a corporate company. It's like a foundation and so on and so forth. And that's kind of kind of over there, basically. And then, but then you will then have these groups who will have consolidated manufacturing. The manufacturing there itself is is highly consolidated across the board and kind of incestuous. And it's really the marketing that is the stuff that is really separated out.

• 50:08Speaker 00

  And do you have a feel for how Swatch has done since its heyday? It's not its heyday anymore, but it still exists.

• 50:15Speaker 01

  Yeah, yeah. So I think it still exists. I think it's, you know, I think that the thing that is interesting, of course, is do you then have, you know, a second disruption, a later disruption than in Um, than in in my in my essay, which is, you know, sort of like, but people would say smart watches, but I would say it's more like the kind of ubiquity of time on devices, right? And so if you think about that market, you know, that that market that we talked about, the the seventy five percent of the watch market, you know, the reason for those cheap watches was simply because you couldn't, you know, it was a significantly life limiting, like lifestyle limiting factor to not have a watch, you know, and you it's always it's a thing that I would certainly, so I'm kind of thirty two, but that was the thing that

• 50:58Speaker 01

  sort of really hit me, read, you know, reading and researching this article was just, you know, for how how long, I mean, obviously, certainly in the nineteenth century, you know, it was such a fundamental, fundamentally important tool, rather than sort of having to hop from public clock to public clock, and a little bit of that residual probably sort of existed in the sixties and seventies and, um, and it's, you know, now it obviously doesn't really matter so much because you'll always have a sort of device, and you've got smart watches as well, haven't you? So, um, now it's a much smaller, much smaller kind of part of the of the watch ecosystem, you know, it's still like a it's still like a pretty big player, it's one that people talk about. Um, but as I say, the market, the the most enduring part of the market today is is essentially the the kind of the

• 51:43Speaker 01

  luxury, the the luxury part of it.

• 51:45Speaker 00

  And so I have, I think we have at home, two analog clocks, uh, living room and kitchen, and then, of course, my microwave, my stove, um, could be my refrigerator, it doesn't, but this time the time is everywhere, as you as you point out, and it could be on my Apple Watch, I don't wrist, I don't have one, but obviously, that's a whole nother enormous now market, which, of course, is a mix of both utilitarian, because it does a thousand things, but it's also fashion, because it can you could play with the band and do all that other stuff. It's a it's a insane world, when you think about it.

• 52:29Speaker 01

  No, totally, yeah. And it's interesting, you know, to see like, because the thing I anecdotally, I use my watch most for is like sort of avoiding having to carry a phone around. So, you know, because ultimately, like the thing that you think about an iPhone, if you have an iPhone screen, that's the thing that pulls you in, isn't it? Like so often I find my trigger to looking at my phone is to check the time. And then once you check the time, you've got the you've got the notifications sitting neatly beneath it. And then suddenly you're pulled in, aren't you? And so it's interesting that time is still, you know, it's still the largest, the largest feature on iPhone lock screen.

• 53:04Speaker 00

  That's bizarre.

• 53:05Speaker 01

  It's the clock, isn't it? It's the clock, isn't it? So yeah, maybe one day they'll sort of start to, maybe that'll be the next, the next, the next beaver will find it in a, in, in Volkswagen ID Buzz or whatever the, whatever the successor is, that the idea that, that mechanic, having a mechanical watch is sort of a way to kind of switch off and, and sort of stay device free.

• 53:25Speaker 00

  So I'm much cleverer than you. I don't put my notifications, I don't use them, but I still have this little flick of the thumb as I look at the time. Because why not just check while I've got my watch in my, in my phone in my hand? It's a terrible addiction. I'm going to close, there are a couple of quotes I want to end with. First, you, you write, "Today, Swiss watchmaking is a $30 billion business with a near monopoly on luxury manufacturing. The country ships just 2% of all watches made each year, yet that sliver captures almost 45% of all revenue from watches worldwide. An industry that

• 54:08Speaker 00

  once faced extinction is stronger than ever. Some things survive not because they have to, but because we want them to. Instead of causing the end of Swiss watchmaking, the quartz crisis was the moment it was reborn." End of quote. Now, when you say it's 2% of all watches and 45% of all revenue, does that include Apple Watch, smart watches?

• 54:28Speaker 01

  I think it does, yeah. I think it does, yeah. I think it comes from a wonderful podcast, which is a three-hour-long deep dive into Rolex by the team at Acquired. But yeah, I think it covers, I think it covers everything, basically. It's quite difficult to break out, it's generally quite difficult to break out revenue for various reasons around watches, because the two big companies, Apple and Rolex, who both don't make public their figures, right? So there's a whole other very funny industry, enjoyable industry of people trying to guess at what's going on with both of those. Yeah, with both of those companies, basically. But certainly, the fact is, is that it's a very small number of watches sold,

• 55:12Speaker 01

  and an extraordinary large amount of the revenue.

• 55:18Speaker 00

  I interviewed Free Con Talk, we interviewed Rebecca Struthers, who's a watchmaker in England. And it feels like there's been this incredible resurgence in new watch brands. She's a very, very high-end. To my internal disappointment, she did not gift me one of her watches for her appearance on Econ Talk. There's still time to remedy that, though. Anytime, I'd be happy to accept. She makes beautiful, beautiful watches. But I think she makes her own movements. I'm pretty sure. I don't know what level she buys materials, but obviously, there are all these

• 56:00Speaker 00

  new brands that have popped up in the United States that are sold on the internet, and sometimes by retailers. But there are people innovating, and I assume they're not making their own movements, right? Or no?

• 56:12Speaker 01

  I think it varies. So I think there's a few interesting kind of trends with the market at the moment. So I think firstly, it's like so many things in the world, it's becoming more and more kind of enthusiast's game. You know what I mean? Like, it's this classic trend of like, that instead of having a broad group of people who might buy one watch, there's this pool of people who are buying multiple watches, and that's where the market goes. The same as everything, you know, it's such a...

• 56:38Speaker 01

  A large second trend of our time. And so, um, so yes, it will depend essentially. So I think you'll have certain, so in the, in the UK, it's interesting because there's not really, um, you know, there were not that many very large kind of watchmaking, you know, companies in the UK. So you get these very, um, interesting independent watchmakers, some of whom will, will make their own movements. Um, and some of, so in my head, certainly like, um, if I think about like the, the, someone like Recker or, you know, you have, um, a guy called Roger Smith as well. You have some, you know, incredibly impressive, just, you know, artisans who are doing incredible things. You'll generally get movements made there, um, themselves, but then you'll have some other watchmakers who are kind of independents, who will be, who will be taking movements from elsewhere.

• 57:27Speaker 01

  And the, the differentiation comes on the, again, the dial, the, the craft, you know, like, at the sort of, you know, the, the aesthetics and so on, so forth. And so, um, so yeah, so you, you know, there's definitely like a large and quite popular set of kind of independent watchmakers, some of whom have kind of gone completely supernova. One of the most famous ones now is a guy called F P Jean, who's watches are extraordinarily expensive, beloved by, uh, go for unbelievable prices. Um, that's probably the one, one big trend. Then the other one is of course, that you have these, you know, like, like luxury watches that have seen a lot of growth, uh, as assets over the last five years. Um, so you see that, um, particularly with kind of the most prestigious models. And it's what's interesting over the last two years, that that's cooled quite a lot and how the market kind of responds to that, this kind of what they call the luxury recession and how to, how to watchmakers survive that.

• 58:25Speaker 01

  Um, and the trends that we've seen there as well has been quite interesting. Um, and the other fun one personally is that, uh, there's been like quite a big retreat away from size. So one thing that put me off watches when I was, uh, in my like teens or twenties is they have to be very big. Yeah, it has to be very big, like, and now, now, yeah, heavy. Now, now it's all, now it's all very, very dainty and very small and thirty six millimeters is what everybody wants. So, um, those are the three trends that are kind of the most interesting to me right now.

• 58:50Speaker 00

  I want to close with another quote which I loved. Because a lot of this is about creative destruction. In this case, the creativity of the quartz innovation did not destroy the mechanical watch market, but often creative destruction is what happens. An innovation wipes out an industry and the jobs are lost, but the consumer benefits often, if not always. And you say that you write the following. "Swiss watchmaking should have died with quartz along with the lamplighters of Victorian London, the ice harvesters of New England, and the telegraph operators of Western Union.

• 59:30Speaker 00

  Instead, Beaver, Hayek, and the watchmakers of Switzerland found a way to outlive their own obsolescence, not by competing on function, but by redefining value." And that's a very nice end quote. That's a very nice summary of what often happens, but not this time.

• 59:49Speaker 01

  No, totally, yeah. And I think, you know, one of the reasons I was drawn to this as someone who was not into watches beforehand was, yeah, this is like an optimistic story about, as you say, creative destruction and what happens when, you know, functions and products change. And I felt certainly that, you know, there's a lot of anxieties now about human work and what happens and so on and so forth. It's very easy to look to the negative stories. But, you know, here's a kind of positive one. It's just a little bit complex because these things are never straightforward. And you end up with, you know, not only structural trends, but you end up with, you know, mavericks and entrepreneurs propping up.

• 1:00:31Speaker 01

  And, you know, the sort of future isn't set. And, you know, lots of things can happen. And, yeah, just, you know, if there's enough people out there in vans, in car parks in Basel, then some things might end up differently.

• 1:00:47Speaker 00

  My guest today has been Aled Maclean Jones. Aled, thanks for being part of Econ Talk.

• 1:00:53Speaker 01

  Thanks for us. Thanks so much for having me.

• 1:01:02Speaker 00

  This is Econ Talk, part of the Library of Economics and Liberty. For more Econ Talk, go to EconTalk.org, where you can also comment on today's podcast and find links and readings related to today's conversation. The sound engineer for Econ Talk is Rich Goyette. I'm your host, Russ Roberts. Thanks for listening. Talk to you on Monday.