The flattening process relentlessly trims the fat out of business and life, but, as Ken noted, fat is what gives life taste and texture. Fat is also what keeps us warm.
Yes, the consumer in us wants Wal-Mart prices, with all the fat gone. But the employee in us wants a little fat left on the bone, the way Costco does it, so that it can offer health care to almost all its employees, rather than just less than half of them, as Wal-Mart does. But the shareholder in us wants Wal-Mart's profit margins, not Costco's. Yet the citizen in us wants Costco's benefits, rather than Wal-Mart's, because the difference ultimately may have to be paid for by society. The consumer in me wants lower phone bills, but the human being in me also wants to speak to an operator when I call 411. Yes, the reader in me loves to surf the Net and read the bloggers, but the citizen in me also wishes that some of those bloggers had an editor, a middleman, to tell them to check some of their facts one more time before they pressed the Send button and told the whole world that something was wrong or unfair.
Given these conflicting emotions and pressures, there is potential here for American politics to get completely reshuffled-with workers and corporate interests realigning themselves into different parties. Think about it: Social conservatives from the right wing of the Republican party, who do not like globalization or closer integration with the world because it brings too many foreigners and foreign cultural mores into America, might align themselves with unions from the left wing of the Democratic Party, who don't like globalization for the way it facilitates the outsourcing and offshoring of jobs. They might be called the Wall Party and militate for more friction and fat everywhere. Let's face it: Republican cultural conservatives have much more in common with the steelworkers of Youngstown, Ohio, the farmers of rural China, and the mullahs of central Saudi Arabia, who would also like more walls, than they do with investment bankers on Wall Street or service workers linked to the global economy in Palo Alto, who have been enriched by the flattening of the world.
Meanwhile, the business wing of the Republican Party, which believes in free trade, deregulation, more integration, and lower taxes-everything that would flatten the world even more-may end up aligning itself with the social liberals of the Democratic Party, many of whom are East Coast or West Coast global service industry workers. They might also be joined by Hollywood and other entertainment workers. All of them are huge beneficiaries of the flat world. They might be called the Web Party, whose main platform would be to promote more global integration. Many residents of Manhattan and Palo Alto have more interests in common with the people of Shanghai and Bangalore than they do with the residents of Youngstown or Topeka. In short, in a flat world, we are likely to see many social liberals, white-collar global service industry workers, and Wall Street types driven together, and many social conservatives, white-collar local service industry workers, and labor unions driven together.
The Passion of the Christ audience will be in the same trench with the Teamsters and the AFL-CIO, while the Hollywood and Wall Street liberals and the You've Got Mail crowd will be in the same trench with the high-tech workers of Silicon Valley and the global service providers of Manhattan and San Francisco. It will be Mel Gibson and Jimmy Hoffa Jr. versus Bill Gates and Meg Ryan.
More and more, politics in the flat world will consist of asking which values, frictions, and fats are worth preserving-which should, in Marx's language, be kept solid-and which must be left to melt away into the air. Countries, companies, and individuals will be able to give intelligent answers to these questions only if they understand the real nature and texture of the global playing field and how different it is from the one that existed in the Cold War era and before. And countries, companies, and individuals will be able to make sound political choices only if they fully appreciate the flattened playing field and understand all the new tools now available to them for collaborating and competing on it. I hope this book will provide a nuanced framework for this hugely important political debate and the great sorting out that is just around the corner.
To that end, the next three sections look at how the flattening of the world and the triple convergence will affect Americans, developing countries, and companies.
Brace yourself: You are now about to enter the flat world.
America and the Flat World
FIVE: America and Free Trade
Is Ricardo Still Right?
As an American who has always believed in the merits of free trade, I had an important question to answer after my India trip: Should I still believe in free trade in a fiat world? Here was an issue that needed sorting out immediately-not only because it was becoming a hot issue in the presidential campaign of 2004 but also because my whole view of the flat world would depend on my view of free trade. I know that free trade won't necessarily benefit every American, and that our society will have to help those who are harmed by it. But for me the key question was: Will free trade benefit America as a whole when the world becomes so flat and so many more people can collaborate, and compete, with my kids? It seems that so many jobs are going to be up for grabs. Wouldn't individual Americans be better off if our government erected some walls and banned some outsourcing and offshoring?
I first wrestled with this issue while filming the Discovery Times documentary in Bangalore. One day we went to the Infosys campus around five p.m. -just when the Infosys call-center workers were flooding into the grounds for the overnight shift on foot, minibus, and motor scooter, while many of the more advanced engineers were leaving at the end of the day shift. The crew and I were standing at the gate observing this river of educated young people flowing in and out, many in animated conversation. They all looked as if they had scored 1,600 on their SATs, and I felt a real mind-eye split overtaking me.
My mind just kept telling me, “Ricardo is right, Ricardo is right, Ricardo is right.” David Ricardo (1772-1823) was the English economist who developed the free-trade theory of comparative advantage, which stipulates that if each nation specializes in the production of goods in which it has a comparative cost advantage and then trades with other nations for the goods in which they specialize, there will be an overall gain in trade, and overall income levels should rise in each trading country. So if all these Indian techies were doing what was their comparative advantage and then turning around and using their income to buy all the products from America that are our comparative advantage-from Corning Glass to Microsoft Windows-both our countries would benefit, even if some individual Indians or Americans might have to shift jobs in the transition. And one can see evidence of this mutual benefit in the sharp increase in exports and imports between the United States and India in recent years.
But my eye kept looking at all these Indian zippies and telling me something else: “Oh, my God, there are so many of them, and they all look so serious, so eager for work. And they just keep coming, wave after wave. How in the world can it possibly be good for my daughters and millions of other young Americans that these Indians can do the same jobs as they can for a fraction of the wages?”
