The author is not an economist or a management guru. He is what I would call ‘a senior international journalist’. He is indeed equipped by intellect and experience to well handle the subject matter of the book. Below the title of the book, in smaller letters, you find this mention: ”A Brief History of the Twenty First Century”. This is untrue because the book basically handles current history or what we may call current affairs. The dust jacket also says “National Bestseller” but I think that is anticipatory.
The genesis of the book lies in Tom Friedman’s visit to Bangalore in 2004. He was struck or indeed awestruck by the world of intellectual work or the services work performed in the city by companies, multinational and national, particularly catering to western requirements. These companies with thousands of brainworkers function as offshore companies or outsourcing instruments in a variety of services. The offshore companies are the arms of multinationals and the outsource-driven ones are independent service operators to foreign clients.
Friedman was struck by the huge modern buildings in Bangalore built by General Electric, Hewlett-Packard, Intel, Texas Instruments, Goldman Sachs etc apart from the several large Indian companies such as Infosys and Wipro. Here is the Silicon valley of India. Nandan Nilekani of Infosys told him that the world had become a level playing field with such horizontal work sharing in services. That induces Friedman to jump to titling his book as “The World is Flat”.
The author has been mesmerized by India and China. India with its knowledge workers and China with its manufacturing. The entire book revolves around the theme that the future would witness a horizontal and interdependent world where countries will share challenges and responsibilities. In fact he believes that the flatness has already taken place. He traces the reasons that has made the world ‘flat’.
Friedman outlines three great eras of globalization. The first era is from 1492 when Columbus discovered America to 1800. He says that the world became large to medium in this era with European countries conquering the seas for trade. The second era is from 1800 to 2000 when the world becomes small from medium with multinational companies playing the globalization role. The third era of great globalization, according to Friedman, starts around the year 2000, with individuals, particularly the Asians, playing the main role and turning the world from small to tiny. This third era owes a lot to fibre-optics, satellites, MP3 etc and has already witnessed rapid changes in market place, in work culture etc.
The author is amazed at the way Bangalore has achieved its eminence. Mphasis undertakes outsourced accounting work so that Americans can file tax returns. Doctors in Bangalore read and report on radiological films digitally received from American hospitals. Quarterly financial results of American companies are summed up and reported by analysts based in Bangalore.
Executives in America get their power-point presentations prepared by youngsters in Bangalore. Of course, very high-end chip design work for Texas Instruments and Intel are being done by brainy Indians. Customers Call Centers handle ‘outbound’ calls soliciting business in credit cards, airline tickets etc and also handle ‘inbound’ calls for flight bookings, lost baggage tracking, fixing computer glitches etc on behalf of foreign companies. In salary costs, Indians cost one fifth of the Americans.
With such stockpiling of information and a genuine wonderment for Bangalore, Friedman has concluded that the world has gone flat. He urges that America accept the flat world and not become protectionist. It should allow jobs to go to India or China or wherever there is cost saving and efficiency. We Indians would readily support this. Friedman recommends that America which has reduced investments in science and technology and in R. and D., should reverse the trendin orderto remain the innovation-leaders in the world. He recommends that every American should go for tertiary education for overall upgradation of peoples’skills. He believes that the USA should not be afraid of outsourcing since the wages in developing countries would tend to rise fast and partially neutralize their present cost advantage , and secondly the “lump of labour theory” is wrong since the total labour market will keep increasing. The millions of “non-fungible” jobs in America, meaning the jobs such as barbers, plumbers etc where functions cannot be digitized would remain in America. I think we all would agree with these opinions.
In the era of the new flat world, Friedman has recommendations for developing countries also. He wants them to accept their mistakes like a new entrant into Alcoholics Anonymous would confess to, and conduct hard and honest introspection. He wants them to introduce what he calls “reforms retail” since mere trade opening is insufficient. The “reforms retail’ would relate to infrastructure, education, regulatory institutions and culture. In the developing countries, any entrepreneur should be able to start business quickly, be able to obtain credit, hire and fire workers, quickly enforce contracts and face smooth bankruptcy process. These recommendations are unexceptionable.