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Book Reviews

The World is Flat by Thomas L. Friedman

reviewed by Marc Schulman

Reading the World Is Flatby Thomas Friedman is like reading one of hiscolumns in the New York Times- It is insightful, well written and a greatread. It may not be what its subtitle calls it a brief history of the 21st centurybut it an excellent book describing the effects of Globalization 3.0.Globalization 3.0 according to Friedman has taken place due to theconvergence of three factors. First the development of tools that allowsworldwide collaboration. That collaboration has become possible by thedevelopment of web based tools that allowed people throughout the world towork together. That convergence has become possible by worldwide accessto the web and tremendous increase in the ability of all people tocommunicate. The convergence included the existence of varioustechnologies that came together that allowed people to do things differently-such as the example that Friedman gives as the ability of airlines to offer E-tickets. The second convergence is the ubiquities of technology incorporations and homes. For many years economist wondered whycomputers did not seem to improve productivity, Then by the 90s thatproductivity kicked in and companies developed new way to work in theways that bolstered productivity tremendously. The final convergence is theopening of the Indian, Chinese, and Eastern European markets and people tothe world market. The opening added 2 billion people to both the worldmarkets- thus creating 2 billion additional potential consumers as well as anadditional 2 billion additional competitors.

The book outlines the challenges that America faces in this new flat worldand concludes that the challenges are great, but it the United States takes theright steps it will be able to compete. Friedman is concerned those actions,including a better education policy, a new national health policy and evenmore importantly a crash plan for alternative energy may not take place.

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Friedman spends about 2/3 of the book describing with great stories how thisconvergence has come about and what it means for Americans. The bookthen describes what is the greatest threat to the flat world, and that being Al

Queda and related terrorist groups. Their actions have the ability to destroythe very flatness. Friedman believes that much of terrorism is driven morethen any thing else by the humiliations that the societies that terrorist comefrom have suffered. As Friedman describes the problem the failures of theArab world as a whole in economics, science and technologies has enragedmany and driven them to become terrorists. Friedman worries that the sameflattening effects that are changing global trade are also empowering theterrorists, giving Osama bin Laden and his compatriots the power of theInternet to communicate and gather intelligence.

As the book nears a conclusion Friedman suggests that one of the ways forfighting terrorism is to ensure that those areas of the world that are not flatneed to become flatter and that will be a way to defuse much of the angeramong those who seek to do us harm. He ends however on a pessimisticnote describing his feelings as he dropped his daughter off to begin college,he relates that he fears that the world that his daughter will be inheriting is amuch less certain world then the world he became an adult in.

It is hard not to agree with all the major themes of the book. I will quibblewith a few positions that Friedmans puts forth. He reviews the very casefor free trade Friedman believes that the theories of comparative advantagestill hold. He is convinced that if we allow each society to freely trade allwill ultimately gain. I am not so sure. Friedman underestimates the effectof intellectual property theft on Americas economy. In the world of freetrade and comparative advantage- Americas greatest advantage is in the areasof intellectual property. What would the USs trade imbalance with Chinalook like if everyone in China paid for a legal copy of windows and paid forevery DVD they watched.- When you were trading lumber and cars I havegreater confidence that Ricardos theories were correct. Trading the very

items that Friedman claims has made the world flat-bits and bytes is a wholeother matter.

The other missing element from Friedmans book that has a subtitle: Thebrief history of the 21st century, is what his previous book referred to as theOlive Tree. In a century that has seen the second Palestinian Intifadahagainst Israel, and the rejection of the European constitution, which I at leastattribute partially to nascent nationalism, one cannot explain all of what is

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happening in the world in economic terms. Freidman presents in his book anew version of his MacDonalds theory from his earlier works. In it hesuggested that no two countries that have MacDonalds would go to warwith each other. In this book he suggests that no two countries that are partof the Dell global supply train would fight each other. While his theory

sounds plausible before WWI and WWII Germanys largest trade partnerswere England and France, in that day of rising international trade. Many saidwar was a thing of the past. It is dangerous to underestimate eithernationalism or the power of madmen.

As I first starting reading The World is Flat I questioned whether contentsreally deserved to be a book, as opposed to a long magazine piece.However, as time goes on I find myself quoting different elements and storiesin the book to friends and colleagues all the time. Despite my earlier

disagreements with a number of Friedmans points I believe that it would bea mistake for anyone who wishes to understand the world around them andthe economics of the 21st century, not to read this book.

Send Comments to Marc@Multied.com