| reviewed by Marc Schulman
Reading the World Is Flat by Thomas Friedman is like reading one of his columns in the New York Times- It is insightful, well written and a great read. It may not be what its subtitle calls it a brief history of the 21st century but it an excellent book describing the effects of Globalization 3.0. Globalization 3.0 according to Friedman has taken place due to the convergence of three factors. First the development of tools that allows worldwide collaboration. That collaboration has become possible by the development of web based tools that allowed people throughout the world to work together. That convergence has become possible by worldwide access to the web and tremendous increase in the ability of all people to communicate. The convergence included the existence of various technologies that came together that allowed people to do things differently- such as the example that Friedman gives as the ability of airlines to offer E-tickets. The second convergence is the ubiquities of technology in corporations and homes. For many years economist wondered why computers did not seem to improve productivity, Then by the 90’s that productivity kicked in and companies developed new way to work in the ways that bolstered productivity tremendously. The final convergence is the opening of the Indian, Chinese, and Eastern European markets and people to the world market. The opening added 2 billion people to both the world markets- thus creating 2 billion additional potential consumers as well as an additional 2 billion additional competitors.
The book outlines the challenges that America faces in this new flat world and concludes that the challenges are great, but it the United States takes the right steps it will be able to compete. Friedman is concerned those actions, including a better education policy, a new national health policy and even more importantly a crash plan for alternative energy may not take place.
Friedman spends about 2/3 of the book describing with great stories how this convergence has come about and what it means for Americans. The book then describes what is the greatest threat to the flat world, and that being Al Queda and related terrorist groups. Their actions have the ability to destroy the very flatness. Friedman believes that much of terrorism is driven more then any thing else by the humiliations that the societies that terrorist come from have suffered. As Friedman describes the problem the failures of the Arab world as a whole in economics, science and technologies has enraged many and driven them to become terrorists. Friedman worries that the same flattening effects that are changing global trade are also empowering the terrorists, giving Osama bin Laden and his compatriots the power of the Internet to communicate and gather intelligence.
As the book nears a conclusion Friedman suggests that one of the ways for fighting terrorism is to ensure that those areas of the world that are not flat need to become flatter and that will be a way to defuse much of the anger among those who seek to do us harm. He ends however on a pessimistic note describing his feelings as he dropped his daughter off to begin college, he relates that he fears that the world that his daughter will be inheriting is a much less certain world then the world he became an adult in.
It is hard not to agree with all the major themes of the book. I will quibble with a few positions that Friedman’s puts forth. He reviews the very case for free trade Friedman believes that the theories of comparative advantage still hold. He is convinced that if we allow each society to freely trade all will ultimately gain. I am not so sure. Friedman underestimates the effect of intellectual property theft on America’s economy. In the world of free trade and comparative advantage- Americas greatest advantage is in the areas of intellectual property. What would the US’s trade imbalance with China look like if everyone in China paid for a legal copy of windows and paid for every DVD they watched.- When you were trading lumber and cars I have greater confidence that Ricardo’s theories were correct. Trading the very items that Friedman claims has made the world flat-bits and bytes is a whole other matter.
The other missing element from Friedman’s book that has a subtitle: ” The brief history of the 21st century”, is what his previous book referred to as the Olive Tree. In a century that has seen the second Palestinian Intifadah against Israel, and the rejection of the European constitution, which I at least attribute partially to nascent nationalism, one cannot explain all of what is happening in the world in economic terms. Freidman presents in his book a new version of his MacDonald’s theory from his earlier works. In it he suggested that no two countries that have MacDonald’s would go to war with each other. In this book he suggests that no two countries that are part of the Dell global supply train would fight each other. While his theory sounds plausible before WWI and WWII Germany’s largest trade partners were England and France, in that day of rising international trade. Many said war was a thing of the past. It is dangerous to underestimate either nationalism or the power of madmen.
As I first starting reading The World is Flat I questioned whether contents really deserved to be a book, as opposed to a long magazine piece. However, as time goes on I find myself quoting different elements and stories in the book to friends and colleagues all the time. Despite my earlier disagreements with a number of Friedman’s points I believe that it would be a mistake for anyone who wishes to understand the world around them and the economics of the 21st century, not to read this book.
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