Wednesday, July 27, 2005

Non-fiction - "The World is flat" (part II)

I was going to write a deeply analytical essay on "The World is Flat", when I finished reading it. But then I got distracted by other books. So instead, here is a short summary of the second part of the book. The second part of the book contains Friedman's advice to various global actors, as to how to deal with globalization.

For America he suggest that we embrace free trade (no mention is made of US goverment's farm subsidies). He says we should worry about the state of our education and in particular science education. Other countries are outpacing us. We should also spent more on scientific research. He says that Americans lack ambition - we have become complacemant about our place in the world.

Developing countries in order to attract and keep bussiness need to have democtratic and transparent goverments. This way companies will not be afraid to move into those countries.

His advice to companies is not to "build walls" and to "outsource to win". Rather than to hide behind proprietary processes, companies should be much more open to colaboration with other companies, and should be ready to outsource those parts that can be done better by others.

On geopolitics. There are places in the world (i.e. Africa) where the largest productivity losses are due to sickness. When people are sick with malaria, they cannot do anything. Unless we can deal with some of those problem, benefits of globalization will not extend to those countries.

In Middle East, the political systems leave the people too frustrated. There is too much unemployment and lack of desire to work. There is no incentive for governments to improve, as they are funded by oil money and not taxes, so they are not accountable to the people. This makes the area a fertile ground for extremists.

He mentions the theory that no two countries that have McDonalds have been in a real war against each other. He proposes the "Dell Theory of Conflict Prevention" - if your country is involved in a production chain of something like a Dell computer, your goverment will remain reasonable and will not attempt to start wars in order to keep the business. To me this seems to be correct - I hope.

Overall I think the book is bit too much of a cheerleader for globalization. The author only talked with people who directly benefit from it (i.e. CEOs, business leaders). He did not spent much time with the people who are negatively affected. He also seems to have bought into some of the marketing literature passed out by the various companies and ignored some non-free market practices of US goverment (i.e. farm subsidies).


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