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Online Study Guide: The World is Flat by Thomas L. Friedman

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ONLINE BOOK SUMMARY FOR THE WORLD IS FLAT

How the World Became Flat: Chapters 1 - 4

Summary

(Continued)

The fifth flattener is outsourcing. Friedman quickly details how the United States benefited from India’s seven Institutes of Technology (IIT), created in 1951. These highly-competitive schools, which are subsidized by tax dollars, churn out highly-qualified, highly-skilled professionals in need of jobs. Y2K created jobs for Indian software engineers because a large number of techs were needed to remedy the millennium bug. Moreover, the fiber optic boom, which occurred at the same time, allowed any “service, call center, business support operation, or knowledge work that could be digitized” to be outsourced. Thus, the dot-com bust resulted in jobs for Indians, who would work for less money than Americans and could perform the tasks in India because of their education as well as the technology of the PC, the Internet, and fiber optics.

The sixth flattener is offshoring. Offshoring is when a company moves one of its factories to another country (not just a specific task, as with outsourcing) for various reasons, such as cheaper labor and resources, fewer trade barriers, and fewer taxes. When China joined the World Trade Organization in 2001, offshoring reached new heights because China now had to comply with international law and standard business practices, therefore assuring investors that establishing factories in China would be financially beneficial.

The seventh flattener is supply-chaining. Friedman describes supply-chaining as “a method of collaborating horizontally--among suppliers, retailers, and customers--to create value.” Friedman describes how supply chains both flatten the world and are enabled by its flattening. As an example, Friedman considers Wal-Mart, the world’s biggest retail company, which makes nothing. Wal-Mart is essentially a hyper-efficient supply chain. For example, during the Christmas season, Hewlett-Packard sells four-hundred thousand computers each day through Wal-Mart’s four thousand stores. Continuing to cite Wal-Mart, Friedman considers the costs and benefits of supply chains. Stores like Wal-Mart are great for consumers because they keep costs very low. However, because Wal-Mart is under pressure to provide competitive prices, employees often suffer low salaries and little or no benefits.


The eighth flattener is insourcing. Friedman argues that when the world became flat, small companies “could suddenly see around the world,” meaning that they became aware of more avenues to sell and produce their products as well as to buy materials. Because most companies did not have the capacity or the desire to develop a supply chain as complex as Wal-Mart’s, they hired other companies to do it for them. To explore this concept more concretely, Friedman considers UPS’s role in insourcing. For example, if a Toshiba laptop breaks while under warranty, the customer can drop the computer off at a UPS store to have it shipped to Toshiba. But what actually happens is that UPS repairs the laptop in Louisville in a UPS workshop. A few years ago, Toshiba was criticized for taking too long to repair broken computers, so Toshiba collaborated with UPS to make the process go faster.

The ninth flattener is in-forming, Google, Yahoo!, and MSN Web Search. Friedman defines in-forming as “searching for knowledge” and having the resources to become “your own self-directed and self-empowered researcher, editor, and selector of entertainment without having to go to the library or the movie theater or through network television.” Friedman argues that world becomes flatter as resources like Google become more readily available. As knowledge becomes more accessible (Google can already be searched in 100 languages) more people become empowered. Friedman also considers how this knowledge jeopardizes our privacy. Friedman claims that it will be increasingly difficult to keep information about our pasts private as we leave electronic footprints behind.

The tenth and final flattener is what Friedman calls “the steroids.” Friedman calls certain technologies steroids (digital, mobile, personal, and virtual), because they augment and strengthen other flatteners. An example Friedman offers is voice over Internet protocol, or VoIP. This service allows customers to make unlimited, local and long-distance, phone calls through the internet for the cost of local calls. This will revolutionize telecommunications because companies will no longer be able to charge for distance and time. Connecting via telephone, anywhere in the world, will become extremely cheap.

In chapter 3 Friedman explores what he calls “the triple convergence,” or the way the ten flatteners converged to create an even flatter global playing field. The first convergence encompasses how the ten flatteners came together in such a way that people could see that things were different after 2000. The convergence of these flatteners created a global, Web-enabled platform that allows for multiple forms of collaboration. The second convergence is the appearance of a set of business practices and skills--managers, innovators, business consultants, business schools, designers, IT specialists, CEOs, and workers--that make the most of the ten flatteners, thus enhancing the flatteners’ potential. The third convergence is the entrance of some three billion people onto the playing field. During the 1990s the economies and political systems of China, India, Russia, Eastern Europe, Latin America, and Central Asia opened up in such a way that the citizens of these nations were able to join the free-market game. Thus there has been an explosion in the number of workers in the global economic labor force.

In chapter four, “The Great Sorting Out,” Friedman describes what he believes will follow the triple convergence. The triple convergence is likely to cause some chaos and confusion; the great sorting out will recalibrate the ceilings, walls, and floors that define us. Friedman offers some examples of the issues that result from the triple convergence that will have to be negotiated in the great sorting out, such as when an Indian company won the contract to upgrade the unemployment department of the state of Indiana because it was able to place a bid 8.1 million dollars lower that its competitors. Some questions that arise are: what should be the relationship between companies and the communities in which they operate?; how do we navigate our multiple identities as consumers, employees, citizens, taxpayers, and shareholders?; who owns what, particularly in the case of intellectual property?

Notes

There are two glaring issues in this section of text. The first is the parallel that Friedman draws between himself and Christopher Columbus by claiming that Columbus had to prove to his contemporaries that the world was round (while Friedman will prove that it is flat). As James Lowen deftly demonstrates in his book Lies My History Teacher Told Me: Everything Your American History Textbook Got Wrong (Touchstone, 1995) most Europeans and Native Americans knew the world was round when Columbus set sail. The idea that Columbus was challenging the status quo was popularized by Washington Irving in his biography of Columbus, written in 1828.

The second issue that emerges in this section is also related to metaphor: Friedman’s concept of the world as flat. It seems this notion emerges from the convergence of two ideas--the first, that the global market has become a level playing field, and the second, which describes the complexities of 21st century globalization. While this metaphor works because Friedman can weave it throughout his narrative, which is at times unwieldy, it may not accurately portray what Friedman is arguing. After all, Friedman contends that Globalization 3.0 is “shrinking the world from a size small to a size tiny” (10). One must ask if a “tiny” world with greater access is necessarily a “flat” world.


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