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Summary and Analysis of The World Is Flat: A Brief History of the Twenty-first Century Further Updated and Expanded
Based on the Book by Thomas L. Friedman
By Worth Books OPEN ROAD INTEGRATED MEDIA
Copyright © 2017 Open Road Integrated Media, Inc.
All rights reserved.
ISBN: 978-1-5040-4410-3
CHAPTER 1
Summary
Introduction to the Paperback Edition
Thomas L. Friedman knows people are wondering why he has updated his book for the second time in two years. His reply: because he could. In an example of the technological changes he discusses in The World Is Flat 3.0, Friedman says the publishing industry has sped up the process so much that he is now able to revise a book quickly, whereas before it wouldn't have been possible. Another reason for the second update is that he wanted to address questions from parents and educators on how best to raise children in this flat world.
How the World Became Flat
One: While I Was Sleeping
Christopher Columbus, of oceans blue and 1492, thought he could find a better passage to India. Spain wanted in on the spice trade, so they funded his voyage. It was lucky, then, that he reached land before running out of food and water. He declared the natives "Indians" and proved that the world was round, despite some sketchy cartography.
In the present day, Indians of a very different kind greet Westerners — in the form of companies like IBM, HP, Microsoft, and Texas Instruments, as well as consumers in need of a helping tech hand — through phone lines and fiber-optic networks created at great expense and sold cheaply in the early 2000s. These Indians are the first of many people freed from the accident of geography. They handle the work that Americans used to do — in fields ranging from accounting to radiology to journalism to tutoring kids. Whatever work can be digitized and outsourced, will be — even if only a portion of the process is sent to India (or Australia, China, or anyplace else where it's daytime during the American nighttime). Friedman uses the example of making dinner plans: Sure, you need cooks and waiters in the United States, but someone in Bangalore can easily take your reservation, assign you a table, and store your contact information.
The reason is simple: Indian workers can be paid less than American workers. In India, there is an entire system set up to hire and train call center employees — including classes on how to develop an American accent. The people seeking these jobs are educated and upwardly mobile, the type of Indians who might've immigrated to the United States in the past, seeking advancement. Now, they can have a successful American job without having to leave their families and culture.
It's not just America, either. Friedman discusses Japan outsourcing jobs to China, an odd concept for historical enemies. Chinese workers don't seem bothered by the old animosity, though — they're focused on the bottom line. Their plan is to earn money and learn the newest technology and business ... so that eventually they can stop working for American and Japanese firms and start their own.
Outsourcing isn't the only kind of sourcing. JetBlue uses home workers in Utah to handle reservations. McDonald's has people in other states taking drive-through orders. The military flies drones in Iraq from a base in Nevada.
The virtual, collaborative community we call "the world" is flat.
Need to Know: Opportunity costs fell so massively in the decade between the collapse of the Berlin Wall and the events of 9/11 that we might as well call it a new era of discovery, a world gone from round to flat. Friedman believes that this is a watershed development in history, akin to the Industrial Revolution.
Two: The Ten Forces That Flattened the World
Friedman believes that ten flatteners led to our current era of globalization:
1. The Berlin Wall fell, enabling millions of people to join in the world economy in a new way. Around the same time, Microsoft Windows was created, giving all people, everywhere, the ability to create content on their own.
2. Tim Berners-Lee and others developed the World Wide Web, allowing people to use the Internet to share information. With the addition of Netscape, a browser that let different systems interoperate, the threat of proprietary standards ebbed. People using any type of computer were able to access the Web. This led to the dot-com bubble, and to massive investment in fiber-optic cable, optimistically laid to handle infinitely growing traffic.
3. Work flow software was developed, breaking tasks into smaller pieces using an alphabet soup of standards — TCP/IP, HTTP, HTML, XML, AJAX — to hand to teams around the world. This enabled work to happen at all hours of the day. It also broke internal business departments out of their specialized silos.
4. Communities began forming online, with people uploading and sharing content and new creations without specialized support. This allowed the technical-minded to gel into their own groups of free-software developers, creating, among other things, browsers, GNU/Linux, Apache, Wikipedia, and countless blogs.
5. Outsourcing, with roots in Y2K's two-digit drudgery, occurred primarily in India, but China and others went along for the ride.
6. A rise in offshoring, or moving businesses to the cheapest labor (in effect, this has meant China ever since it joined the World Trade Organization). Cheap imports save consumers money, and China's practices have forced many other countries to attempt to match their prices and abilities in order to draw business.
7. Supply chaining, exemplified by Wal-Mart, the darling of just-in-time business, pushed prices and margins down and led to a standardization of practices among companies.
8. Insourcing grew more sophisticated, combining services and shipping, as exemplified by UPS taking over Toshiba's laptop repair business.
9. In-forming, the development of search engines like Google, allowed for an individual to create his or her own "supply chain" of content.
10. Wireless devices, the convergence of cameras and cell phones, file sharing, VoIP/videoconferencing, and other tech advances sped up the process of globalization like an injection of steroids, according to Friedman.
Need to Know: There was no single cause for the latest round of globalization. Converging technologies — and the will to use them — drove the behind-the-scenes changes that dissolved the boundaries between nations and people.
Three: The Triple Convergence
People are slow to pick up on new technologies such as convergent printer-fax-scanners, or the ability to print tickets at home. Convergence took three phases:
1. After the fall of the Berlin Wall, the ten flatteners conflated into a global whole.
2. Horizontal thinking drove people to look outward and not upward.
3. New players joined the flat world — people in India, China, Russia, and other locations that had previously been part of more controlled economies.
Walls (fiber), ceilings (upload), and floors (history) are eroding: Imagine the house of the old nation-state riddled with holes. The world is more open. But it is also more dangerous — people missed a number of important changes while they were busy looking out for others. We ignored the growing threat of terrorism until we could not.
Need to Know: We don't change when we want to, only when we are out of choices. India was close to broke when it initiated economic reforms in 1991, but ten years later it had accumulated nearly a hundred billion dollars in cash reserves.
Four: The Great Sorting Out
Globalization is a transition from an industrial to a knowledge society, a revolution-in-the-making with eerie parallels to the Communist Manifesto. The boundaries of communities will dissolve and new ones — political, personal, and business — will arise.
Critics of globalization complain that:
• Political designations have become meaningless: Republicans block Democratic efforts to save Indiana money by outsourcing the design of the state unemployment system to an Indian firm, resulting in the same waste they frequently campaign against.
• Companies headquartered in one nation hire a workforce that spans many others. They owe their allegiance only to shareholders, whose priorities often conflict with those of people and politicians whose identity and fortune is tied to their geography.
• Wal-Mart saves consumers money on goods at the cost of taxpayers who end up paying for health care and other public assistance required by the company's low-paid employees.
• Streamlined drug approval saves time for consumers and government alike, but there are sometimes fatal mistakes like the arthritis medication Vioxx, which created a higher incidence of heart attack and stroke in its users.
• Individuals with mobile access become more powerful when they are able to connect and research constantly, but they and their coworkers never leave the virtual office.
Need to Know: Globalization is the silver that lines a dark cloud, erasing political beliefs and sidestepping national identity, saving consumers billions in discounted retail while costing society in unpaid health care and turning offices and social lives inside out.
America and the Flat World
Five: America and Free Trade Friedman admits to a fondness for free trade, but he shows where it hurts as well as why it works. Economics are not a zero-sum game of "I win, you lose." Low-wage jobs flee to cheaper shores, but rising profits enable companies to hire more skilled "knowledge" workers who adapt to the shift. Nations may lose in the short term, yet if they adapt by specializing, they will ultimately do well.
Some examples of this phenomenon are:
• The fact that low-end chip manufacturing did not put Intel out of business.
• The post–World War II success of Japan and Germany did not come at the expense of the American middle class.
• Google's algorithm spawned the new industry of search engine optimization (SEO), creating jobs that had never existed before.
• Italian clothing production moved to cheaper communities, but overall employment remained stable as the remaining companies focused on design.
Need to Know: There is a push to demonize globalization, but many contrary examples — the economic boom of postwar Japan, Germany, and America — point to the benefits of change.
Six: The Untouchables
There is no guarantee of lifetime employment in the unstable, post-globalization world. Now you compete with your neighbor, as well as with the rising workers of China and India, where a centuries-old caste system is also being upended. This is dangerous ground for the American middle class, which may drain from the center of the bell curve into lower and upper classes.
"Untouchable" once meant the lowest of the low, but to Friedman it now means a highly prized worker with specialized, contextualized skills: celebrities and brain surgeons, barbers and waiters, and a new middle: synthesizers, explainers, leveragers, adapters, environmentalists, personalizers, mathematicians, and localizers.
Need to Know: Living in the new world will take a lot of adaptation. The poorest — like the lowest class Indians in the old caste system — may profit by easier access to education, but the richer Western middle class must prioritize education and create a specialized skill set that defies commoditization.
Seven: The Right Stuff
Preparing youth for an uncertain future in a borderless, virtual world, separating signal from noise, is a daunting task. Incoming students must learn how to learn, differentiate between truth and fiction, find curiosity and passion, engage in liberal arts education, and synthesize skills through right-brain thinking. America is uniquely suited to handle these challenges due to its flexibility, research, institutions, venture capital, open society, intellectual property protection, political stability, and trust.
In an effort to boost creativity and adaptability in its engineering students, the Georgia Institute of Technology purposely selected students with musical backgrounds for admission. Since then, the college has gone from zero to five chamber orchestras and an improvement in graduation from 65% to 76%. It has also seen a sea of change in the computer science department, which reorganized its degrees into nine threads combining computing with intelligence, embodiment, internetworking, platforms, information, people, media, modeling, and foundations.
Need to Know: The only certainty in the years to come is that there will be change, and students who maximize the breadth of their education in science, engineering, mathematics, and liberal arts stand to profit the most.
Eight: The Quiet Crisis
Is America a country in decline? China sure thinks so. Once upon a time, in the days of Sputnik, science and engineering was our bread and butter. Now investment has fallen and political fear keeps foreign students from working here. Modern countries need infrastructure, education, and governance to survive in the flat world. Ours suffers from serious gaps: low total numbers of students, fewer top students, unmotivated kids, struggling poor kids left behind, and slow home broadband compared to other nations.
Need to Know: The Chinese have a saying: fu bu guo san dai, or "wealth does not make it past three generations." Watch out, America. The political winds that shifted against education and foreign knowledge worker visas will lead us all into the still waters of a national brain drain.
Nine: This Is Not a Test
This is the new Cold War. The crises are more personal than a foreign satellite whizzing overhead. Government must acknowledge globalization and, working with it, do the job of creating a more fair, compassionate, egalitarian environment using the powers of:
• Leadership by replacing bad performers like lawyers-turned-politicians or underperforming employees, and encouraging a new moonshot in energy independence.
• Muscle building: Constantly renewing training for employees to give them portable skills that will benefit both their current companies and their next, and health care and retirement plans that can follow them.
• Cushioning, keeping the fat that helps, like wage insurance that guarantees no drop in pay for workers who lose and then find employment.
• Parenting, encouraging hard work, and eliminating entitlement.
Need to Know: We need good leaders, people who can fight for us and create opportunities in ongoing education, portable benefits, "good fat" like wage insurance, and parenting that emphasizes hard work over instant gratification.
Developing Countries and the Flat World
Ten: The Virgin of Guadalupe
The North American Free Trade Agreement (NAFTA) was meant to breathe life into Mexico's economy, but it was steamrolled by China's entry into the World Trade Organization. It's not alone: China's culture seems to lend itself to taking advantage of globalization. But every region has strengths and weaknesses. Countries no longer have the luxury of geographic divisions. In the new, flat world they must grow their economies through connectivity (Internet, roads and airports), education, governance (fiscal responsibility and the rule of law), and environment (green spaces and pleasant workplaces). Ideally, they make it easy to start a business, hire and fire workers, enforce a contract, get credit, and embrace a culture of work, thrift, honesty, patience, tenacity, and openness to change and equality.
Need to Know: Each country will need to look into its national character to see how its puzzle piece fits — and how its economy survives — in the new map caused by a borderless world.
Companies and the Flat World
Eleven: How Companies Cope
Under globalization, there are nine habits of highly successful companies. The best companies:
• Have the ability to quickly and competitively find and implement new ideas.
• Make it easy to innovate.
• Act large even if they're small (an example is Aramex).
• Set out a business buffet to help customers help themselves.
• Constantly look inward to trim fat and leverage strength.
• Outsource to shrink basic labor costs, and channel these savings into specialized knowledge labor to stay one step ahead of ambitious rivals.
• Act ethically.
• Recognize failure and treat it as an opportunity.
Need to Know: Even large companies feel the bite of globalization. They adapt by taking on the traits of smaller, leaner ones, farming out services that are not totally crucial to the core business and inventing new ones to stay relevant in changing times.
You and the Flat World
Twelve: Globalization of the Local
The updated version of The World Is Flat goes deeper than the first editions into the cultural impact of globalization. Friedman discusses the fear many had that American culture would become the de facto world culture due to the dissolving of virtual walls. But in fact it has gone both ways: Due to the ease of uploading, the local traditions of other nations have been exported to the United States as well. It's true that the bad stuff — pornography, racism, lies, and conspiracy theories — seems to travel across the Internet at the speed of light. The good news is that more positive things — cultural and language preservation, activism pushing for clean water, medicine, and education — do as well.
(Continues...)
Excerpted from Summary and Analysis of The World Is Flat: A Brief History of the Twenty-first Century Further Updated and Expanded by Worth Books. Copyright © 2017 Open Road Integrated Media, Inc.. Excerpted by permission of OPEN ROAD INTEGRATED MEDIA.
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