Academia
Some Background Information:
The following article was a final deliverable for the Loyola class "Ethics and Social Responsibility" of Professor Stacey B. Lee, written
in April 2007. 'Globalization' with all it facets has been a favorite topic throughout my Loyola MBA studies. While criticizing Friedman
for a too optimistic and unbalanced view I am nevertheless a clear supporter of 'Free Trade'.You can also find more on this issue in a comprehensive article titeled "Some Lessons to learn about Trade" [GB 705: Leadership and Management, Professor Peter Lorenzi, Spring 2007]
More articles:Some Lessons to learn about Trade
A search for answers in healthcare
Marketing Case 'IKEA Invades America'
Sarbanes Oxley - Good or bad for Corporate Governance?
Stephan Kroker-Bode
Book - Review:
Thomas Friedman: "The World Is Flat" (Release 2.0 published in 2006)
With "The World Is Flat" Friedman has written an incomplete book about modern Globalization - heavily overstated as "A Brief History of the Twenty-First Century". While readers won't find really misleading information or misstated data in his book, neither will they get a more comprehensive picture of Globalization which includes viewpoints from both winners and loosers.
Friedman's general thesis is that technological innovations combined with an almost universal adoption of free market economies have "flattened" the playing field for developing countries. Interesting enough this thesis starts with utilizing a statement in a completely different way than it was given originally.
Very early in the book Friedman talks about a conversation he had with Nandan Nilekani, the CEO of Infosys, an Indian outsourcing company. Nilekani says "Tom, the playing field is being leveled." - meaning that countries like India are now able to compete for global knowledge work.
Some minutes after the interview Friedman is thinking about these worlds in his van driving back to the hotel - and everything starts with a significant memory deficiency. "What Nandan is saying, I thought to myself, is that the playing field is being flattened … Flattened? Flattened? I rolled that word around in my head for a while and then, in the chemical way that these things happen, it just popped out: My God, he's telling me the world is flat!" (Page 7)
No, Mr. Friedman - he told you that the playing field is leveled. That is a completely different concept. A Level is a qualitative idea that implies equality; it contains the element of balance. Flat is a physical and geographic concept. But the idea is born and from this moment on we will read the word "flattened" multiple times. And even the geographical blunder that a flat world brings two distant points closer together (no - it's still the round one) won't stop Friedman to go his way of partially entertaining anecdotes but metaphorical nonsense.
Soon after the introduction with some insights in outsourcing companies and golf courses in Bangalore Friedman builds his first theoretical concept. He is dividing the history of Globalization into three parts:
In the second chapter of his book - Friedman introduces "The Ten Forces That Flattened the World" leading to Globalization 3.0. With the fall of the Berlin Wall in 11-9 1989 (not 9-11, a remarkable coincidence in historical dates) the already broken iron curtain finally disappeared - and a whole new world was opened for capitalism.
While everywhere in Eastern Europe walls came down, 'Windows' came up. Microsoft's Operating System Version 3.0 was shipped 5 month after the November nights in Berlin and helped to increase data transfer and handling significantly.
In 1995 Netscape went public. This first commercial browser finally brought the Internet alive. (Friedman ignores that Tim Barners Lee had already developed HTML at CERN seven years earlier and the idea of TV-based hypertext reaches back till Vannemar Bush's 'Memex' machine of 1945). People from more different places in more different ways could connect with one another faster and easier than ever before. It also helped to develop and insure open standards. And it, as Friedman points out, "triggered the Dot-Com Boom - and that triggered the Dot-Com Bubble - and that triggered the accidental ridiculous obscured outrageous insane overinvestment of something close to a Trillion Dollars in Fiber optic Cable in 5 years which made accidentally Begging, Bangalore and Bethesda Next-door-neighbors - without anyone anywhere planning it to happen."
Friedman continues describing the other "Flatteners":
For Friedman somewhere around the year 2000 three huge convergences (Chapter 3) came together to shape the 21st century:
After these three chapters in Freedman's book (and a total of 230 pages) one could stop reading. All what is really crisp and fun to follow was said, in a lengthy way but still entertaining. From this moment on the proportion of the 'entertaining factor' and intellectual stimulant is continuously shrinking. Too many ideas and basic concepts are repeated again and again - while other material and facts - which would balance Friedman's euphoric view of Globalization - are left unspoken.
In his fourth chapter "The great Sorting Out" Friedman tries a reality check on how companies adapt to the dramatic changes of Globalization. Friedman wants to make the reader belief that the "flattening" of the world was foreseen by Karl Marx.
In my personal 'other life' in Germany, 20 years ago, I read Marx' masterpiece, 'Das Kapital' back and force as part of a sociology class in Heidelberg - and sorry, I can't remember any links to our so-called "flattened" world.
An interview with Harvard's political theorist Michael Sandel discusses Globalization and the potential exploitation of Indian workers dealing with outsourced projects. The consent among Friedman and his discussion partner is that these workers are given opportunities they otherwise would not have - but the real problems of India's vast majority in the context of Globalization are frankly ignored.
No word about the suicides of thousands of Indian farmers, who where tricked by western companies into farming projects with genetically modified rice and the need of expensive, environment destroying pesticides. These 'dark sides' of the bright shining globalized world are excluded (or - almost like an alibi - packed into one chapter called "The Unflat World").
What is interesting in Chapter 4 is the description of ongoing changes and relationships between communities and local businesses, how local people start to interact on a global level and how traditional roles of consumers, employees, taxpayers and shareholders have all become blurred.
In Chapter 5 - "America and Free Trade" - Friedman is clearly 'outing' himself as the Neo-Liberal he is. I share his support for free markets and believe that the system works best without tariffs and disturbing subsidies. 'Free Trade' is clearly worth defending - but it needs to be seen in the context of 'Fair Trade' and at least discussed without ignoring the partially unbalanced division of power.
Friedman knows "that free trade won't necessarily benefit America as a whole", when the world "becomes so flat and so many more people can collaborate, and compete" - and that "our society will have to help those who are harmed by it" (all on page 261). But he is not really delivering much more than common platitudes in this chapter.
In Bangalore while he was observing "this river of educated young people flowing in and out", his mind started telling him "Ricardo is right, Ricardo is right, Ricardo is right" (yes, these are the original words). He doesn't bother to explain David Ricardo's theory of the competitive advantage of nations in a little more than one sentence but delivers his basic message: "Even as the world gets flat, America as a whole will benefit more by sticking to the general principles of free trade, as it always has …" (page 263).
Well, I have to stop here because once again Friedman must have skipped his history class. Globalization was more 'developed' 100 years ago - with a higher GDP percentage of free flows of goods, services and capital. The First World War and the Great Depression brought all of that to a deep-freeze stagnation - and America was 'leading' for a while with high tariffs and trade distortions. Did Friedman ever hear about the Smoot-Hawley Tariff Act of 1930?
Globalization - so Friedman - must be "accompanied by a focused domestic strategy aimed at upgrading the education of every American, so that he or she will be able to compete for the new jobs in a flat word. And it must be accompanied by a foreign strategy of opening restricted markets all over the world (including some of our own, like agriculture), thereby bringing more countries into the global free-trade system - which will increase demand for goods and services, spur innovation, and reduce both unemployment and job migration across the globe." (page 271)
A lot of this is not really new - and some important issues are nowhere stated in the book. For example is Friedman only mentioning the word 'agriculture' and hesitates to use 'subsidies' in the same context. In America and Europe (especially France) a small amount of highly industrialized agriculture businesses receive billions of subsidies - which leads to overproduction, higher prices for American and European consumers and most importantly significant trade barriers for developing countries especially in Africa and Latin America.
Agriculture is the most important stumbling block for the stalled Doha Trade Round which would - finally finished with a successful treaty - help both the industrialized world and developing countries. Friedman ignores this significant trade-related issue completely!
Instead he talks about common outsourcing topics like the 'creative destruction' of jobs (he doesn't call it this way nor mentions Schumpeter as the Economist behind this concept), the decline of manufacturing and the fact that 150 years ago 90 percent of Americans worked in agriculture (this number went down to 2% today supposing that manufacturing might see a similar development).
He finishes the chapter with pointing to the rise of new jobs (like 'search engine optimizer').
There are plenty of other articles available who cover these outsourcing basics in a better way, with more significant data and in a smaller amount of pages (start with Daniel Dreznere's "The Outsourcing Bogeyman", May 2004; in: Foreign Affairs, as only one example).
Relatively early in Chapter 6 - "The Untouchables" - Friedman presents a one page long quote of Princeton economist Alan Blinder:
"Simplifying this underlying reality, economic theorists typically conceptualize the world's goods and services as falling into one of two bins: 'tradable' or 'non-tradable'. [...] But that is now vestigial thinking. Because technology is constantly improving, and because transportation seems to grow easier and cheaper over time, the boundary between what is tradable and what is not tradable is constantly shifting. […] Because packets of digitized information can now play the role that boxes used to play, many services are now tradable and many more will surely become so." (page 279)
The fact that services become more and more 'vulnerable' for outsourcing and that blue collar workers dealing with manufacturing are no longer the most endangered western human species is also not really 'big news'. But Friedman's description of the "untouchables" is one of the best parts of his analysis.
"The untouchables in a flat world will fall into three broad categories. First are people who are really 'special or specialized'. […] Second are people who are really 'localized' and 'anchored'" And then we have the third group - a broad category which includes people in many 'middle-class jobs'. (page 279/280).
What will survive the outsource rush are "The New Middlers": These are
In Chapter 7 - "The Right Stuff" - we are confronted with Friedman's personal E=mc2 Formula:
It is CQ + PQ > IQ - the conclusion "that in a flat world, IQ - intelligence quotient - still matters, but CQ and PQ - curiosity quotient and passion quotient - matter even more." (Page 303). While keeping this nice statement in mind we can skip the rest of the chapter - it is basically about the importance of self-learning and learning to learn - and this is definitely not a new idea.
America loves Sports-Metaphors! Friedman knows that very well and is pleasing his audience finally in Chapter 8 with a very lengthy story of the unexpected loss of the U.S. Olympic Basketball Team. It should help as an example of our complacency as the rest of the world is learning and catching up in areas where The United States were dominating.
The "Quiet Crisis" is an ongoing discussion of investing more in education. If not doing so it can create "the perfect storm" (page 327) that could lead to America falling behind in innovation, science and technology. The components of this misery are
Summarized in one sentence: Friedman is talking about the lack of highly skilled scientists and engineers, disinterest in math and science,
videogames and television killing the ambition for learning, the outdated education system and a lack of research funding - and finally the
focus on wrong priorities (first of all the war in Iraq).Chapter 9 - "This Is Not A Test" - makes us say: God thanks! (because we rushed through this 'thin' chapter relatively fast). The first message: People must be willing to change and adapt. Well - up to now one should have uncovered the concept of "live-long learning" which existed before Friedman discovered the "flat" world.
The second message is "compassionate flatism" - another example of Friedman's 'creativity' in designing new words. These are moments when a non-native speaker is questioning the beauty of the English language. This monster mutation of an already 'flat' metaphor unfortunately is covering a very good concept: Friedman rallies for a new version of the Space Race - this time for making America energy-independent in 10 years by investing in and developing renewable energy systems. This idea should be given much more space, more background information, the right larger perspective (contra agriculture subsidies and a switch to production of bio-energy plants) - but we have to wait for another book to read about it in a more comprehensive style.
Up to this point (we have passed the 390 pages mark) 95% percent of the developing world is frankly ignored:
Africa? Not yet really mentioned!
Latin America? Wait for the next chapter!
Europe? You want to hear more about the former Warsaw Pact States? Ups (not UPS, one of Friedman's most featured companies) - that was forgotten completely.
Finally, in the following three chapters, Friedman is briefly acknowledging some Globalization 'losers'. Actually he does that in one chapter - the others are more of an 'introduction'.
In Chapter 10 - "The Virgin of Guadalupe" - we learn about Mexico's problem of not being the area with the cheapest labor anymore When developing countries compete against each other - and China replaces Mexico as the U.S. number two importer in 2003 - Mexico suddenly sees a national symbol (the statue of the Virgin of Guadalupe) being produced in China and imported to Mexico.
As an evangelist of Globalization Friedman doesn't forget to present some encouraging World Bank data. And - as some critics of him want to ignore - it actually includes a comparison with Sub-Saharan Africa! "The World Bank reported that in 1990 there were roughly 375 million people in China living in extreme poverty, on less than $1 per day. By 2001, there were 212 million Chinese living in extreme poverty, and by 2015, if current trends hold, there will be only 16 million on less than $1 a day. In South Asia - primarily India, Pakistan, and Bangladesh - the numbers go from 462 million in 1990 living on less than $1 a day down to 431 million by 2001 and down to 216 million in 2015. In sub-Saharan Africa, by contrast, where Globalization has been slow to take hold, there were 227 million people living on less than $1 a day in 1990, 313 million in 2001, and an expected 340 million by 2015." (page 399/400)
Friedman now discusses the need for developing countries to put policies in place to create the right environment for companies and local entrepreneurs to succeed. Companies have to be "brutally honest" with themselves, have to open their borders and have to adopt free trade policies - or they will fall behind. Ireland - the former European poorhouse of the past and now with the second highest European GDP - serves as a case study for financial success.
Chapter 11 - "How Companies Cope" - teaches us that companies need to collaborate and focus on niche markets, doing themselves what needs to be done to stay in front of their customers - and outsource the rest. The best companies use outsourcing as a method of growth - but not to shrink their workforce. Friedman points to the fact that we should outsource 'socially responsible' - giving the outsourced workers a good wage: $2 instead of $1.
This sounds cynical but is indeed the best way to reduce worldwide poverty and provides opportunities these workers otherwise don't have - including support to build a local education system.
So far, so good. A little thin, but the direction Friedman is heading is clearly the right one.
One would have expected that in Chapter 12 - "The Unflat World" - finally some arguments of Globalization critics will be covered in detail (not to compromise the overall correct call for worldwide trade liberalization but to have at least a little 'balance' in the book). Now it would be time to hear some NGOs instead of CEOs, learn something about the destruction of the commons, environmental externalities … well, anything else than the almost exclusive focus on India and China and the 'Outsourcing is O.K. rhetoric' of the last 200 pages.
The actual content is with some exceptions disappointing.
First - we get a surprise. On page 460 we suddenly read: "To put it bluntly, I don't know how the flattening of the world will come out. Indeed, let me go even further and make a deeper confession: I know that the world is not flat. Yes, you read me right: I know that the world is not flat Don't worry. I know. I am certain, though, that the world has been shrinking and flattening for some time now, and that process has quickened dramatically in recent years. Half the world today is directly or indirectly participating in the flattening process or feeling its effects. I have engaged in literary license in titling this book The World Is Flat to draw attention to this flattening and its quickening pace because I think it is the single most important trend in the world today." (Page 460/461)
What is this? What happened? Did one of Friedman's kids accidentally bring a globe? Do we see one of these rare moments of genius inspiration? A response to some strange commends and questions during last night's cocktail party when Friedman had presented the idea of a 'flat world'? Read again. The moment of reason lasts only for two sentences - than we have our "flattening process" again: the demon of language once created continues to demand its sacrifice. We will not get rid of it for the rest of the book.
What is the 'meat' in this chapter? The examination of different groups of people Friedman thinks are disadvantaged for one reason or the other. These folks are:
Friedman is only covering one country - China - but provides some interesting facts in 10 well written pages.And that it was - we are leaving the topic "Globalization and Poverty" again.
With "Globalization of the Local" - Chapter 13 - Friedman covers at least some cultural aspects of the Globalization impact which is seen by many as an 'Americanization' of the world. We hear about new forms of communication and innovation which create a global platform for sharing of work, entertainment and opinion.
The communication utopia of a world as a village was not born in Friedman's head. In the 1960s a pioneering thinker about the media, Marshall McLuhan, made the term 'Global village' popular (it was actually coined earlier in 1948 by Wyndham Lewis). In his book "The Gutenberg Galaxy" McLuhan describes a vision of electronic communication uniting the world, allowing people to interact and live on a global scale. In this sense - fueled trough electronic mass media - the globe turns into a 'village'.
Chapter 14 brings with "The Dell Theory of Conflict Prevention" an in-depth study of supply chains (using Friedman's laptop as an example). One must seriously question Friedman's theory, that two countries deeply involved in the same global supply chain will never go to war against each other. Later on in the chapter he is modifying the hypophesis in stating that the opportunity costs for such an action would be very high and war therefore unlikely. Basically this is only an 'update' of his idea (documented in the earlier book "The Lexus and the Olive Tree") that two countries with McDonalds restaurants will never become enemies. It was approximately the same time Friedman wrote his "Lexus" statement when NATO bombers dropped their payload over Serbia (for a justified cause, but that is irrelevant here).
Serbia had plenty of McDonalds. Well - four years ago you couldn't find one in Iraq. And most likely that's still the case. Let's hope Friedman's theory still holds when we might face some day a military conflict with China.
Everything comes to an end in Chapter 15 with a comparison of two historical days - which indeed have a magical symmetry: 11-9 versus 9-11, the Fall of Berlin's Wall and the al-Qaeda attack on New York and Washington.
I personally was in Berlin both times - I celebrated 3 a.m. in the morning when the first 'Trabbis' (the East German plastic cars) arrived at West-Berlin's shopping district Kuhdam. I lived not far away and started to visit the next day an unknown world only some miles away. And I watched the burning World Trade Center on multiple TV sets in a shopping mall at 3 p.m. in the afternoon (6 hours time difference),waiting in Berlin for my American H1B visa to finally make my move to the United States.
Friedman concludes that imagination can go a creative and a destructive way. With the pictures of the fallen towers in my head I think that "flattening" the world is a bad metaphor in whatever context.
With some of Friedman's ideas I sympathize nevertheless. I share his almost childish fascination for imagination, his belief in the principle good of mankind and his passion for socially covered Trade Liberalization. And I can agree with his statement that we continuously have to define the line between precaution and paranoia to keep things in perspective.
But I missed a lot in his book which would make him a true observer of the 'whole picture' and not only a partially entertaining journalist with lots of CEO buddies, a passion for golf, many unused First Class Frequent Flyer Miles and a $75,000 bill for a 2 hour public presentation.
Home |
Executive Resume |
References |
For Recruiters & HR |
Portfolio |
'Second Life' Presentation |
More PowerPoint |
More Webdesign |
Academia©2008 Stephan Kroker-Bode