The World Is Flat: Book Review and Commentary

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I’ve been chipping away at it for months, and finally finished Thomas Friedman’s The World Is Flat: A Brief History of the Twenty-first Century. By a flat world, he means that the playing field is being leveled and the gap between emerging and developed countries is closing faster and faster. For many people this means the fear of losing jobs to outsourcing, but it’s actually a lot more than that.

Flat means less friction. Yes, less friction for jobs to go back and forth across the world (usually away from the US). But the same holds true for people, money, ideas, and even cultures. He says this is caused by the “triple convergence — of new players, on a new playing field, developing new processes and habits for horizontal collaboration.” We can either look at this loss of friction as a bad thing and try to ignore it or keep it from happening, or we can realize that it is inevitable and work to take best advantage of it.

Up to now, many of the best jobs were here, and you had to live here to perform them. But thanks to new technology like the internet and computers, as long as someone is able to learn the same skills, they can do it from anywhere. This varies from the familiar cheap manufacturing of goods and telephone support, to highly skilled jobs like corporate accounting, computer chip design, even medical procedures.

Up to now, the best education was here. To me, this is critical, and I don’t think people realize it enough. Historically, we have had the most advanced and desirable graduate schools in the world. While in grad school, just in my building alone, I was surrounded by the top students from Germany, India, China, Taiwan, Brazil, and Russia. I’ve heard their stories about having to be the top 0.01% in their country just to get here. The vast majority of these people ended up getting jobs and settling down in the US. If you look around, first-generation immigrants anchor many of the research arms of all our major corporations. Microsoft, GE, Genentech, Google…

In other words, this country has been skimming off much of the smartest and most driven people in the world for ourselves. That’s a pretty sweet deal. But as I type many countries are working feverishly to make their own educational systems better.

If another country has a similar or better educational system, and their workers can do it for less, you can bet the job will be moving there. Patriotism, protectionism, or whatever – it’s still fgoing to happen. This means that we need to work to improve our own education systems and get rid of any sense of entitlement. Soon, simply being lucky enough to have been born in the US won’t be enough.

The book touches on many more topics than this, and I don’t even claim to understand all of it. I’m not an economist nor am I much of a historian. Although Friedman overall is a great storyteller and good at explaining complex ideas, there are also several slow and repetitive parts that literally made me fall asleep while reading it.

Conclusion
In the end, The World Is Flat reminds us that we are all in constant competition with each other. Before, it was your neighbors across the street. Now, it’s anyone with internet access. While it is not a zero-sum game (there is not a fixed number of jobs), there will be people who do better than others. As Americans, we are being chased. Our choices are either to run faster or risk getting left in the dust. Just making us consider such a possibility is a good result from this book.

How you think this competition will unfold can also alter your investment strategy. I still haven’t made any conclusions regarding this, but have been considering simply weighting my investments in proportion to the value of the world’s companies (i.e. using a world market cap-weighted index).

Overall Rating: 3 Stars (ratings explained)

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Comments

  1. i learn something everytime i check out your blog 🙂

  2. You can even watch Mr. Friedman’s MIT speech about the world is flat here for free. http://mitworld.mit.edu/video/266/

  3. Thanks, liche. I’m about halfway through the video – it’s includes a lot of the anecdotes from the book and is a pretty good synopsis of his main points. I wish there was a mp3 version, I’m just listening to it in the background.

  4. Anon Coward says

    You might also want to check this critique of “World is Flat”

    ” Award-winning journalist and author, Thomas L. Friedman discusses the changing forces of global competition in his best-seller, The World is Flat: A Brief History of the Twenty-first Century.

    Award-winning professor and director of the UCLA Anderson Forecast, Edward Leamer reviews the book and dissects the title’s metaphor in the Journal of Economic Literature book review, “A Flat World, A Level Playing Field, a Small World After All, or None of the Above?”

    http://uclaforecast.com/reviews/Leamer_FlatWorld_060221.pdf

  5. I was amused by this paragraph in Leamer’s conclusion:

    Physically, culturally, and economically the world is not flat. Never has been, never will be. There may be vast flat plains inhabited by indistinguishable hoi polloi doing mundane tasks, but there will also be hills and mountains from which the favored will look down on the masses. Our most important gifts to our offspring are firm footholds on those hills and mountains, far from the flat part of the competitive landscape. Living in the United States helps a lot, and will continue to. But those footholds will increasingly require natural talent. As a byproduct of our search for personal pleasure, we provide our children highly loaded dice to roll at the genetic craps table. Beyond the all-important luck of the genetic draw, it takes the kind of education that releases rather than constrains their natural talent. We send our children to good private schools and then on to UCLA. The rest is up to them.

    Is he suggesting that Americans are somehow genetically superior as a whole? Byproduct of personal pleasure? Huh? I would disagree. I think there is just as much ‘natural talent’ in any given village in China than any given suburb of America.

    Of course I agree that being born here and going to good schools helps. There are people who would give their right arms and left legs to have their children born here.

    I feel like he was arguing selected points but missed a lot of the overall theme of the book. Friedman openly admits, the world is not flat, it’s just getting flatter.

  6. If we are short on engineers and scientists, maybe we have too many MBAs and journalists.

  7. I’m not a Friedman fan.
    His pro Iraq war stance really turns me off.

    And most of his predictions about the war have been
    completely wrong. here is a list of them.
    http://www.fair.org/index.php?page=2884

    I really question his judgment about anything.

  8. Good review, Jonathan.

    I am still trying to forge my way through the book, however it is very difficult to put down for any length of time and be able to pick right up where you left off.

    I think he makes some very good observations and ties together a lot of different strings.

    The long end of it is this: Those who think life is fair and are entitled to something are sorely mistaken. Life is a battle to get ahead, and those who are complacent will be replaced on a whim unless they continue to develop and have new things to offer.

    -Grant

  9. I agree with those who say to take what Friedman writes with a wary eye, as he’s one of the biggest proponents of globalization and his writing is not unbiased. For a more rounded look, check out Amy Chua’s “World on Fire” or Amartya Sen.

  10. Virtually everything in this book is obvious to anyone who reads the newspaper eveyday.

  11. money blog says

    I second Jim on that…plus the book is kind of big for the point it is trying to convey

  12. I first saw the review on amazon, I am in the middle of the book now. Start to google around for reaction, of course your site came up! (More links to follow) I can totally see number of other jobs (currently look stable) can be outsource /insource to cheaper labor force, due to flatting.

    Talk about “who moved my cheese”? I’ll also write a review after I finished the 600+ pages… maybe titled “Want to fall flat on your face?”. The book is a little long but easy to read.

  13. “….simply being lucky enough to have been born in the US won’t be enough.”.

    I STRONGLY AGREE.
    Asians are starting to kick our asses in math, science, engineering, and hell, even computer. India and Philippines are producing the best programmers in the world. Infosys and De La Salle University – Manila have produced very very good computer students. We better watch out.

  14. I strongly recommend to read the recent book, World 3.0 by Pankaj Ghemawat if you’re interested in the topic globalization. This is by far one of the best and most valid books on the subject out there.

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