 True Eye Opener on Global Economic Integration 22 of 23 people found this review helpful.
The World is Flat is worth it's weight in gold for those who seek to not only improve their understanding of how the world will change, but how it has already changed. Friedman's uses the metaphor of a "flat world" to describe the leveling that is occurring across global economies, including both developed and "undeveloped" countries.
In the book, Friedman highlights ten shifts - or flatteners - that are influencing livelihoods and the way of life of people throughout the world.
Some of the interesting flatteners Friedman refers to include the fall of the Berlin Wall, introduction of Netscape, the open-source software movement, offshoring and insourcing.
Friedman does a great job of drawing on his personal experiences and travels in this book. He includes dozens of stories based on accounts and interactions with individuals throughout the world. One example is a meeting with the head of an accounting firm in Bangalore, India. The firm has a talented staff of CPA-equivalents who prepare tax returns for Americans. The individual indicates to Friedman that his next venture is a company that transmits CAT scans via the Net so patients around the world can get an inexpensive second opinion on a health diagnosis.
Friedman highlights that while the trends shaping globalization were identified long ago, they truly converged at the start of this century in a way that is accelerating the pace of change. In other words - the change we're seeing is not new news, but the rate at which this change is taking hold and the speed at which this change is affecting livelihoods is unprecedented.
The book is filled with fun examples of companies that are shaping global economic integration, including Wal-Mart, McDonald's and JetBlue. For example, there is a McDonald's in Missouri with a drive through where instead of sending an order to a kid with a headphone no more than steps away, the order goes to a call-center in Colorado. In addition to the order, a digital photo is included to help the server at the drive-up match the order with the customer; McDonald's claims that this model has increased their efficiency per order by 30 seconds and reduced their errors in half. The other examples are just as interesting.
Friedman emphasizes that the best way for workers in developed countries to remain competitive and globally employable is to gain additional skills and expertise. Moving up the value chain will allow individuals and companies to attract a price premium for their talents and specialized services. A good example that he highlights is that of UPS. UPS is in the business of parcel delivery and logistics; however, they have also deployed a model where they repair computers at a distribution center on behalf of a major customer. UPS has applied their supply chain expertise to a new service line, and have thus launched an entirely new revenue line.
Finally, the books is filled with a good references to history and the lessons that it can teach us. There is a clear premise that continued global economic integration cannot be stopped, and attempts to prevent change will be at the expense of economic well being. He highlights specific examples of this over the past hundred years, comparing closed economies to open economies, and indicating how America can do more to position ourselves to compete more effectively in the global arena.
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Friedman provides an excellent summary of recent changes that have created today's intense global economy. However, his conclusion that this is good for the U.S. - based on anecdotal evidence supplied by outsourcing supporters - is dead wrong.
Broader data show massive deterioration in U.S. workers' healthcare and pension coverage, and opportunities to use and develop higher-level skills (eg. software, engineering, production management, technical skills). The most recent data even show a decline in inflation-adjusted incomes. (Not only are the areas outsourced directly impacted, but so are career areas that displaced individuals move into.) Meanwhile, the areas being outsourced continues to grow to now include tutors, and drug trials.
Friedman observes that Asian competitors are quick learners, moving up the "food chain" from simple production managed by Americans to designing new sophisticated equipment and parts and then manufacturing them under local management. What he fails to note is that sooner or later they will also take over total control and financing - leaving only U.S. distribution to Americans. Thus, most of those that now support outsourcing will eventually find themselves also outsourced. (Median salary and cash bonuses for U.S. CEOs in office for at least a year was $2.3 million in '03, vs. $88,117 in India, according to the Wall Street Journal, 7/19/05)
Friedman does have a recommendation for America in the "flattened world" - substantially improve education and pupil achievement. Unfortunately, even if accomplished (30+ years of reform efforts have yet to come close), it would be of little help. Experts have concluded that Oriental IQs generally average 10 points higher than those of Americans. China and India graduate a combined 500,000 scientists and engineers a year, vs. 60,000 in the U.S., according to Business Week (8/22/05). China alone has about four times the U.S. population, and then there's India, Pakistan, South America, etc. - earning as little as 5% of what Americans bring in. Meanwhile, the number of U.S. computer science students is DECLINING - as a result of unemployment caused by outsourcing. In addition, the inflation-adjusted income for B.A. degrees has fallen 4.9% from '00-'04, while high-school graduates only fell 0.2% (BW, 9/12/05)
In addition, American corporations are hobbled by having to pay high healthcare costs, vs. other nations' much lower costs - largely born by government. And finally there are the government restrictions on genetic research that American firms are forced to live with - possibly precluding significant participation in a potentially booming new area.
If the preceding examples do not set off alarm bells, there's always the latest news that the brightest Indian immigrants in the U.S. are now starting to return to India. At the same time, the volume of those coming here is declining - reportedly because of "better opportunities" in India. Meanwhile, improved technology and reliability acerbate the job problem by further reducing opportunities.
Clearly the mathematics are against us and the inevitable result is that our standard of living is headed for a substantial fall - unless some other solution is found. Rome, Spain, and England proved that a nation's strength is not permanent. Friedman summarized the factors eroding America's - unfortunately, he failed to look clearly into the future or to find a solution. And those should be America's main concerns
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