Talk:The World Is Flat

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GLOBAL EVOLUTION

In the pathbreaking 1989 essay, "Computer and Dynamo: the Modern Productivity Paradox in a Not-Too Distant Mirror," the economic historian Paul A. David explained such a lag by pointing to a historical precedent. He noted that while the lightbulb was invented in 1879, it took several decades for electrification to kick in and have a big economic and productivity impact. Why? Because it was not enough just to install electric motors and scrap the old technology -- steam engines. The whole way of doing manufacturing had to be reconfigured. In the case of electricity, David pointed out, the key breakthrough was in how buildings, and assembly lines, were designed and managed. Factories in the steam age tended to be heavy, costly multistory buildings designed to brace the weighty belts and other big transmission devices needed to drive steam-powered systems. Once small, powerful electric motors were introduced, everyone hoped for a quick productivity boost. It took time, though. To get all the savings, you needed to redesign enough buildings with small electric motors powering machines of all sizes. Only when there was a critical mass of experienced factory architects and electrical engineers and managers, who understood the complementarities among the production line, did electrification really deliver the productivity breakthrough in manufacturing, David wrote.
The Berlin wall came down, the Berlin mall opened up.
Bill Gates: 30 years ago, if you had a choice between being born a genius on the outskirts of Bombay or Shanghai or being born an average person in Poughkeepsie, you would take Poughkeepsie, because your chances of thriving and living a decent life there, even with average talent, were much greater. But as the world has gone flat, and so many people can plug and play from anywhere, natural talent has started to trump geography.(p.194)
America integrated a broken Europe and Japan into the global economy after World War II, with both Europe and Japan every year upgrading their manufacturing, knowledge, and service skills, often importing and sometimes stealing ideas and equipment from the US, just as America did from Britain in the late 1770s. Yet in the sixty years since World War II, our standard of living has increased every decade, and our unemployment rate -- even with all the outcry about outsourcing -- stands at only a little above 5 percent, roughly half that of the most developed countries in Western Europe.
By automating these jobs, it enables companies to save money and free up talented brainpower from relatively mundane tasks to start new businesses in other areas. You should be afraid of free markets only if you believe that you will never need new medicines, new work flow software, new industries, new forms of entertainment, new coffeehouses.
It takes a leap of faith, based on economics, to say there will be new things to do. But there always have been new jobs to do, and there is no fundamental reason to believe the future will be different. Some 150 years ago, 90 percent of American worked in agriculture and related fields. Today, it's only 3 or 4 percent. What if the government had decided to protect and subsidize all those agricultural jobs and not embrace industrialization and then computerization? Would America as a whole really be better off today? Hardly.
For instance, there was a time when America's semiconductors industry dominated the world, but then companies from other countries came along and gobbled up the low end of the market. Some even moved into the higher end. American companies were then forced to find newer, deeper specialties in the expanded market. If that weren't happening, Intel would be out of business today. Instead, it is thriving.
Between 2000 and 2004, total global Internet usage grew 125 percent, including 186 percent in Africa, 209 percent in Latin America, 124 percent in Europe, and 105 percent in North America, according to Nielson/NetRatings.
During the 2004 election campaign we saw the Democrats debating whether NAFTA was a good idea and the Bush White House putting duct tape over the mouth of N. Gregory Mankiw, the Chairman of the White House Council of Economic Advisers, and stashing him away in Dick Cheney's basement, because Mankiw, author of a popular college economics textbook, had dared to speak approvingly of outsourcing as just the "latest manifestation of the gains from trade that economists have talked about at least since Adam Smith."
Well, here's the truth that no one wanted to tell you: The world has been flattened. As a result of the triple convergence, global collaboration and competition -- between individuals and individuals, companies and individuals, companies and companies, and companies and customers -- have been made cheaper, easier, more friction-free, and more productive for more people from more corners of the earth than at any time in the history of the world.
Somehow we got through this transition from an agriculture based society 100 years ago to an industrial-based one -- and still ended up with a higher standard of living for the vast majority of Americans.
In the Communist Manifesto, Karl Marx described capitalism as a force that would dissolve all feudal, national, and religious identities, giving rise to a universal civilization governed by market imperatives. (p. 202)
The more your legal structure fosters cross-licensing and standards, the more collaborative innovation you will get. The PC is the product of a lot of cross-licensing between the company that had the patent on the cursor and the company that had the patent on the mouse and the screen.

EDUCATION IN A FLAT WORLD

The sense that our kids have to be swaddled in cotton wool so that nothing bad or disappointing or stressful ever happens to them at school is, quite simply, a growing cancer on American society.
There will be plenty of good jobs out there in the flat world for people with the knowledge and ideas to seize them.
I don't care to have that conversation with my girls, so my advice to them in this flat world is very brief and very blunt: "Girls, when I was growing, my parents used to say to me, 'Tom, finish your dinner -- people in China and India are starving.' My advice to you is: Girls finish your homework -- people in China and India are starving for your jobs."
It is a truism, but the more educated you are, the more options you will have in the flat world.
The Web browser, magnetic resonance imaging (MRI), superfast computers, global positioning technology, space exploration devices, and fiber optics are just a few of the many inventions that got started through basic university research projects. The BankBoston Economics Department did a study titled "MIT: The Impact of Innovation." Among its conclusions was that MIT graduates have founded 4,000 companies, creating at least 1.1 million jobs worldwide and generating sales of $232 billion.
America has 4,000 colleges and universities. The rest of the world combined has 7,768 institutions of higher education. In the state of California alone, there are about 130 colleges and universities. There are only 14 countries in the world that have more than that number.
In 2003, American universities reaped $1.3 billion from patents, according to the Association of University Technology Managers. No country respects and protects intellectual property better than America. The US has among the most flexible labor laws and the world's largest domestic consumer market. The easier it is to fire someone in a dying industry, the easier it is to hire someone in a rising industry.
Lucky for us, we were the only economy standing after World War II, and we had no serious competition for 40 years.
This quiet crisis involves the steady erosion of America's scientific and engineering base. In the fiscal 2005 budget passed by the Republican Congress in November 2004, the budget for the National Science Foundation, which is the federal body most responsible for promoting research and funding more and better science education, was actually cut by 1.9 percent, or $105 million. History will show that when America should have been doubling the NSF funding, its Congress passed a pork-laden budget that actually cut assistance for science and engineering.
According to the National Science Foundation, half of America's scientists and engineers are 40 years old or older, and the average age is steadily rising. NASA employees over 60 outnumber those under thirty by a ratio of about three to one. Only 4 percent of NASA workers are under 30. Two-thirds of the nation's mathematics and science teaching force will retire by 2010.
A National Science Board report found that the number of American eighteen-to-twenty-four-year-olds who receive science degrees has fallen to 17th in the world, whereas we ranked 3rd three decades ago. In engineering specifically, universities in Asian countries now produce eight times as many bachelor's degrees as the US. Science and engineering degrees now represent 60 percent of all bachelor's degrees earned in China, 33 percent in South Korea, and 41 percent in Taiwan. By contrast, the percentage of those taking a bachelor's degree in science and engineering in the US remains roughly at 31 percent. Factoring out science degrees, the number of Americans who graduate with just engineering degrees is 5 percent, as compared to 25 percent in Russia and 46 percent in China.
The number of jobs requiring science and engineering skills in the US labor force is growing almost 5 percent per year.
The percentage of women, for example, choosing math and computer science careers fell 4 percentage points between 1993 and 1999.
The proportion of foreign-born students in S&E (science and engineering) fields and workers in S&E occupations continued to rise steadily in the 1990s. The NSB said that persons born outside the US accounted for 14 percent of all S&E occupations in 1990. Between 1990 and 2000, the proportion of foreign-born people with bachelor's degrees in S&E occupations rose from 11 to 17 percent; the proportion of foreign-born with master's degrees rose from 19 to 29 percent; and the proportion of foreign-born with Ph.D.'s in the S&E labor force rose from 24 to 28 percent. By attracting scientists and engineers born and trained in other countries we have maintained the growth of the S&E labor force without a commensurate increase in support for the long-term costs of training and attracting native US citizens in those fields, the NSB said.
Unfortunately, federal funding for research in physical and mathematical sciences and engineering, as a share of GDP, actually declined by 37 percent between 1970 and 2004.
Almost all the students who make it to Caltech, one of the best scientific universities in the world, come from public schools. So it can be done.
The National Foundation for American Policy shows that 60 percent of the nation's top science students and 65 percent of the top mathematics students are children of recent immigrants.
The brain gain started to go to brain drain around the year 2000.
Between 1993 and 1997, the OECD countries (Organization for Economic Co-operation and Development, a group of 40 nations with highly developed market economies) increased their number of S&E research jobs 23 percent, more than twice the 11 percent increase in S&E research jobs in the US.
I dare you to find an 11-year-old in America who wants to be an engineer today.
The US State Dept. issued 20 percent fewer visas for foreign students in 2001 than in 2000, and the rate fell farther in subsequent years.
I call this the American Idol problem. If you've ever seen the reaction of contestants when Simon Cowell tells them they have no talent, they look at him in total disbelief.
The fact is, parents and schools and cultures can and do shape people. The most important influence in my life, outside of my family, was my high school journalism teacher, Hattie M. Steinberg. She pounded the fundamentals of journalism into her students -- not simply how to write a lead or accurately transcribe a quote but, more important, how to comport yourself in a professional way. She was nearing sixty at the time I had her as my teacher and high school newspaper adviser in the late 1960s. She was the polar opposite of "cool," but we hung around her classroom like it was the malt shop and she was Wolfman Jack. None of us could have articulated it then, but it was because we enjoyed being harangued by her, disciplined by her, and taught by her. She was a woman of clarity and principles in an age of uncertainty. I sit up straight just thinking about her!

WAL-MART

Sam Walton bred not only a kind of ruthless quest for efficiency in improving Wal-Mart's supply chain but also a degree of ruthlessness -- period. I am talking about everything from Wal-Mart's recently exposed practice of locking overnight workers into its stores, to its allowing Wal-Mart's maintenance contractors to use illegal immigrants as janitors, to its role as defendant in the largest civil-rights class-action lawsuit in history, to its refusal to stock certain magazines -- like Playboy -- on its shelves, even in small towns where Wal-Mart is the only major store.
In 2004 Wal-Mart's supply chain pulled in $18 billion worth of goods from 5,000 Chinese suppliers. If Wal-Mart were an individual economy, it would rank as China's eighth-biggest trading partner, ahead of Russia, Australia and Canada
80 percent of Wal-Mart's corporate campaign contributions go to Republicans. But Republicans tend not to support the types of public assistance programs that Wal-Mart depends on. If anything, Wal-Mart should be crusading for national health insurance.

UPS

The UPS fleet of 270 aircraft is the 11th largest airline in the world.
UPS actually repairs the computers in its own UPS-run workshop dedicated to computer and printer repairs at its Louisville hub. There are companies today that never touch their own products anymore.
According to UPS, on any given day 2 percent of the world's GDP can be found in UPS delivery trucks or package cars.
There is no longer a vendor-customer relationship. We answer your phones, we talk to your customers, we house your inventory, and we tell you what sells and doesn't sell. We have access to your information and you have to trust us.

GOOGLE

1) sex 2) God 3) jobs 4) professional wrestling. No single word or subject accounts for more than 1 or 2 percent of all Google searches at any given time.
Google is now processing roughly one billion searches per day, up from 150 million just three years ago. "Over a third of our searches are U.S.-based, and less than half are in English."
Google now employs scores of mathematicians working on its search algorithms, in an effort to always keep them one step more relevant than the competition.
Send Google an SMS that says Sushi 20817 (the Bethesda, MD zip code) and it will send you back a text message of choices.
Live your life honestly, because whatever you do, whatever mistakes you make, will be searchable one day.
"Always tell the truth," said Mark Twain. "That way you won't have to remember what you said."
We cannot let the FBI, CIA and Homeland Security, in their zeal to keep out the next Mohammed Atta, also keep out the next Sergey Brin, one of the cofounders of Google, who was born in Russia.

TIVO

Guess what the most rewound moment in TV history was? Answer: Janet Jackson's breast exposure, or, as it was euphemistically called, her "wardrobe malfunction."
The companies you want to bet on are those that , like Google or Yahoo! or TiVo, learn to collaborate with their users and offer them shows and advertisements tailored just for them. I can imagine a day soon when advertisers won't pay for anything other than that.
I am slightly obsessed with the fact that Japan, not to mention most of the rest of the world, has so much better wireless connectivity than America.
I wanted to run for president on a one-issue ticket: "I promise, if elected, that within four years America will have as good a cell phone coverage as Ghana, and eight years as good as Japan."

CHINA

In China today, Bill Gates is Britney Spears. In America today, Britney Spears is Britney Spears -- and that is our problem.
Think about the time when the emperor in China threw out the British ambassador. Who did it hurt? It hurt the Chinese. Exclusivity is a dangerous thing.
China does not want just to get rich. It wants to get powerful. China doesn't just want to learn how to make GM cars. It wants to be GM and put GM out of business. Anyone who doubts that should spend time with young Chinese.
Remember, in China when you are one in a million -- there are 1,300 other people just like you.
Some 30,000 new cars were being added to the roads in Beijing every month 1,000 new cars a day! 1,433 cars added daily if you include used cars.
16 of the 20 most polluted cities in the world are in China, and that pollution and environmental degradation together cost China $170 billion a year. (The Economist, 8/21/04)
Right now about 700 to 800 million of China's 1.3 billion people live in the countryside. Half are expected to migrate to the cities over the next two decades, if they can find work.
China's foreign policy today consists of two things: preventing Taiwan from becoming independent and searching for oil. This is driving China to get cozy with some of the worst regimes in the world. The Islamic fundamentalist government in Sudan now supplies China with 7 percent of its oil supplies and China has invested $3 billion in oil drilling infrastructure there. Iran supplies 13 percent of China's oil supplies.
With China and the other nine flatteners coming on so strong, no country today can afford to be anything less than brutally honest with itself.
China has 160 cities with a population of 1 million or more.
"China is a threat, China is a customer, and China is an opportunity."
In the private, non-state-owned sector of Chinese industry, productivity increased 17 percent annually -- I repeat, 17 percent annually -- between 1995 and 2002.
400 out of the Forbes 500 companies have invested in more than 2,000 projects in mainland China. And that was four years ago.
Practice a China-plus-one strategy: keep one production leg in China but the other in a different Asian country, just in case of political turmoil.
There are already more cell phones in use in China today than there are people in the United States. Many Chinese just skipped over the landline phase. South Koreans put Americans to shame in terms of Internet usage and broadband penetration.
The Chinese operation not only has allowed Donaldson to keep making a product it no longer could make at a profit in the US, it also has helped boost the company's Minnesota employment, up by 400 people since 1990. In Minnesota, Global Insight estimates that 1,854 jobs were created as a result of foreign out-sourcing in 2003. By 2008, the firm expects nearly 6,700 new jobs in Minnesota as a consequence of the trend. (p. 235)
Chinese applications to American graduate schools fell 45 percent this year, while several European countries announced surges in Chinese enrollment.

INDIA

India versus Indiana (p. 205)
Y2K should be a national holiday in India
54 percent of India is under the age of 25, that's 555 million people.
In 2003, Infosys, the largest tech company in India, received "one million applications" from young Indians for 9,000 tech jobs.
When people have hope, you have a middle class.
They live in villages or rural areas that only criminals would want to invest in, regions where violence, civil war, and disease compete with one another to see which can ravage the civilian population most.
One million people die from malaria each year in the unflat world, about seven hundred thousand of them children.
As exciting and as visible as the flat Indian high-tech sector is, have no illusions: It accounts for 0.2 percent of employment in India. Add those Indians involved in manufacturing for export, and you get a total of 2 percent of the employment in India.
There is a political vacuum waiting to be filled. There is a real role today for a movement that could advance the agenda of how we globalize -- not whether we globalize. The best place such a movement could start is rural India. The most important forces fighting poverty in India today, in my view, are those NGOs fighting for better local governance.
NGO to look for: Janaagraha
It may not be as sexy as protesting against world leader in the streets of Washington and Genoa, and getting lots of attention on CNN, but it is a lot more important. Just ask any villager.
India: there are 300 million people in the middle class, larger than the size of the US or Europe.

RANDOM QUOTES

Immigrants are always hungry and they don't have a backup plan. Young Chinese, Indians, and Poles are not racing us to the bottom. They are racing us to the top. They do not want to work for us; they don't even want to be us. They want to dominate us.
If President Bush is looking for a similar legacy project, there is one just crying out -- a national science initiative that would be our generation's moon shot: a crash program for alternative energy and conservation to make America energy-independent in ten years. (p. 283)
Creating legal and institutional frameworks for universal portability of pensions and health care -- in addition to Social Security, Medicare, and Medicaid -- will help people build up such muscles. This type of plan worked like a charm for members of Congress, so why not offer it to the wider public?
It is not an accident that plumbers can charge $75 an hour in major urban areas or that good housekeepers or cooks are hard to find.
At an unemployment rate of 5 percent, the wage insurance and health-care subsidy today would cost around $8 billion a year. (p. 295)
If you want to live like a Republican, vote like a Democrat -- take care of the losers and left-behinds.
Faith and Fortune: the Quiet Revolution to Reform American Business by Marc Gunther
Economic growth and trade remains the best anti-poverty program in the world.
P. 318: Ease of doing business around the world
Most important book on cultural impact on a country's development is The Wealth and Poverty of Nations by David Landes.
We know the basic formula for economic success -- reform wholesale, followed by reform retail, plus good governance, education, infrastructure, and the ability to glocalize. (p. 330)
How many new highways have been built connecting Mexico with the US since NAFTA? (virtually none)
Will Rogers said it a long time ago: "Even if you're on the right track, you'll get run over if you just sit there."
The whole contract, which was signed by pro-labor Democrats, got torn up under pressure from free-trade Republicans.
Venture capitalists today want to know from day one that your start-up is going to take advantage of the triple convergence to collaborate with the smartest, most efficient people you can find anywhere in the world.
Job in the future: Corporate radiologist
HP is not only the largest consumer technology company in the world; it is the largest IT company in Europe, the largest IT company in Russia, the largest IT company in the Middle East, and the largest IT company in South Africa.
If I can buy five brilliant researchers in China and/or India for the price of one in Europe or America, I will buy the five; and if, in the long run, that means my own society loses part of its skills base, so be it.
"We streamlined the FDA's drug approval process in response to concerns about its cumbersome nature. We took those steps with one objective in mind: to move drugs to the marketplace more quickly. The result, however, has been an increasingly cozy relationship between the FDA and the pharmaceutical industry." --Congressman Rahm Emanuel, former senior advisor to Pres. Clinton.
The best companies outsource to win, not to shrink. They outsource to innovate faster and more cheaply in order to grow larger, gain market share, and hire more and different specialists -- not to save money by firing more people. (p. 360)
If you are in the business of selling words, music, or pharmaceuticals and you are not worried about protecting your intellectual property, you are not paying attention.
"It's like they have cut out all the fat of the business. But fat is what gives meat its taste. You want it marbled with at least a little fat."
Job of tomorrow: search engine optimizer.
JAFA -- Just Another Fucking Artist
But firms that are using outsourcing primarily as a tool to cut costs, not enhance innovation and speed growth, are the minority not the majority -- and I wouldn't want to own stock in any of them.
Responding to one big question: What are the biggest problems that, if science attended to them and solved them, could most dramatically change the fate of the several billion people trapped in the vicious cycle of infant mortality, low life expectancy and disease. (A list of 14 Great Challenges)
When people, particularly people who are illiterate, say something and it gets immediately represented on the wall, they feel really validated, and therefore they get more animated and more engaged.
150 million people is roughly the size of the U.S. workforce.
Japan and Europe rising coincided with the oil crisis of the 1970s.
The business organization consultant Michael Hummer once remarked, "One thing that tells me a company is in trouble is when they tell me how good they were in the past. Same with countries. You don't want to forget your identity. I am glad you were great in the 14th century, but that was then and this is now. When memories exceed dreams, the end is near. The hallmark of a truly successful organization is the willingness to abandon what made it successful and start fresh.
I believe that history will make very clear that President Bush shamelessly exploited the emotions around 9/11 for political purposes. He used those 9/11 emotions to take a far-right Republican domestic agenda on taxes, the environment, and social issues from 9/10 -- an agenda for which he had no popular mandate -- and drive it into a 9/12 world. In doing so, Mr. Bush not only drove a wedge between Americans, and between Americans and the world, he drove a wedge between America and its own history and identity. His administration transformed the United States into "the United States of Fighting Terrorism." This is the real reason, in my view, that so many people in the world dislike President Bush so intensely. They feel that he has taken away something very dear to them -- an America that exports hope not fear. Because ultimately September 11 is about them -- the bad guys -- not about us. We're about the Fourth of July. We're about November 9.
People don't change when you tell them there is a better option. They change when they conclude that they have no other option.
That has always been America's strength, because America was, and for now still is, the world's greatest dream machine.
Louis Pasteur said it a long time ago: "Fortune favors the prepared mind."
Offshoring is when a company takes one of its factories that is operating in Canton, Ohio, and moves the whole factory offshore to Canton, China.
There is a variety of studies indicating that every dollar a company invests overseas in an offshore factory yields additional exports for its home country, because roughly one-third of global trade today is with multinational companies.
According to a January 26, 2004, study by the Heritage Foundation, Job Creation and the Taxation of Foreign-Source Income, American companies that produce at home and abroad, but for both the American market and China's, generate more than 21 percent of U.S. economic output, produce 56 percent of U.S. exports, and employ three-fifths of all manufacturing employees, about 9 million workers.
Foreigners want access to American markets and labor just like we want access to theirs.
For 12 years, DaimlerChrysler has had a Mercedes-Benz passenger car factory in Tuscaloosa, Alabama, and announced a $600 million plant expansion in 2003.
Three United States are better than one, and five would be better than three
The experiences of the high-tech companies in the last few decades that failed to navigate the rapid changes brought about in their market place by these types of forces may be warning to all the businesses, institutions, and nation-states that are now facing these inevitable, even predictable, changes but lack the leadership, flexibility, and imagination to adapt - not because they are smart or aware, but because the speed of change is simply overwhelming them (p. 49)

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