“The World is Flat”: by Thomas Friedman

Introduction:

“Globalization refers in general to the worldwide integration of humanity and the compression of both the temporal and spatial dimensions of planetwide human interaction.” It “has aggravated many of the region’s most chronic problems–such as the pronounced degree of economic exploitation and social inequality that have characterized Latin America since it came under European colonial domination in the sixteenth century.”

 The globalization of the world is a phenomenon which has always depended on technology. Although much of the recent attention to globalization focuses on it as a recent development, escalating since the end of World War II and exploding in the post-Cold War period, the world’s diverse societies have been drawn into complex inter-connections throughout the modern period, and even before with the great ancient empires. Yet the phenomenon of globalization involves technology and the distribution of power, and is therefore a topic which cries out for the attention of philosophers.

Friedman’s concept of the flat world:

Friedman describes the unplanned cascade of technological and social shifts that effectively leveled the economic world, and “accidentally made Beijing, Bangalore and Bethesda next-door neighbors.” Today, “individuals and small groups of every color of the rainbow will be able to plug and play.” Friedman’s list of “flatteners” includes the fall of the Berlin Wall; the rise of Netscape and the dotcom boom that led to a trillion dollar investment in fiber optic cable; the emergence of common software platforms and open source code enabling global collaboration; and the rise of outsourcing, offshoring, supply chaining and insourcing.

Friedman says these flatteners converged around the year 2000, and “created a flat world: a global, web-enabled platform for multiple forms of sharing knowledge and work, irrespective of time, distance, geography and increasingly, language.” At the very moment this platform emerged, three huge economies materialized — those of India, China and the former Soviet Union –“and three billion people who were out of the game, walked onto the playing field.”

A final convergence may determine the fate of the U.S. in this final chapter of globalization. A “political perfect storm,” as Friedman describes it — the dotcom bust, the attacks of 9/11, and the Enron scandal — “distract us completely as a country.” Just when we need to face the fact of globalization and the need to compete in a new world, “we’re looking totally elsewhere.”

The metaphor of a flat world, used by Friedman to describe the next phase of globalization, is ingenious. It came to him after hearing an Indian software executive explain how the world’s economic playing field was being leveled. For a variety of reasons, what economists call ”barriers to entry” are being destroyed; today an individual or company anywhere can collaborate or compete globally. Bill Gates explains the meaning of this transformation best.

Thirty years ago, he tells Friedman, if you had to choose between being born a genius in Mumbai or Shanghai and an average person in Poughkeepsie, you would have chosen Poughkeepsie because your chances of living a prosperous and fulfilled life were much greater there. ”Now,” Gates says, ”I would rather be a genius born in China than an average guy born in Poughkeepsie.” In The World Is Flat, Friedman at once shows “how and why globalization has now shifted into warp drive” (Robert Wright, Slate) and brilliantly demystifies the new flat world for readers, allowing them to make sense of the often bewildering scene unfolding before their eyes.

With his inimitable ability to translate complex foreign policy and economic issues, he explains how the flattening of the world happened at the dawn of the twenty-first century; what it means to countries, companies, communities, and individuals; how governments and societies can, and must, adapt; and why terrorists want to stand in the way. More than ever, The World Is Flat is an essential update on globalization, its successes and discontents, powerfully illuminated by one of our most respected journalists.

What created the flat world? Friedman stresses technological forces. Paradoxically, the dot-com bubble played a crucial role. Telecommunications companies like Global Crossing had hundreds of millions of dollars of cash — given to them by gullible investors — and they used it to pursue incredibly ambitious plans to ”wire the world,” laying fiber-optic cable across the ocean floors, connecting Bangalore, Bangkok and Beijing to the advanced industrial countries. This excess supply of connectivity meant that the costs of phone calls, Internet connections and data transmission declined dramatically — so dramatically that many of the companies that laid these cables went bankrupt. But the deed was done, the world was wired. Today it costs about as much to connect to Guangdong as it does New Jersey.

The next blow in this one-two punch was the dot-com bust. The stock market crash made companies everywhere cut spending. That meant they needed to look for ways to do what they were doing for less money. The solution: outsourcing. General Electric had led the way a decade earlier and by the late 1990’s many large American companies were recognizing that Indian engineers could handle most technical jobs they needed done, at a tenth the cost. The preparations for Y2K, the millennium bug, gave a huge impetus to this shift since most Western companies needed armies of cheap software workers to recode their computers.

Friedman explains the importance of the development of ”work flow platforms,” software that made it possible for all kinds of computer applications to connect and work together, which is what allowed seamless cooperation by people working anywhere. ”It is the creation of this platform, with these unique attributes, that is the truly important sustainable breakthrough that has made what you call the flattening of the world possible,” Microsoft’s chief technology officer, Craig J. Mundie, told Friedman.

Friedman has a flair for business reporting and finds amusing stories about Wal-Mart, UPS, Dell and JetBlue, among others, that relate to his basic theme. Did you know that when you order a burger at the drive-through McDonald’s on Interstate 55 near Cape Girardeau, Mo., the person taking your order is at a call center 900 miles away in Colorado Springs? (He or she then zaps it back to that McDonald’s and the order is ready a few minutes later as you drive around to the pickup window.) Or that when you call JetBlue for a reservation, you’re talking to a housewife in Utah, who does the job part time? Or that when you ship your Toshiba laptop for repairs via UPS, it’s actually UPS’s guys in the ”funny brown shorts” who do the fixing?

China and India loom large in Friedman’s story because they are the two big countries benefiting most from the flat world. To take just one example, Wal-Mart alone last year imported $18 billion worth of goods from its 5,000 Chinese suppliers. (Friedman doesn’t do the math, but this would mean that of Wal-Mart’s 6,000 suppliers, 80 percent are in one country — China.)

The Indian case is less staggering and still mostly in services, though the trend is dramatically upward. But Friedman understands that China and India represent not just threats to the developed world, but also great opportunities. After all, the changes he is describing have the net effect of adding hundreds of millions of people — consumers — to the world economy. That is an unparalleled opportunity for every company and individual in the world.

Friedman quotes a Morgan Stanley study estimating that since the mid-1990’s cheap imports from China have saved American consumers over $600 billion and probably saved American companies even more than that since they use Chinese-sourced parts in their production. And this is not all about cheap labor. Between 1995 and 2002, China’s private sector has increased productivity at 17 percent annually — a truly breathtaking pace.

Friedman describes his honest reaction to this new world while he’s at one of India’s great outsourcing companies, Infosys. He was standing, he says, ”at the gate observing this river of educated young people flowing in and out. . . . They all looked as if they had scored 1600 on their SAT’s. . . . My mind just kept telling me, ‘Ricardo is right, Ricardo is right.’ . . .

These Indian techies were doing what was their comparative advantage and then turning around and using their income to buy all the products from America that are our comparative advantage. . . . Both our countries would benefit. . . . But my eye kept . . . telling me something else: ‘Oh, my God, there are just so many of them, and they all look so serious, so eager for work. And they just keep coming, wave after wave. How in the world can it possibly be good for my daughters and millions of other young Americans that these Indians can do the same jobs as they can for a fraction of the wages?’ ”

He ends up, wisely, understanding that there’s no way to stop the wave. You cannot switch off these forces except at great cost to your own economic well-being. Over the last century, those countries that tried to preserve their systems, jobs, culture or traditions by keeping the rest of the world out all stagnated. Those that opened themselves up to the world prospered. But that doesn’t mean you can’t do anything to prepare for this new competition and new world. Friedman spends a good chunk of the book outlining ways that America and Americans can place themselves in a position to do better.

People in advanced countries have to find ways to move up the value chain, to have special skills that create superior products for which they can charge extra. The UPS story is a classic example of this. Delivering goods doesn’t have high margins, but repairing computers (and in effect managing a supply chain) does. In one of Friedman’s classic anecdote-as-explanation shticks, he recounts that one of his best friends is an illustrator.

The friend saw his business beginning to dry up as computers made routine illustrations easy to do, and he moved on to something new. He became an illustration consultant, helping clients conceive of what they want rather than simply executing a drawing. Friedman explains this in Friedman metaphors: the friend’s work began as a chocolate sauce, was turned into a vanilla commodity, through upgraded skills became a special chocolate sauce again, and then had a cherry put on top.

Of course it won’t be as easy as that, as Friedman knows. He points to the dramatic erosion of America’s science and technology base, which has been masked in recent decades by another aspect of globalization. America now imports foreigners to do the scientific work that its citizens no longer want to do or even know how to do. Nearly one in five scientists and engineers in the United States is an immigrant, and 51 percent of doctorates in engineering go to foreigners.

America’s soaring health care costs are increasingly a burden in a global race, particularly since American industry is especially disadvantaged on this issue. An American carmaker pays about $6,000 per worker for health care. If it moves its factory up to Canada, where the government runs and pays for medical coverage, the company pays only $800. Most of Friedman’s solutions to these kinds of problems are intelligent, neoliberal ways of using government in a market-friendly way to further the country’s ability to compete in a flat world.

There are difficulties with the book. Once Friedman gets through explicating his main point, he throws in too many extras — perhaps trying to make that chocolate sundae — making the book seem slightly padded. The process of flattening that he is describing is in its infancy. India is still a poor third-world country, but if you read this book you would assume it is on the verge of becoming a global superstar.

(Though as an Indian-American, I read Friedman and whisper the old Jewish saying, ”From your lips to God’s ears.”) And while this book is not as powerful as Friedman’s earlier ones — it is, as the publisher notes, an ”update” of ”The Lexus and the Olive Tree” — its fundamental insight is true and deeply important.

In explaining this insight and this new world, Friedman can sometimes sound like a technological determinist. And while he does acknowledge political factors, they get little space in the book, which gives it a lopsided feel. I would argue that one of the primary forces driving the flat world is actually the shifting attitudes and policies of governments around the world.

From Brazil to South Africa to India, governments are becoming more market-friendly, accepting that the best way to cure poverty is to aim for high-growth policies. This change, more than any other, has unleashed the energy of the private sector. After all, India had hundreds of thousands of trained engineers in the 1970’s, but they didn’t produce growth. In the United States and Europe, deregulation policies spurred the competition that led to radical innovation. There is a chicken-and-egg problem, to be sure. Did government policies create the technological boom or vice versa? At least one can say that each furthered the other.

The largest political factor is, of course, the structure of global politics. The flat economic world has been created by an extremely unflat political world. The United States dominates the globe like no country since ancient Rome. It has been at the forefront, pushing for open markets, open trade and open politics. But the consequence of these policies will be to create a more nearly equal world, economically and politically.

If China grows economically, at some point it will also gain political ambitions. If Brazil continues to surge, it will want to have a larger voice on the international stage. If India gains economic muscle, history suggests that it will also want the security of a stronger military. Friedman tells us that the economic relations between states will be a powerful deterrent to war, which is true if nations act sensibly. But as we have seen over the last three years, pride, honor and rage play a large part in global politics.

The ultimate challenge for America — and for Americans — is whether we are prepared for this flat world, economic and political. While hierarchies are being eroded and playing fields leveled as other countries and people rise in importance and ambition, are we conducting ourselves in a way that will succeed in this new atmosphere? Or will it turn out that, having globalized the world, the United States had forgotten to globalize itself?

in Friedman’s world, and that of the educated Baby Boomer professional today, the reality of physical economy, which is organized through the political instrumentality of nation-states, has been replaced by the “flat earth” of markets, where individuals all fend for themselves in a global marketplace.

Friedman devotes nearly half of his book to reviewing personal encounters with particularly Indian entrepreneurs who have “made it” in the high-tech world, through methods he calls “flatteners.” These range from free computer software, to outsourcing, to insourcing, and in-forming, and other methods which have made a wide range of industries “global.” He argues that these have created “a global, Web-enabled playing field that allows for multiple forms of collaboration—the sharing of knowledge and work—in real time, without regard to geography, distance, or, in the near future, even language,” and that this is an unstoppable process to which we must adapt.

What this “reality” means, Friedman says, is that countries have to turn out more and more “knowledge jobs,” rather than the “limited” physical production jobs. In a particularly lurid example, he puts it like this: “If you are a knowledge worker making and selling some kind of idea-based product—consulting or financial services or music or software or marketing or design or new drugs—the bigger the market is, the more people there are out there to whom you can sell your product.

And the bigger the market, the more new specialties and niches it will create. If you come up with the next Windows or Viagra, you can potentially sell one to everyone in the world. So idea-based workers do well in globalization, and fortunately American as a whole has more idea-driven workers than any country in the world.” (p. 230)

What an outrageous idea, in this world so devoid of essential physical products to keep people alive! Instead of pointing citizens toward a mission of producing to bring people out of poverty, through providing power, clean water, or transport, Friedman idealizes the opportunity to produce a “vanity” drug!

It actually gets worse. When Friedman turns to the question of the role of government in all of this, it’s all about government enabling people to become “more employable,” i.e., to go out and compete in the “flattened” Earth. Noting that it might help for national leaders to provide a “mission,” the modern-day equivalent of the LBJ’s war on poverty, or JFK’s Moon-shot, Friedman puts forward “a crash program for alternative energy and conservation to make America energy-independent in ten years.” (p. 283) This goal, he claims, would help win the “war on terror” by taking away oil revenues from Arab states, help solve “global warming,” and make Americans scientists and engineers.

All Friedman’s assumptions motivating this mission are wrong. Terrorism does not depend on oil revenues; fossil fuel energy production has not caused global warming; and going to conservation and solar or wind power, takes our science backwards, not forwards to solving the power-production problems of the world. What we need is a renaissance of nuclear power, moving forward to nuclear fusion power—and that’s going to require training rigorous scientists and engineers, and a whole lot of construction, all over the world.

Behind all the web-spinning, including Friedman’s schemes for portable health care and pensions, one cannot escape the strong smell of Baby Boomer distaste for physical work, and the people who do it. Yet, if we don’t begin to base our economy once more on building the physical economy, starting with power, water, health, and transport infrastructure, we are indeed headed toward doom.

If the idea of globalization filled a conceptual void in the formless 1990s — the editors of Foreign Affairs magazine wrote in 1997 that “the overall theme of the 1990s is that there is no overall theme to the 1990s” — the shock of al Qaeda’s assault yanked early-21st-century geopolitics back to worries about security.

In The World Is Flat, Friedman rejoins the debate over what’s really driving world politics, but he does not come out where readers of his eloquent columns on the challenges of defeating bin Ladenism might expect; instead, he argues that “the most important force shaping global economics and politics in the early twenty-first century” is not the admittedly important war on terrorism but a “triple convergence — of new players, on a new playing field, developing new processes and habits for horizontal collaboration.”

Friedman writes that the world is now entering the era of “Globalization 3.0,” following Globalization 1.0, which ran from 1492 until 1800 and was driven by countries’ sheer brawn, and Globalization 2.0, in which “the key agent of change, the dynamic force driving global integration, was multinational companies” driven to look abroad for markets and labor, spurred by industrial-age “breakthroughs in hardware” such as steamships, trains, phones and computers. That epoch ended around 2000, replaced by one in which individuals are the main agents doing the globalizing, pushed by “not horsepower, and not hardware, but software” and a “global fiber-optic network that has made us all next-door neighbors.” If the first two eras were driven mostly by Europeans and Americans, the third is open to “every color of the human rainbow.”

In particular, Friedman is obsessed with one of the great economic phenomena of our day: the outsourcing of the U.S. economy’s service and information-technology work to India, China and elsewhere. The reason that Indian accounting firms are expected to do about 400,000 American tax returns this year, that small U.S. hospitals have their CAT scans read in the wee hours by Indian or Australian radiologists known as the “Nighthawks,” or that the Chinese port city of Dalian is taking outsourced work from its former imperial masters in Japan, Friedman argues, is that the world is undergoing “one of those fundamental changes — like the rise of the nation-state or the Industrial Revolution” — that transform the roles of individuals, governments and societies.

The world was flattened, he writes, by 10 forces, including the fall of the Berlin Wall and the discrediting of Soviet-style command economies; the 1995 Netscape IPO, which opened up the Internet for easy browsing; the dot-com era overinvestment in the fiber-optic cables that such globalizing hubs as Bangalore and Shenzhen, China, rely upon to cheaply transmit data around the planet; search engines like Google, most of whose queries are now no longer in English; and such flat-world “steroids” as PalmPilots, tiny laptops and the wireless technology that lets one of Friedman’s colleagues merrily e-mail from aboard a Japanese bullet train. “The ‘hot line,’ which used to connect the Kremlin with the White House,” Friedman writes, “has been replaced by the ‘help line,’ which connects everyone in America to call centers in Bangalore.”

Even as these forces leveled the playing field, Friedman notes, some 3 billion people were rushing onto it — from China, India, the former Soviet Union and other countries whose economies had thrown off socialism or self-defeating insularism. As American politicians were letting the country’s scientific and engineering base erode and peddling protectionist myths, the global economy was being “shaped less by the ponderous deliberations of finance ministers and more by the spontaneous explosion of energy” from eager Indian and Chinese entrepreneurs.

Friedman offers an engrossing tour of Flat World, but he sometimes overestimates its novelty. For starters, the glee of Globalization 3.0’s players at the prospect of a seemingly borderless world is hardly new. “Merchants have no country,” Jefferson wrote in 1814. “The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.” Similarly, Friedman is right that China might now be more leery about attacking high-tech Taiwan for fear of snarling international trade and manufacturing lines, giving the island its so-called silicon shield.

But his puckishly named Dell Theory of Conflict Prevention — “No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain” — skates past the fact that potential belligerents have always weighed the economic costs of war, often with breathtaking inaccuracy. (Saddam Hussein thought gobbling up Kuwait in August 1990 would let him dominate the world oil market, not shatter his army and usher in a decade of crippling sanctions.) And the argument that trade inhibits belligerence dates back at least to Kant.

Friedman also does not have a compelling rebuttal for Harvard’s Michael Sandel, who calls Flat World’s new horizontal collaboration “just a nice name for the ability to hire cheap labor in India.” For instance, Indian techies had the manpower and ambition to do the “huge, tedious job” of fixing the West’s Y2K computer bug, giving India a surge of IT business that Friedman calls “a second Indian Independence Day.”

But India’s Y2K windfall could be read just as easily as a sign of dependence, of reliance on tasks that American workers no longer want. Friedman rightly notes that “low-wage, low-prestige jobs in America . . . become high-wage, high-prestige jobs” when outsourced to India. But in an era where, as Friedman puts it, both pride and humiliation get served up to you via fiber-optic cable, it’s not at all clear we’ll like the long-term geopolitical consequences of having emerging powers reliant on scraps from the American economic table.

Friedman’s evangelism never entirely allays the suspicion that “the single most important trend in the world today” is actually the empty half of the glass. In a sense, The World Is Flat serves as a sort of bookend to this spring’s other blockbuster economics book, Jeffrey D. Sachs’s The End of Poverty, which angrily notes that some 20,000 people die unnecessarily every day from starvation and diseases like malaria while the developed world fiddles. Much of the world is indeed flat — flat broke. “You cannot drive economic growth,” Friedman acknowledges, “in a place where 50 percent of the people are infected with malaria or half of the kids are malnourished or a third of the mothers are dying of AIDS.”

And then there’s 9/11. “The flat world — unfortunately — is a friend of both Infosys and al-Qaeda,” Friedman writes, since both rely on the imaginative use of the Internet and global supply chains and since both are super-empowered by a flatter playing field magnifying the importance of individuals and groups. Fair enough, but why does Rajesh Rao matter more than Osama bin Laden, the Lexus more than the olive tree, flat-world globalization more than the far-flung struggle with jihadism that Friedman himself has likened to World War III?

He doesn’t quite say. As one would expect from the author of the brilliant From Beirut to Jerusalem, his treatment of 9/11 and Middle Eastern issues is insightful and deeply informed, but it doesn’t convincingly settle the question of whether global trade or global terror is our age’s central organizing principle. If al Qaeda ever buys, builds or steals even a small nuclear bomb — taking advantage of the Bush administration’s leisurely belief that America can afford to wait until sometime after 2008 to secure poorly guarded Russian nuclear weapons and material — the surging growth of the Indian and Chinese entrepreneurial classes may seem largely of academic interest.

Friedman embraces much of his flat world’s complexity, and his reporting brings to vibrant life some beguiling characters and trends. If his book is marred by an exasperating reliance on the first person and a surplus of catch phrases (” ‘Friedman,’ I said to myself, looking at this scene, ‘you are so twentieth-century. . . . You are so Globalization 2.0’ “), it is also more lively, provocative and sophisticated than the overwhelming bulk of foreign policy commentary these days.

Conclusion

To set-up his theory of conflict prevention, Friedman traces the path through the global supply chain of how Dell built his laptop on which he wrote most of The World is Flat. The trail begins with the design of his laptop by engineers in Austin, Texas, collaborating with engineers in Taiwan.

The order for the laptop was taken over the phone and sent to a factory in Malaysia where parts from the Philippines, Costa Rica, China, Malaysia, Japan, Taiwan, Korea, and other nations around the world converged to be assembled into Friedman’s laptop. Friedman uses the interdependence of national economies and the economic prosperity brought by globalization shown by his laptop anecdote to assert his Dell Theory of Conflict Prevention that he believes drives twenty-first century geopolitics.

The World is Flat succeeds as a clear and concise guide to modern globalization for the average person. Friedman’s emphasis throughout the book focuses on how modern globalization has been driven by the major political and technological developments of the past twenty years.

His simple language and fluid style grant him the ability to break down even the most technical or complicated ideas or events into terms any reader can understand. The structure of the book is a logical organization of arguments and evidence that build upon each other as the book progresses. The anecdotes that Friedman opens each section with also further the ease of the book.

As the twenty-first century progresses, Friedman argues that corporations, governments, and individuals must have the ability to adapt to the current state of globalization. The playing field has been flattened, but the knowledgeable and responsible citizen of the world who does not resist change will be able to take full advantage of new benefits provided by the global community. The World is Flat provides a clear picture of the nature of globalization and the state of world affairs at the dawn of the twenty-first century and equips readers with the knowledge needed to guide themselves through it.

Thus, when the world is flat, you can innovate without having to emigrate.

References

www.mitworld.com
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