Thursday, September 27, 2007

The World Is Flat


Ever since Christopher Columbus’s very famous westward journey busted the notion regarding “World being flat”, very few dared to question its authenticity. But seems like a new breed of proponents of “Flat World” have arrived and Thomas L. Friedman is leading them.

In the book “The World Is Flat”, Friedman’s use of the metaphor of flat world to describe the next phase of globalization is ingenious. His realization started in Banglore after hearing to Nandan Nilekani, who explained him how the economic playing field is being leveled. It is now possible for more people then ever to collaborate and compete in real time with more other people on more different kind of work from more different corners of the world and on a more equal footing than at any previous time in the history of the world – using computers, email, fiber optics, networks, teleconferencing, and dynamic new software.

The Friedman way of writing is very engaging. He takes you with him on travel to all corners of the world, meet his family & friends and conduct interviews with him. The entire book is presented as a memoir with occasional introspection. In his book, Friedman cited 10 forces that really helped in flattening the world. He called them 10 flatteners.

  1. 11/9/89: The New Age of Creativity: When the Walls Came Down (Berlin wall) and the Windows Went Up (MS Windows).
  2. 8/9/95: The New Age of Connectivity: When the Web Went Around and Netscape Went Public.
  3. Work Flow Software
  4. Uploading
  5. Outsourcing
  6. Off-Shoring
  7. Supply-Chaining
  8. In-Sourcing
  9. In-Forming
  10. The Steroids

Not surprisingly, Friedman stresses the crucial role technological forces particularly dot-com bubble played in flattening the world. During fiber-optic bubble, telecommunication companies like baby bells and AT&T were sitting on hefty cash reserves – given to them by na├»ve investors. Internet boom led everyone believe that the demand for bandwidth to carry internet traffic would double every there month - indefinitely. Hence, they used millions of dollars ($1 trillion) to pursue an incredibly ambitious plan of “wiring the world” through laying fiber-optic cables on land and under the sea, connecting third world countries to the advanced industrial nations. Unfortunately, the telecom companies were not paying close attention to the developing mismatch between demand and supply. When the internet bubble burst, disaster for telecom companies turned out to be a great boon for the consumers and the third world countries like India. The cost of phone calls, internet connections, and data transmission declined dramatically and for Indians, who wanted to get online from Banglore for business, could do so. The next development was stock market crash following dot-com bust, this made companies looking for ways to cut cost and reduce spending – resulting in outsourcing. Companies discovered that Indian Engineers can handle most of the technical jobs they needed done, at a fraction of the cost (Thanks to fiber-optics cable which enabled working from offshore).

Friedman’s honest reaction to this new world is quiet evident from his words “at the gate observing this river of educated young people flowing in and out... They all looked as if they had scored 1600 on their SAT's…. These Indian techies were doing what was their comparative advantage and then turning around and using their income to buy all the products from America that are our comparative advantage. Both our countries would benefit. . . . But my eye kept . . . telling me something else: 'Oh, my God, there are just so many of them and they all look so serious, so eager for work. And they just keep coming, wave after wave. How in the world can it possibly be good for my daughters and millions of other young Americans that these Indians can do the same jobs as they can for a fraction of the wages?”

Friedman refrained from taking an anti or a pro globalization stance; rather he concluded that the biggest challenge for America is whether it is prepared for this flat world. He precisely explained the factors and the possible implications of the globalization. A must read for those who want to gain an insiders view into the globalization.

Reviewed By:--

Vishal Chourasiya

Class of 2009

3 comments:

  1. An enlightening review ... as usual from the great reviewer himself .. vish .
    good job dude ..

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