New playing fields

The World is Flat: A Brief History of the Globalized World in the 21st Century By Thomas Friedman, Allen Lane, ? 20

This book of almost 200,000 words looks heavy, but once one gets into Friedman?s rhythm, it is easy to read. For it is not really a treatise on the state of the world; it is Friedman?s notes, conversations and collected quotes strung together in a loose order; once one works out where one bit ends and the next begins, one can sail through.

The book is divided in two parts. The subject of the first part is a turning point in world history that Friedman claims has just passed us. At this point, inequalities of opportunity that were taken for granted for two centuries began to disappear. Till now, it made all the difference to one?s prospects whether one was born in a rich or in a poor country. Not only had he a better chance in a rich country of acquiring skills that would make him rich, but even if he was not skilled, he had a better chance in life. Someone in a poor country could not acquire the same opportunities except by migrating to a rich country; and rich countries limited the number of people from poor countries whom they would admit. Trade theory told us that exchange of goods was equivalent to exchange of factors of production and would tend to equalize the wages across the countries. But it could do so only if countries traded goods ? and allowed trade in goods. And services were inherently immobile and could not be traded; the higher the share of services in the product of a country, the more immune were its people from the international equalizing tendency.

Now, however, one can live and grow up in a poor country, and sell one?s services in a rich country: one can work in Bangalore for a Californian company and live as well as in Sacramento. The competition between him and his equivalent in a rich country has become more equal. As Nandan Nilekani told Friedman in Bangalore, ?The playing field is being leveled.? Or in Friedman?s words, the world is getting flatter.

Bangalore comes quite early in this book: what America was for Christopher Columbus, Bangalore is for Friedman. Like Columbus, Friedman had heard about India?s wealth ? its software, call centres and brainpower. So he set out to do a television series for the Discovery Times Channel on the secret of India?s newfound prowess. Some of this book is about what he discovered.

According to Friedman, the world began to get flatter 16 years ago ? when the Berlin wall fell. It led in quick order to the collapse of the Soviet Union and the ascendancy of democracy and openness. The next step was Netscape?s public issue in 1995. Netscape gave away its browser free; that began the shift from computer-based to internet-based computing. The advent of internet led to all the forms of integration we take for granted today ? in-sourcing, outsourcing, open sourcing, offshoring, supply chains, etc. It enabled people to cooperate and participate in the world economy regardless of location and distance. This integration is changing the way firms are organized. Work is moving across the world to where it can be done most cheaply, firms are spreading their connections across the world, and are evolving forms of organization which involve less command and control and more cooperation ? they are getting flatter. This integration is drawing in half the world?s people in Asia, Latin America and Africa who had no part to play in the old order dominated by industrial countries.

That is the easy part ? at least as far as economics goes. But at the beginning of the second part of the book, as Friedman stood near the gate of Infosys at five one afternoon and watched software programmers leaving and call centre operators streaming in, another thought struck him: if India continues to produce so many serious, devoted workers, how will my daughters ? and millions of young Americans ? get a job? His answer is: by becoming untouchable, by which he means those whose jobs would not be touched by Indians. Amongst the untouchables there are four castes: special people like Bill Gates and Barbra Streisand, specialized people like lawyers and brain surgeons, anchored people like barbers and waitresses, and adaptable people who can drop an outsourced profession and find another. He looks around the US and finds that it is not doing enough to expand these four castes. Americans are falling behind in the number of skilled professionals, in the level of ambition and in the quality of education. He wants the US government to help people retrain themselves throughout their working lives, to make their social benefits portable from one job to another, and to make up the shortfall in wages of workers who lose a job and get another.

On developing countries, Friedman is more casual. He believes that the days of wholesale reforms ? the kind that the Fund and the Bank advocated in the times of structural adjustment ? are over and that it is time now for retail reforms to make administration less bureaucratic and more effective. He thinks that cultures that are good at absorbing foreign influences into local traditions are winners ? for instance, the American, the Japanese, the Indian and the Chinese.

Friedman?s advice to companies follows from his conception of the flattening process: they must adapt their organization to the opportunities thrown up by increasing integration of the world. They must spread out across the world to wherever the business opportunities are and whence they can source the cheapest inputs. And they must not do so by setting up subsidiaries; they must find partners. They must replace vertical by horizontal management structures.

Friedman has done much to publicize this book in India: he had it released by Mani Shankar Aiyar and talked about it on Shekhar Gupta?s Walk the Talk. He admires India, not only for the way it has responded to the new knowledge economy but also for its democracy and adaptability. This admiration is infectious; there are many passages in this book which made a sceptic like me recognize our strengths, and would warm the hearts of patriots. For instance, he mentions watching Shabana Azmi debating Iraq with a Muslim priest on television after the US invaded it and asking him to go and fight the jihad instead of asking his flock to do so; I cannot think of many developing countries where this could happen.

But more than these things, this book is worth reading as a model of how to write a book in the electronic age. As far as I can estimate, it was written in something like eight months. I find the earliest date mentioned to be some time in May, and the latest in December 2004. It was on bookstands in another four months. And while it is a panorama of grand, sometimes grandiose ideas, it is written with such a light touch; almost all the serious lessons are conveyed with racy anecdotes. It is wisdom disguised as journalism.