Wednesday, August 31, 2005

Don't Fear the Flatness

In light of a recent speech by Alan Greenspan where he warned Americans about the dangers of protectionism and trade restriction in the new global economy (shout-out to the Intellectual Insurgent for drawing my attention to this speech), I decided to write a brief review of a book I finished recently. The book is called The World Is Flat by Thomas Friedman and it is a lucid yet sophisticated look at the past, present, and future of globalization. The book is currently #3 on the New York Times Best Sellers List for Non-Fiction.

In his book, Friedman outlines “a brief history of the 21st century”…actually more like the history of the last 15 years of geopolitics and economic globalization and how recent advances in technology have caused another industrial revolution (the first revolution was powered by steam…this one is powered by Google). Words like "geopolitical"may sound like a bunch of gobbledy-gook to certainly sounded like esoteric economist jargon when I first picked up the book. But now I understand that the concepts related to globalization are important and relevant, because it is something that is going to affect Americans dramatically in the near future – I mean in the present. This book is a great resource for any American who, like me, senses that the world is changing, but can’t quite describe exactly how so. Friedman’s book is a great framework to start to understand how technology, politics, and economics have converged to create the post-cold war political climate, the world trade organization policy, the oil-dependent energy crisis, and the modern-day terrorist. Plus Friedman sounds the alarm to sleeping Americans to wake up to the challenges ahead. Friedman’s pragmatic compassion concerning developing countries, domestic policy, and even terrorists is a breath of fresh air that even conservatives lend an ear to, because it is so clearly thought out.

Friedman’s main theme is that the world is becoming “flatter”. He’s not talking about plate tectonics or geological catastrophe. When describing the “flat world”, he is talking about the ability of historically disadvantage people and nations to compete in the new world economy on a more level playing field than ever before. He starts the book by describing a recent trip he took to India to do a documentary on outsourcing. (I'm sure you have noticed that someone with an Indian accent answers the phone when you call many customer service phone numbers: “Hello, Thanks for calling Bank Of America, this is Vijay, may I have your 10-digit account number…”) Once in Bangalore, Friedman describes the incredible revelation that outsourcing was not just some recent human resources fad, but that it was one of the many interelated changes in the way business was being done as a result of the economic playing field between America and India leveling out (becoming flat, so to speak).

Friedman goes on to explain how the fall of the Berlin Wall in 1989 (which ironically happened on 11/9) was the beginning of events that led to a world where 9/11 could happen. As communism dissolved in Eastern Europe and trade barriers came down (even in China), the world was able to take advantage of the globe-shrinking technological boom of the 90’s, most notably the Internet. All of the sudden, information and technical work could be shared easily across a now tiny ocean. Instead of competing with the guy next door, companies had to compete with the guy on the other side of the world. India was poised to benefit from this, because it’s a country of nearly 1 billion people with a large proportion having excellent educations (in English, no less). China, also with a strong university system and well over a billion inhabitants, has spent the last 15 years surging ahead as the “wall around China” has come down, and allowed them to compete more fairly in the world market.
From there, Friedman then gives the reader a crash course in “Flatology” to explain how the flat world has made it possible for the smartest and most enabled people and nations of the world to get ahead. He explains how educated Indians and Chinese had to hope for American or European visas to make something of themselves 20 years ago. Now they are able to stay at home where they can compete, innovate, and prosper. But for America this is worrisome as American jobs are threatened by the increasing competition. Also, this new world has allowed the most humiliated and non-enabled people to see the rest of the world moving ahead and leaving them behind…frustrated and angry. The flat world has created the modern terrorist. The violent and destructive minds of the frustrated are just as able to take advantage of modern technology to incite chaos, as the creative minds of the enabled are able to take advantage of technology to improve their standard of living. Although Friedman does attribute many present-day problems like the al-Qaeda terror network and out-sourced/off-shored American jobs to globalization, his outlook of the future is not bleak. On the contrary, he thinks the global community (including America) stands to benefit if globalization is embraced, and more people are allowed to participate. After all, what is good for the globe is good for all the globes inhabitants - American and otherwise. Friedman believes that fear of globalization will not slow it down anyway, but only leave America behind:

The two greatest dangers we Americans face are an excess of protectionism – excessive fears of another 9/11 that prompt us to wall ourselves in, in search of personal security – and excessive fears of competing in a world of 11/9 that prompt us to wall ourselves off, in search of economic security. Both would be a disaster for us and for the world. Yes, economic competition in the flat world will be more equal and more intense. We Americans will have to work harder, run faster, and become smarter to make sure we get our share. But let us not underestimate our strengths or the innovation that could explode from the flat world when we really do connect all of the knowledge centers together. On such a flat Earth, the most important attribute you can have is creative imagination…”

Friedman offers erudite insight into the modern flat world as he demystifies economic globalization and leaves the reader informed and thinking in broad terms of a geopolitical vision, instead of the myopic terms of the self-absorbed American dilemma. In Alan Greenspan’s recent speech he states, “A fear of the changes necessary for economic progress is all too evident in the current stymieing of international trade negotiations.” Greenspan understands that Americans are acting out of childish fear in their approach to the new flat world. Instead of equipping ourselves for the difficult challenges ahead, we are being short-sighted and hiding in the closet. Like a child who is afraid to get a measles innoculation, our aversion to some short-term discomfort is setting us up for a world of hurt in the not too distant future. We have to face the challenges that are coming pro-actively, and that means cooperation with the world, not protectionism and isolation. Friedman’s book has personally made me aware of this “quiet crisis”. I suggest you make yourself aware of the effects of globalization as well, and vaccinate yourself against the ignorance that threatens to leave our nation hanging on the edge of the flat world.

Your brother in embracing the global village,

“So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself - nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
~FDR in his first inaugural address
March 4, 1933 (the Great Depression)


At Thu Sep 01, 03:42:00 PM, Blogger Intellectual Insurgent said...

Thanks for the shout out and, more importantly, for a great review of the book.
I am inspired to read it.

At Mon Sep 12, 07:22:00 PM, Blogger MIZPOWDERPINK said...

We westerners have this arrogance with us. We are Americans; the playing field will never be leveled. I guess we are in for a rude awakening. This is a topic that I have only discussed on the surface not really knowing all there is to know. You have given good detail so now I feel I have some understanding. I'm inspired as well, I'll be picking up this book.

At Fri Sep 16, 11:08:00 PM, Blogger Free Agency Rules said...


Dina referred me here. She is right that this is a good subject to be informed about.

I too, believe that protectionism is bad and that we should be un-afraid of competing in the global marketplace. We as a people will shine where it counts...ingenuity.

If someone can make a buck on a better mousetrap, I will bet my money on an American discovering it.

Manfacturing jobs have been going toward robotics for decades. Has anyone seen a Ford or GM commercial with the Robots assembling the cars?

Somebody here in the good old U.S. has to repair that stuff, and it requires skill in Computers and Electronics, but if someone else can do it better and cheaper, we all benefit. For those that are able to compete will want service that only an American Company (local) can provide.

I have 16 employees that are in an industry that will never be replaced by overseas labor. We do stuff inside the customers house that requires a great deal of skill and a "secret formula."

Our only competition is the "Big Box" stores, Sears, Home Depot, and Lowes. We charge half of what they charge and deliver a better product that they haven't got a clue as to how to compete. I don't want to advertise on this forum, so I will not give more details.

Even with this big advantage, we still make only a respectable living because of the government "red tape" and anti-business regulations that spew forth from the Calif State legislature. Many businesses have left the State and if they continue to see business as the enemy and the laboror as the hero, instead of seeing them as a team, both sides on the same team, then we are doomed.



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