[Paleopsych] NYT: Tho. Friedman: It's a Flat World, After All
Steve Hovland
shovland at mindspring.com
Sun Apr 3 18:42:09 UTC 2005
It's not flattening.
It's a race to the bottom.
Steve Hovland
www.stevehovland.net
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Subject: [Paleopsych] NYT: Tho. Friedman: It's a Flat World, After All
Magazine > It's a Flat World, After All
http://www.nytimes.com/2005/04/03/magazine/03DOMINANCE.html
5.4.3
In 1492 Christopher Columbus set sail for India, going west. He had
the Nina, the Pinta and the Santa Maria. He never did find India, but
he called the people he met ''Indians'' and came home and reported to
his king and queen: ''The world is round.'' I set off for India 512
years later. I knew just which direction I was going. I went east. I
had Lufthansa business class, and I came home and reported only to my
wife and only in a whisper: ''The world is flat.''
And therein lies a tale of technology and geoeconomics that is
fundamentally reshaping our lives -- much, much more quickly than many
people realize. It all happened while we were sleeping, or rather
while we were focused on 9/11, the dot-com bust and Enron -- which
even prompted some to wonder whether globalization was over. Actually,
just the opposite was true, which is why it's time to wake up and
prepare ourselves for this flat world, because others already are, and
there is no time to waste.
I wish I could say I saw it all coming. Alas, I encountered the
flattening of the world quite by accident. It was in late February of
last year, and I was visiting the Indian high-tech capital, Bangalore,
working on a documentary for the Discovery Times channel about
outsourcing. In short order, I interviewed Indian entrepreneurs who
wanted to prepare my taxes from Bangalore, read my X-rays from
Bangalore, trace my lost luggage from Bangalore and write my new
software from Bangalore. The longer I was there, the more upset I
became -- upset at the realization that while I had been off covering
the 9/11 wars, globalization had entered a whole new phase, and I had
missed it. I guess the eureka moment came on a visit to the campus of
Infosys Technologies, one of the crown jewels of the Indian
outsourcing and software industry. Nandan Nilekani, the Infosys
C.E.O., was showing me his global video-conference room, pointing with
pride to a wall-size flat-screen TV, which he said was the biggest in
Asia. Infosys, he explained, could hold a virtual meeting of the key
players from its entire global supply chain for any project at any
time on that supersize screen. So its American designers could be on
the screen speaking with their Indian software writers and their Asian
manufacturers all at once. That's what globalization is all about
today, Nilekani said. Above the screen there were eight clocks that
pretty well summed up the Infosys workday: 24/7/365. The clocks were
labeled U.S. West, U.S. East, G.M.T., India, Singapore, Hong Kong,
Japan, Australia.
''Outsourcing is just one dimension of a much more fundamental thing
happening today in the world,'' Nilekani explained. ''What happened
over the last 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, all those things.'' At the same time, he
added, computers became cheaper and dispersed all over the world, and
there was an explosion of e-mail software, 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,
making it easy for anyone to do remote development. When all of these
things suddenly came together around 2000, Nilekani said, they
''created a platform where intellectual work, intellectual capital,
could be delivered from anywhere. It could be disaggregated,
delivered, distributed, produced and put back together again -- and
this gave a whole new degree of freedom to the way we do work,
especially work of an intellectual nature. And what you are seeing in
Bangalore today is really the culmination of all these things coming
together.''
At one point, summing up the implications of all this, Nilekani
uttered a phrase that rang in my ear. He said to me, ''Tom, the
playing field is being leveled.'' He meant that countries like India
were now able to compete equally for global knowledge work as never
before -- and that America had better get ready for this. As I left
the Infosys campus that evening and bounced along the potholed road
back to Bangalore, I kept chewing on that phrase: ''The playing field
is being leveled.''
''What Nandan is saying,'' I thought, ''is that the playing field is
being flattened. Flattened? Flattened? My God, he's telling me the
world is flat!''
Here I was in Bangalore -- more than 500 years after Columbus sailed
over the horizon, looking for a shorter route to India using the
rudimentary navigational technologies of his day, and returned safely
to prove definitively that the world was round -- and one of India's
smartest engineers, trained at his country's top technical institute
and backed by the most modern technologies of his day, was telling me
that the world was flat, as flat as that screen on which he can host a
meeting of his whole global supply chain. Even more interesting, he
was citing this development as a new milestone in human progress and a
great opportunity for India and the world -- the fact that we had made
our world flat!
This has been building for a long time. Globalization 1.0 (1492 to
1800) shrank the world from a size large to a size medium, and the
dynamic force in that era was countries globalizing for resources and
imperial conquest. Globalization 2.0 (1800 to 2000) shrank the world
from a size medium to a size small, and it was spearheaded by
companies globalizing for markets and labor. Globalization 3.0 (which
started around 2000) is shrinking the world from a size small to a
size tiny and flattening the playing field at the same time. And while
the dynamic force in Globalization 1.0 was countries globalizing and
the dynamic force in Globalization 2.0 was companies globalizing, the
dynamic force in Globalization 3.0 -- the thing that gives it its
unique character -- is individuals and small groups globalizing.
Individuals must, and can, now ask: where do I fit into the global
competition and opportunities of the day, and how can I, on my own,
collaborate with others globally? But Globalization 3.0 not only
differs from the previous eras in how it is shrinking and flattening
the world and in how it is empowering individuals. It is also
different in that Globalization 1.0 and 2.0 were driven primarily by
European and American companies and countries. But going forward, this
will be less and less true. Globalization 3.0 is not only going to be
driven more by individuals but also by a much more diverse --
non-Western, nonwhite -- group of individuals. In Globalization 3.0,
you are going to see every color of the human rainbow take part.
''Today, the most profound thing to me is the fact that a 14-year-old
in Romania or Bangalore or the Soviet Union or Vietnam has all the
information, all the tools, all the software easily available to apply
knowledge however they want,'' said Marc Andreessen, a co-founder of
Netscape and creator of the first commercial Internet browser. ''That
is why I am sure the next Napster is going to come out of left field.
As bioscience becomes more computational and less about wet labs and
as all the genomic data becomes easily available on the Internet, at
some point you will be able to design vaccines on your laptop.''
Andreessen is touching on the most exciting part of Globalization 3.0
and the flattening of the world: the fact that we are now in the
process of connecting all the knowledge pools in the world together.
We've tasted some of the downsides of that in the way that Osama bin
Laden has connected terrorist knowledge pools together through his
Qaeda network, not to mention the work of teenage hackers spinning off
more and more lethal computer viruses that affect us all. But the
upside is that by connecting all these knowledge pools we are on the
cusp of an incredible new era of innovation, an era that will be
driven from left field and right field, from West and East and from
North and South. Only 30 years ago, if you had a choice of being born
a B student in Boston or a genius in Bangalore or Beijing, you
probably would have chosen Boston, because a genius in Beijing or
Bangalore could not really take advantage of his or her talent. They
could not plug and play globally. Not anymore. Not when the world is
flat, and anyone with smarts, access to Google and a cheap wireless
laptop can join the innovation fray.
When the world is flat, you can innovate without having to emigrate.
This is going to get interesting. We are about to see creative
destruction on steroids.
H ow did the world get flattened, and how did it happen so fast?
It was a result of 10 events and forces that all came together during
the 1990's and converged right around the year 2000. Let me go through
them briefly. The first event was 11/9. That's right -- not 9/11, but
11/9. Nov. 9, 1989, is the day the Berlin Wall came down, which was
critically important because it allowed us to think of the world as a
single space. ''The Berlin Wall was not only a symbol of keeping
people inside Germany; it was a way of preventing a kind of global
view of our future,'' the Nobel Prize-winning economist Amartya Sen
said. And the wall went down just as the windows went up -- the
breakthrough Microsoft Windows 3.0 operating system, which helped to
flatten the playing field even more by creating a global computer
interface, shipped six months after the wall fell.
The second key date was 8/9. Aug. 9, 1995, is the day Netscape went
public, which did two important things. First, it brought the Internet
alive by giving us the browser to display images and data stored on
Web sites. Second, the Netscape stock offering triggered the dot-com
boom, which triggered the dot-com bubble, which triggered the massive
overinvestment of billions of dollars in fiber-optic
telecommunications cable. That overinvestment, by companies like
Global Crossing, resulted in the willy-nilly creation of a global
undersea-underground fiber network, which in turn drove down the cost
of transmitting voices, data and images to practically zero, which in
turn accidentally made Boston, Bangalore and Beijing next-door
neighbors overnight. In sum, what the Netscape revolution did was
bring people-to-people connectivity to a whole new level. Suddenly
more people could connect with more other people from more different
places in more different ways than ever before.
No country accidentally benefited more from the Netscape moment than
India. ''India had no resources and no infrastructure,'' said Dinakar
Singh, one of the most respected hedge-fund managers on Wall Street,
whose parents earned doctoral degrees in biochemistry from the
University of Delhi before emigrating to America. ''It produced people
with quality and by quantity. But many of them rotted on the docks of
India like vegetables. Only a relative few could get on ships and get
out. Not anymore, because we built this ocean crosser, called
fiber-optic cable. For decades you had to leave India to be a
professional. Now you can plug into the world from India. You don't
have to go to Yale and go to work for Goldman Sachs.'' India could
never have afforded to pay for the bandwidth to connect brainy India
with high-tech America, so American shareholders paid for it. Yes,
crazy overinvestment can be good. The overinvestment in railroads
turned out to be a great boon for the American economy. ''But the
railroad overinvestment was confined to your own country and so, too,
were the benefits,'' Singh said. In the case of the digital railroads,
''it was the foreigners who benefited.'' India got a free ride.
The first time this became apparent was when thousands of Indian
engineers were enlisted to fix the Y2K -- the year 2000 -- computer
bugs for companies from all over the world. (Y2K should be a national
holiday in India. Call it ''Indian Interdependence Day,'' says Michael
Mandelbaum, a foreign-policy analyst at Johns Hopkins.) The fact that
the Y2K work could be outsourced to Indians was made possible by the
first two flatteners, along with a third, which I call ''workflow.''
Workflow is shorthand for all the software applications, standards and
electronic transmission pipes, like middleware, that connected all
those computers and fiber-optic cable. To put it another way, if the
Netscape moment connected people to people like never before, what the
workflow revolution did was connect applications to applications so
that people all over the world could work together in manipulating and
shaping words, data and images on computers like never before.
Indeed, this breakthrough in people-to-people and
application-to-application connectivity produced, in short order, six
more flatteners -- six new ways in which individuals and companies
could collaborate on work and share knowledge. One was
''outsourcing.'' When my software applications could connect
seamlessly with all of your applications, it meant that all kinds of
work -- from accounting to software-writing -- could be digitized,
disaggregated and shifted to any place in the world where it could be
done better and cheaper. The second was ''offshoring.'' I send my
whole factory from Canton, Ohio, to Canton, China. The third was
''open-sourcing.'' I write the next operating system, Linux, using
engineers collaborating together online and working for free. The
fourth was ''insourcing.'' I let a company like UPS come inside my
company and take over my whole logistics operation -- everything from
filling my orders online to delivering my goods to repairing them for
customers when they break. (People have no idea what UPS really does
today. You'd be amazed!). The fifth was ''supply-chaining.'' This is
Wal-Mart's specialty. I create a global supply chain down to the last
atom of efficiency so that if I sell an item in Arkansas, another is
immediately made in China. (If Wal-Mart were a country, it would be
China's eighth-largest trading partner.) The last new form of
collaboration I call ''informing'' -- this is Google, Yahoo and MSN
Search, which now allow anyone to collaborate with, and mine,
unlimited data all by themselves.
So the first three flatteners created the new platform for
collaboration, and the next six are the new forms of collaboration
that flattened the world even more. The 10th flattener I call ''the
steroids,'' and these are wireless access and voice over Internet
protocol (VoIP). What the steroids do is turbocharge all these new
forms of collaboration, so you can now do any one of them, from
anywhere, with any device.
The world got flat when all 10 of these flatteners converged around
the year 2000. This created a global, Web-enabled playing field that
allows for multiple forms of collaboration on research and work in
real time, without regard to geography, distance or, in the near
future, even language. ''It is the creation of this platform, with
these unique attributes, that is the truly important sustainable
breakthrough that made what you call the flattening of the world
possible,'' said Craig Mundie, the chief technical officer of
Microsoft.
No, not everyone has access yet to this platform, but it is open now
to more people in more places on more days in more ways than anything
like it in history. Wherever you look today -- whether it is the world
of journalism, with bloggers bringing down Dan Rather; the world of
software, with the Linux code writers working in online forums for
free to challenge Microsoft; or the world of business, where Indian
and Chinese innovators are competing against and working with some of
the most advanced Western multinationals -- hierarchies are being
flattened and value is being created less and less within vertical
silos and more and more through horizontal collaboration within
companies, between companies and among individuals.
Do you recall ''the IT revolution'' that the business press has been
pushing for the last 20 years? Sorry to tell you this, but that was
just the prologue. The last 20 years were about forging, sharpening
and distributing all the new tools to collaborate and connect. Now the
real information revolution is about to begin as all the
complementarities among these collaborative tools start to converge.
One of those who first called this moment by its real name was Carly
Fiorina, the former Hewlett-Packard C.E.O., who in 2004 began to
declare in her public speeches that the dot-com boom and bust were
just ''the end of the beginning.'' The last 25 years in technology,
Fiorina said, have just been ''the warm-up act.'' Now we are going
into the main event, she said, ''and by the main event, I mean an era
in which technology will truly transform every aspect of business, of
government, of society, of life.''
A s if this flattening wasn't enough, another convergence
coincidentally occurred during the 1990's that was equally important.
Some three billion people who were out of the game walked, and often
ran, onto the playing field. I am talking about the people of China,
India, Russia, Eastern Europe, Latin America and Central Asia. Their
economies and political systems all opened up during the course of the
1990's so that their people were increasingly free to join the free
market. And when did these three billion people converge with the new
playing field and the new business processes? Right when it was being
flattened, right when millions of them could compete and collaborate
more equally, more horizontally and with cheaper and more readily
available tools. Indeed, thanks to the flattening of the world, many
of these new entrants didn't even have to leave home to participate.
Thanks to the 10 flatteners, the playing field came to them!
It is this convergence -- of new players, on a new playing field,
developing new processes for horizontal collaboration -- that I
believe is the most important force shaping global economics and
politics in the early 21st century. Sure, not all three billion can
collaborate and compete. In fact, for most people the world is not yet
flat at all. But even if we're talking about only 10 percent, that's
300 million people -- about twice the size of the American work force.
And be advised: the Indians and Chinese are not racing us to the
bottom. They are racing us to the top. What China's leaders really
want is that the next generation of underwear and airplane wings not
just be ''made in China'' but also be ''designed in China.'' And that
is where things are heading. So in 30 years we will have gone from
''sold in China'' to ''made in China'' to ''designed in China'' to
''dreamed up in China'' -- or from China as collaborator with the
worldwide manufacturers on nothing to China as a low-cost,
high-quality, hyperefficient collaborator with worldwide manufacturers
on everything. Ditto India. Said Craig Barrett, the C.E.O. of Intel,
''You don't bring three billion people into the world economy
overnight without huge consequences, especially from three societies''
-- like India, China and Russia -- ''with rich educational
heritages.''
That is why there is nothing that guarantees that Americans or Western
Europeans will continue leading the way. These new players are
stepping onto the playing field legacy free, meaning that many of them
were so far behind that they can leap right into the new technologies
without having to worry about all the sunken costs of old systems. It
means that they can move very fast to adopt new, state-of-the-art
technologies, which is why there are already more cellphones in use in
China today than there are people in America.
If you want to appreciate the sort of challenge we are facing, let me
share with you two conversations. One was with some of the Microsoft
officials who were involved in setting up Microsoft's research center
in Beijing, Microsoft Research Asia, which opened in 1998 -- after
Microsoft sent teams to Chinese universities to administer I.Q. tests
in order to recruit the best brains from China's 1.3 billion people.
Out of the 2,000 top Chinese engineering and science students tested,
Microsoft hired 20. They have a saying at Microsoft about their Asia
center, which captures the intensity of competition it takes to win a
job there and explains why it is already the most productive research
team at Microsoft: ''Remember, in China, when you are one in a
million, there are 1,300 other people just like you.''
The other is a conversation I had with Rajesh Rao, a young Indian
entrepreneur who started an electronic-game company from Bangalore,
which today owns the rights to Charlie Chaplin's image for mobile
computer games. ''We can't relax,'' Rao said. ''I think in the case of
the United States that is what happened a bit. Please look at me: I am
from India. We have been at a very different level before in terms of
technology and business. But once we saw we had an infrastructure that
made the world a small place, we promptly tried to make the best use
of it. We saw there were so many things we could do. We went ahead,
and today what we are seeing is a result of that. There is no time to
rest. That is gone. There are dozens of people who are doing the same
thing you are doing, and they are trying to do it better. It is like
water in a tray: you shake it, and it will find the path of least
resistance. That is what is going to happen to so many jobs -- they
will go to that corner of the world where there is the least
resistance and the most opportunity. If there is a skilled person in
Timbuktu, he will get work if he knows how to access the rest of the
world, which is quite easy today. You can make a Web site and have an
e-mail address and you are up and running. And if you are able to
demonstrate your work, using the same infrastructure, and if people
are comfortable giving work to you and if you are diligent and clean
in your transactions, then you are in business.''
Instead of complaining about outsourcing, Rao said, Americans and
Western Europeans would ''be better off thinking about how you can
raise your bar and raise yourselves into doing something better.
Americans have consistently led in innovation over the last century.
Americans whining -- we have never seen that before.''
R ao is right. And it is time we got focused. As a person who grew up
during the cold war, I'll always remember driving down the highway and
listening to the radio, when suddenly the music would stop and a
grim-voiced announcer would come on the air and say: ''This is a test.
This station is conducting a test of the Emergency Broadcast System.''
And then there would be a 20-second high-pitched siren sound.
Fortunately, we never had to live through a moment in the cold war
when the announcer came on and said, ''This is a not a test.''
That, however, is exactly what I want to say here: ''This is not a
test.''
The long-term opportunities and challenges that the flattening of the
world puts before the United States are profound. Therefore, our
ability to get by doing things the way we've been doing them -- which
is to say not always enriching our secret sauce -- will not suffice
any more. ''For a country as wealthy we are, it is amazing how little
we are doing to enhance our natural competitiveness,'' says Dinakar
Singh, the Indian-American hedge-fund manager. ''We are in a world
that has a system that now allows convergence among many billions of
people, and we had better step back and figure out what it means. It
would be a nice coincidence if all the things that were true before
were still true now, but there are quite a few things you actually
need to do differently. You need to have a much more thoughtful
national discussion.''
If this moment has any parallel in recent American history, it is the
height of the cold war, around 1957, when the Soviet Union leapt ahead
of America in the space race by putting up the Sputnik satellite. The
main challenge then came from those who wanted to put up walls; the
main challenge to America today comes from the fact that all the walls
are being taken down and many other people can now compete and
collaborate with us much more directly. The main challenge in that
world was from those practicing extreme Communism, namely Russia,
China and North Korea. The main challenge to America today is from
those practicing extreme capitalism, namely China, India and South
Korea. The main objective in that era was building a strong state, and
the main objective in this era is building strong individuals.
Meeting the challenges of flatism requires as comprehensive, energetic
and focused a response as did meeting the challenge of Communism. It
requires a president who can summon the nation to work harder, get
smarter, attract more young women and men to science and engineering
and build the broadband infrastructure, portable pensions and health
care that will help every American become more employable in an age in
which no one can guarantee you lifetime employment.
We have been slow to rise to the challenge of flatism, in contrast to
Communism, maybe because flatism doesn't involve ICBM missiles aimed
at our cities. Indeed, the hot line, which used to connect the Kremlin
with the White House, has been replaced by the help line, which
connects everyone in America to call centers in Bangalore. While the
other end of the hot line might have had Leonid Brezhnev threatening
nuclear war, the other end of the help line just has a soft voice
eager to help you sort out your AOL bill or collaborate with you on a
new piece of software. No, that voice has none of the menace of Nikita
Khrushchev pounding a shoe on the table at the United Nations, and it
has none of the sinister snarl of the bad guys in ''From Russia With
Love.'' No, that voice on the help line just has a friendly Indian
lilt that masks any sense of threat or challenge. It simply says:
''Hello, my name is Rajiv. Can I help you?''
No, Rajiv, actually you can't. When it comes to responding to the
challenges of the flat world, there is no help line we can call. We
have to dig into ourselves. We in America have all the basic economic
and educational tools to do that. But we have not been improving those
tools as much as we should. That is why we are in what Shirley Ann
Jackson, the 2004 president of the American Association for the
Advancement of Science and president of Rensselaer Polytechnic
Institute, calls a ''quiet crisis'' -- one that is slowly eating away
at America's scientific and engineering base.
''If left unchecked,'' said Jackson, the first African-American woman
to earn a Ph.D. in physics from M.I.T., ''this could challenge our
pre-eminence and capacity to innovate.'' And it is our ability to
constantly innovate new products, services and companies that has been
the source of America's horn of plenty and steadily widening middle
class for the last two centuries. This quiet crisis is a product of
three gaps now plaguing American society. The first is an ''ambition
gap.'' Compared with the young, energetic Indians and Chinese, too
many Americans have gotten too lazy. As David Rothkopf, a former
official in the Clinton Commerce Department, puts it, ''The real
entitlement we need to get rid of is our sense of entitlement.''
Second, we have a serious numbers gap building. We are not producing
enough engineers and scientists. We used to make up for that by
importing them from India and China, but in a flat world, where people
can now stay home and compete with us, and in a post-9/11 world, where
we are insanely keeping out many of the first-round intellectual draft
choices in the world for exaggerated security reasons, we can no
longer cover the gap. That's a key reason companies are looking
abroad. The numbers are not here. And finally we are developing an
education gap. Here is the dirty little secret that no C.E.O. wants to
tell you: they are not just outsourcing to save on salary. They are
doing it because they can often get better-skilled and more productive
people than their American workers.
These are some of the reasons that Bill Gates, the Microsoft chairman,
warned the governors' conference in a Feb. 26 speech that American
high-school education is ''obsolete.'' As Gates put it: ''When I
compare our high schools to what I see when I'm traveling abroad, I am
terrified for our work force of tomorrow. In math and science, our
fourth graders are among the top students in the world. By eighth
grade, they're in the middle of the pack. By 12th grade, U.S. students
are scoring near the bottom of all industrialized nations. . . . The
percentage of a population with a college degree is important, but so
are sheer numbers. In 2001, India graduated almost a million more
students from college than the United States did. China graduates
twice as many students with bachelor's degrees as the U.S., and they
have six times as many graduates majoring in engineering. In the
international competition to have the biggest and best supply of
knowledge workers, America is falling behind.''
We need to get going immediately. It takes 15 years to train a good
engineer, because, ladies and gentlemen, this really is rocket
science. So parents, throw away the Game Boy, turn off the television
and get your kids to work. There is no sugar-coating this: in a flat
world, every individual is going to have to run a little faster if he
or she wants to advance his or her standard of living. When I was
growing up, my parents used to say to me, ''Tom, finish your dinner --
people in China are starving.'' But after sailing to the edges of the
flat world for a year, I am now telling my own daughters, ''Girls,
finish your homework -- people in China and India are starving for
your jobs.''
I repeat, this is not a test. This is the beginning of a crisis that
won't remain quiet for long. And as the Stanford economist Paul Romer
so rightly says, ''A crisis is a terrible thing to waste.''
Thomas L. Friedman is the author of ''The World Is Flat: A Brief
History of the Twenty-First Century,'' to be published this week by
Farrar, Straus & Giroux and from which this article is adapted. His
column appears on the Op-Ed page of The Times, and his television
documentary ''Does Europe Hate Us?'' will be shown on the Discovery
Channel on April 7 at 8 p.m.
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