[This book review, in slightly varied form from what appears here, which is the author's original version,  was published in the Spring 2006 issue of The Journal of Social, Political and Economic Studies, pp. 107-114.]

 

 

Book Review

 

The World is Flat: A Brief History of the Twenty-First Century

Thomas L. Friedman

Farrar, Straus and Giroux, 2005

 

            Thomas Friedman is a widely-acclaimed journalist, foreign affairs columnist for the New York Times, and author of four best-selling books that include From Beirut to Jerusalem (1989).  His eminence as a journalist is clearly demonstrated in the way he prepared for The World is Flat.  He traveled throughout the world, interviewing in depth the political and business leaders who have the most direct, hands-on knowledge of the truly incredible developments occurring in the business structures and technology of globalization. 

            Only a journalist who moves freely at the highest levels could interview the likes of Sir John Rose, the chief executive of Rolls-Royce; Nobuyuki Idei, the chairman of Sony; Richard Koo, the chief economist for the Nomura Research Institute; Bill Gates of Microsoft; Wee Theng Tan, the president of Intel China; David Baltimore, president of Caltech; Howard Schultz, founder and chairman of Starbucks; Nandan Nilekani, CEO of Infosys in Bangalore—and many others, each of whom gave him the inside story of how, specifically, the barriers of time and space separating economies, workforces, sources of capital, and technical abilities are crumbling.  The result of this unfolding story, already far along but with much farther to go, according to Friedman, is that “the world is flat.”  With some notable exceptions in sub-Saharan Africa and the Islamic swathe, everything is connected with everything else on a horizontal basis, with distance and erstwhile time-lags no longer mattering.

            Friedman describes in detail the galloping globalization that has unfolded in even so limited a time as the past five years.  Under the impetus of a worldwide network of interconnectivity, the world economy is much-changed from what it was at the turn of the century a mere half-decade ago.  Friedman quotes the CEO of India’s Infosys: “What happened over the last [few] years is that there was a massive investment in technology, especially in the bubble era, when hundreds of millions of dollars were invested in putting broadband connectivity around the world, undersea cables,” while (Friedman paraphrases him) “computers became cheaper and dispersed all over the world, and there was an explosion of software—e-mail, search engines like Google, and proprietary software that can chop up any piece of work and send one part to Boston, one part to Bangalore, and one part to Beijing….”   Microprocessors today have 410 million transistors compared to the 2800 they had in 1971.  And now, “wireless is what will allow you to take everything that has been digitized, made virtual and personal, and do it from anywhere.”  The effect on productivity is revolutionary: “It now takes Boeing eleven days to build a 737, down from twenty-eight days just a few years ago.  Boeing will build the next generation of planes in three days, because all the parts are computer-designed for assembly.”

            The most strikingly informative aspect of this book, however, is not about technology.  Most especially, Friedman explores the rapidly evolving global business systems, each constantly regenerating itself to keep ahead of the others.  These are systems that span the continents seeking the lowest-cost providers of everything from expert scientific and engineering work to the lowliest grunt work.  Friedman points out that India produces 70,000 accounting graduates each year—and that they are willing to start at $100 a month.  It is no wonder that Boeing employs 800 Russian scientists and engineers for passenger-plane design when “a U.S. aeronautical engineer costs $120 per design hour, a Russian costs about one-third of that.”  Friedman describes a call center in India where outbound callers sell “everything from credit cards to phone minutes,” while operators taking inbound calls do “everything from tracing lost luggage for U.S. and European airline passengers to solving computer problems for confused American consumers.”

            Friedman tells of the transformation of a number of companies, many of which have assumed activities and shapes that make them hardly recognizable.  One of these is Rolls-Royce.  If the firm’s name brings to mind the image of an elegant car, that is years out of date.  We’re told that “Rolls-Royce doesn’t even make cars anymore (that business was sold in 1972 and the brand was licensed to BMW in 1998).”  Instead, the company’s core competency today has become “making gas turbines for civilian and military airplanes, for helicopters, for ships, and for the oil and gas and power-generation industries.”  The business structure based on interconnectivity results in Rolls-Royce’s now employing “people of about fifty nationalities in fifty countries… It outsources and offshores about 75 percent of its components to its global supply chain.”  It “partners” with other companies and with universities for products, services and research. 

            Dell sells in the neighborhood of 150,000 computers a day.  To produce these, Friedman says, Dell has six factories spotted around the world, each surrounded by a staging area (a “supplier logistics center”) made up of the company’s many suppliers, which provide parts for the computers’ thirty key components on an hour-to-hour basis “as needed” for “just-in-time manufacturing.”  In all, about 400 different companies around the world make up Dell’s “supply chain.” As soon as a customer buys a computer, signals go out around the world to suppliers for every component to produce the unit for that customer.  The design of new computers is a never-ending process: Taiwanese designers are brought to Austin to “codesign” the systems, with features being subject to constant change and the notebook computers being “completely redesigned roughly every twelve months.”

            The Rolls-Royce and Dell examples are enough for purposes of this review to give readers a feel for the informative, “cutting edge” content of The World is Flat.  We recommend it highly as the equivalent, in easily readable form, of a graduate course in contemporary business systems and economic globalization.

            This is not to say, however, that the book is equally good in all dimensions.  Certainly one of its better features is to throw a chill down the spine of everyone—and that’s most of us—who expects to find success and contentment through mere hard work and intelligence in a stable world in which those things pay off.  Friedman rightly says that all the marvelous developments he is describing create a “crisis” for any individual, firm or country that cannot at all times “reinvent” itself to find a place a step ahead of the pressures of worldwide expertise and low-cost competition.  The United States itself is in a crisis formed out of its failure adequately to respond to the Katrina-like winds of change.  But, although such a warning is much-needed and a plus in itself, Friedman’s analysis doesn’t match the excellence of his reporting.  Through much of the early part of the book he seems content to repeat the unthinking, lock-step bromides of conventional global free-trade theory based on David Ricardo’s theory of “comparative advantage,” which posited that all economic actors can thrive together if each sticks with what it does best and lets the others do what they do best.   It is to Friedman’s credit that he comes to express some doubts about this, and sees that many people will be “left behind,” but this is vitiated by the fact that so much of what he says by way of analysis is shallow, incomplete or even misinformed.  To explore each of these would extend this review beyond its intended length, so it will suffice to cite a few examples:

            1.  Friedman’s a busy and remarkably productive individual, so it isn’t with malice that we say that he reveals an almost unimaginable ignorance about American political and economic history when he says the United States has always stuck “to the basic principles of free trade.”   The fact is that the United States was pronouncedly Protectionist through much of its history until the New Deal.  Friedman does not mention Patrick Buchanan, or list him in his index, but that is a shame, since Buchanan has written one of the more lucid histories of American trade policy in his book The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy.  That book, too, provides the equivalent of a graduate course in economic history—one that would provide much-needed background for understanding the economic revolution Friedman describes.

            2.  In common with so many economic gurus today who call, naively and perhaps disingenuously, for “retraining” as the universal response to economic displacement as felt by those who lose their jobs or businesses to outsourcing and offshoring, he focuses almost exclusively on the plight of “knowledge workers” and the need of each to make himself “the very best, the most creative thinker.”    It’s as though Friedman is oblivious to the existence of hundreds of millions of Americans (and billions of others around the world) who, although most often wonderful people, don’t have the mental wherewithal to be “knowledge workers.”  Friedman’s blind side here is revealed most starkly in an example he gives of how Americans can thrive in competition with China.  Notice the glaring unrealism of his beginning premise: “Imagine that the American economy has only 100 people.  Of those 100 people, 80 are well-educated knowledge workers and 20 are less-educated low-skilled workers.”  Eighty percent as “well-educated knowledge workers”!  No wonder Friedman calls for a government-subsidized two year minimum education beyond high school for all Americans.  It’s evident that he hasn’t read Murray and Herrnstein’s The Bell Curve or otherwise taken into account the broad distribution of intelligence within a society.  As this review is written, a news report appears on the Internet telling of “the literacy study funded by the Pew Charitable Trusts.”  The study found that “more than half of students at four-year colleges—and at least 75 percent at two-year colleges—lack the literacy to handle complex, real-life tasks such as understanding credit card offers.”  The report says “the results cut across three types of literacy: analyzing news stories and other prose, understanding documents and having math skills needed for checkbooks or restaurant tips.” (Our italics)  This describes the world as it is, not as the ever-straining apologists for economic ideology will it to be.  It’s a fool’s paradise, really, to expect vast masses of people to reinvent themselves as “creative thinkers.”  Not only are most people incapable of doing this, but there can’t be enough economic demand for hundreds of millions of “thinkers”; and imagine the rat-race-like evaporation of all contentment, family and community life in a world where everybody, at all times, has to be an “entrepreneur” who throughout life must “reinvent himself.”

            3.  Friedman is equally unrealistic or shallow in a great many things.  At one point, he writes that in Bangalore “competition for Indian software writers is rapidly pushing up their wages toward American/European levels.”  (This has the advantage, of course, of optimistically suggesting that Euro-American wages will then not be bid down to anything like current Indian levels.)  Are we to believe, however, that the Indian software writers’ wages really are going to rise substantially when we are told, as Friedman does just three pages earlier, that there are one million applicants for nine thousand technical jobs?  Has India repealed the law of supply and demand in pricing its labor?

            One way an individual can insulate himself from foreign competition, Friedman says, is to go into some sort of “anchored work”—i.e., work that can only be done at the specific location and that therefore can’t be exported.  What Friedman doesn’t consider is that there may come to be any number of people within the country, including immigrants both legal and illegal, who may gravitate toward that location to compete for precisely that same piece of work.  (Friedman’s only discussion of immigration of low-skilled workers is a brief parenthetical observation.)

            When he contemplates the effects of the howling winds of economic displacement on the many cultures and ways of life around the world, Friedman recommends “glocalizing.”  He explains that by this he means that the culture should “absorb foreign ideas and meld these with its own traditions.”  In India, say, despite its emergence as a major participant in the global economy, “we still eat curry, our women still wear saris, and we still live in tightly bound extended family units.  That’s glocalizing at its best.”  This sounds wonderful—an altogether too facile solution to a profound conundrum.  He has no idea how inconsistent it is for him to say, a few pages later, that the Arab-Muslim peoples must either “abandon their cherished religion, or remain forever in the rear of human technical advance.”  Or for him to praise efforts to undo India’s caste system, with its large numbers of “untouchables.”  In fact, Friedman shares the predilection of America’s moral crusaders for a universal meliorism: “In a flat world, if you don’t visit a bad neighborhood, it might visit you.”   Exotic peoples are hardly melding their own traditions with modernism if all they do is continue preferring a certain type of spice or clothing.  The clash between Friedman’s “flat world” and the rich variety of world culture goes much deeper than his imagination—oddly foreshortened—suggests to him.

            4.  Friedman arguably is presenting a snapshot (or a short camcorder video) of where the global economy has headed recently.  If we are to see the more complete picture, however, it is essential to take into consideration the rapid introduction of non-labor-intensive technology.  Friedman omits all discussion of this factor, which is likely to render much of what he describes obsolete.  If low-cost labor, including “knowledge work,” drives the current mania, sending work first to Mexico, say, and then moving some, at least, of that work to China, it may well be that within a short time Mexico, India, China and other providers of low-cost labor will themselves be displaced by a technology that increasingly does not use work.  The admonitions in Jeremy Rifkin’s The End of Work need to be taken seriously.  The world economic revolution portends to go much deeper even than Friedman portrays.

            5.  Friedman is at his strongest in seeing the incredible potential productivity of an interconnected world.  He sees, too, the crisis of displacement that the raging competition poses to great masses of people everywhere.  But his grasp of this crisis seems superficial, clouded by his optimism and his general acceptance of the palliatives offered by a remarkably insulated free-trade ideology.  This leads to proffered “solutions” that, though perhaps meritorious in themselves, and discussed by Friedman at some length, are far too limited and shallow.  He argues for an augmented safety net.

            What is most valuable in this part of his discussion—and it is extremely valuable—is not the specifics of his proposals, but the premise he adopts.  This is the premise that a society must "take good care of  those who are left behind.”  As the displacement spreads, this takes on vast implications.  The displacement of hundreds of millions of people, including the American and European middle class, can, if the premise is not radically adopted, produce either of two scenarios: (1) a world sharply divided between those who are extremely rich and those who service the rich or are desperately poor (a social pattern that has historically been habitual and accepted as “natural” in many societies, but not in the United States or modern Europe); or (2) a world beset by a backlash so violent that Friedman hardly seems to comprehend it when he speaks of the possibility of “a political backlash.”   The premise that “the losers will have to be taken care of” sounds very much like what the Left has been saying for much of the past two hundred years.  But it is rapidly becoming a premise that “conservatives,” or anyone of whatever appellation who cares to assure continuity of civilization, will have to embrace if they are to be true to their own values. 

            There are, of course, essential constraints that will have to be taken into account in protecting the displaced.  The developed nations will bleed themselves white, and will encourage a world population explosion that itself constitutes a major threat to human well-being, if they seek to underwrite billions of people, now living and soon to be born, everywhere.  The most, and best, that can be done is for each people to “look after their own.”  This necessarily suggests restricting the tidalwave of immigration into the West.             

            All of this is something that will become ever more pressing as a topic for discussion in the years ahead.  It is to Friedman’s credit that he has broached the subject and suggested the needed premise.

 

                                                                                                                                                                                Dwight D. Murphey

 

Editor’s note: Mr. Murphey has written a book-length exploration of many of the subjects discussed here in his The Emerging Crisis of Economic Displacement, which appears in the “Books” section of his collected writing web site: www.dwightmurphey-collectedwritings.info   Several of the chapters have been published as articles in this Journal.