The Leveling of America – By S. Shah

A compelling read on globalization, citing computer and Internet technology as the main levelers that made the current level of globalization possible, “The World Is Flat` would have been more appropriately titled, “The Leveling of America and Why it is Actually Good For America or All Those Who Seek To Be American.” Mr. Friedman has focused most on the newly Americanizing world of India and China (the good guys) and treated the Muslim world as mostly agnostic to this vision of the flat world (the bad to misguided guys). Therefore, for the paperback, the sub-title, “A Brief History of the Twenty First Century” should be suitably amended to read, `A Brief History of the Americanization of the World in the Twenty First Century.”

Mr. Friedman exemplifies a uniquely American point of view, an elitism disguised as pragmatism. Friedman`s uses theory that is reductionist and deterministic, language that is anecdotal and exclusive, yet reads like the urgings of a coach on a playing field rooting as it were for its own team, while sparing a few pats on the back for the rival faction. The book is so political that in an interview with Wired magazine, Friedman was asked if he wants to run for President. Friedman denied that he was interested in anything except his NYT column. An idea of how important this book can be is the comment in The New York Review of books …[the book] “may prove a prescient guide to future American policy.”

Friedman informs us that many more people in the world are able to compete against each other in the current trend of Globalization 3.0 than before. An advanced level of collaboration and co-operation is possible thanks to technology and free market economics that can allow the poor to get a bigger share of the world’s income. This is an era of opportunity since innovation is key to success. This idea of equal opportunity, a sort of global equity is what Friedman calls flatness.

Friedman shows us how the world became flat and isolates ten flatteners of the world. The flatteners range from computer technology to changing political ideology. Friedman then talks about the steroids that enhance worldwide collaboration i.e., wireless technology and the triple convergence of billions of qualified people entering the global competition for work.

Most of Friedman`s flatteners are the positive externalities of capitalism. For example, the cheap fiber optic cable after the dot com bust, because of which India was able to offer business process outsourcing (aka the ubiquitous call center). However, Friedman does not spend equivalent time on the negative externalities of capitalism. Instead, Friedman repeatedly speaks about the starving, smart Indians with high motivation. In more than one place he criticizes the socialist protectionist policies of the pre 1990`s era as the cause of Indian poverty. He fails to dig deeper into history to realize that the same socialist ideals were the reason why India developed an over qualified workforce. Back in the 1980`s free market economists criticized the over educated Indian workforce that works for peanuts. But in the 1990`s this educated workforce was a resource base –excess capacity that availed opportunity when Manmohan Singh opted for deregulation. At the time India deregulated it had a workforce with prudent habits; it had developed the highest savings rate in the region, an educated middle class and lots of idealism.

In the meanwhile, Pakistan under dubious advice from the IMF liberalized itself to the point that hardly anything was produced in Pakistan. In the decades that India forwent consumption and invested in the future, Pakistan made less investment in education or production capacity. It acted as a US decoy for most of its life. It made the Afghan war its own, the Kashmir struggle its rason detre, it deregulated foreign exchange in the 1990s and applied Greenspan type monetary policy (print ’em notes and we will grow rich). As a result it lived on an ever-expanding deficit, failed to implement land reform and deluded the masses with religious rhetoric. Desperately poor it aligned ideology with Saudi Arabia to get cheaper oil. The famous Shariat Law and Wahabism in Pakistan are outcomes of this policy. The book however, does not, of-course, mention the capitalism next door in Pakistan gone wrong. If anything, Pakistan copied the American consumerist model with support from America. It suffered from perpetual brain drain and insecurity, a fall-out from the Russian invasion of Afghanistan where US used it to support the anti-Russian resistance. Today Pakistan is trying to correct a morass of mistakes, but Friedman spares only derision for the US ‘frontline ally.’

Friedman mentions Azim Premji an Indian Muslim entrepreneur then quotes a story about how Pakistan does not provide similar entrepreneurial opportunity. This is a major factual error. Mr. Friedman fails to notice the GDP growth in the neighboring majority Muslim country in the last few years and bases all his `facts` on conversations with Indian nationalists. For every Azim Premji in India, there are several entrepreneurs in Pakistan, but Friedman is too busy promoting India to notice.

Friedman is very optimistic; he views new technology as an equalizer and harbinger of peace, ultimately he presents interdependence in supply chains as a conflict reducer. “The Dell Theory of Conflict Prevention,” is the idea that interdependence via international supply chains will reduce conflicts. Historically, interdependence alone has not reduced conflict. Countries who need to share resources i.e., are interdependent have higher conflict. Granted that resource struggle and production are technically different concepts, collaboration and co-operation are necessary for both resource allocation and production. Friedman is on real shaky grounds with only one anecdote about the near war between India and Pakistan back in May 2002 to back this claim. The Dell Theory of Conflict Prevention should be called Global Buyer Power in Supply Chains, since the fear of loss of business from the single biggest buyer worked here.

Friedman later on contradicts himself by saying that USA should reduce its energy dependence on the Middle East, solve environmental concerns with resource efficient technology and set an example for the rest of the world. Ok, so America should reduce dependence on Middle East because otherwise they would have to listen to the Middle East? But the rest of the world should continue to be interdependent since it can`t be stopped? Friedman quotes free market economists such as Ricardo as though nations and political ideology can be reduced to metaphors of economic theory. In this free market inspired view, nationalism is a tiresome roadblock to economic freedom and opportunity possible through capitalism (notice WTO bargaining). Yet nationalistic aspirations persuaded India and China to enter the global playing field. ( E.g., Mera Bharat Mahan—`my India is great` is a rallying cry). He notes that the campuses of Infosys and Wipro had to create their own production resources to enable them to compete in the flat world (this sounds like a qausi fiefdom) yet he chooses to call the world flat i.e., equal.

Mr. Friedman, however, notes that there are pockets of discontent in the world that are hurdles to the flattening. But, in a roundabout way he keeps reiterating that to flatten completely you must, you know, flatten. His explanations for the discontent are a bit different from the usual global jealousy and have-not theory. Friedman isolates large pockets of the unflat and half flat world, which are too sick or partially skilled and/or too humiliated (the Muslims) to join in the level playing field. However, the solutions that he proposes for these pockets are simplistic, vague and heavily biased toward capitalism.

One can’t really see a solution to the core issue that large pockets of people don’t subscribe to the capitalist worldview. Rightly or wrongly, the Un American world objects. Mr. Friedman dismisses this world with several paragraphs of derision on terrorism as a sick mind’s reaction coupled with passive European and Muslim jealousy even though earlier he dismisses the jealousy of the poor as merely the desire to be empowered to compete with others. The only people that seem to be worthy of Mr. Friedman’s empathy are the Indians and Chinese who have taken business away or his daughter’s generation who now have to work harder against hungrier people. Oops, if the world is getting richer and the pie bigger than why the concern about his daughter’s struggle? If more people are working meaningfully, then shouldn’t Friedman look forward to more wealth for his daughter? Can it mean that Friedman wonders if globalization through capitalism is a resource struggle that widens the gap between the rich and poor rather than making the ubiquitous pie bigger? Now that’s a thought that Friedman doesn’t dwell on.
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As for sources of information and research, you can`t miss the namedropping and that the main sources skew heavily towards the Who`s Who of software entrepreneurs. At times the hype sounds just like that; hype. From Gates to the call center CEOs in India, the business mind is the main source that Friedman consulted. The subtext grates at times, the world birthing as it were from the mind of Gates (!). The book flatters India and China, it cajoles America and it is evangelistic marketing indeed.

To validate that capitalism is a necessary condition, Friedman quotes Karl Marx. This type of treatment of Marx resonates somewhat with the open source movement, free information in the age of the Internet and turbo world consumption leading to significant freebies. Mr. Friedman fails to explore the Marxian prediction of greater strife and conflict because of the bourgeoisie desire to sell more. Marx also said that when mankind uncovers the delusion and realizes the truth about labor and capital that the communist manifesto will bring peace. But Friedman doesn`t explore this aspect (it requires some courage to explore Marxian thought). Friedman made a quick bow to the great struggle, hoping perhaps to bridge the blue and red divide in USA or inspire others to join in the capitalist dream.

In the section `America and The Flat World`, Friedman provides a number of recommendations for America. He tackles the reducing number of American born scientists and engineers and talks about the dwindling number of foreign students at University post 9/11. He wants the state to improve the incentives for a science education immediately and go on a `crash program` to retrain people. He recommends a portable health care program to reduce the burden of health care on employees (ppionline.org). Friedman mentioned that every entrepreneur he spoke to cited,

“Soaring and uncontrolled health care costs in America as a reason to move factories abroad to countries where benefits were more limited or non existent or where there was a national health insurance.”

Just to give you a rough idea of what Friedman is talking about; a US hospital emergency infection treatment involving a stay of 1 hour 30 minutes cost 1500 dollars in July 2005. Treatment comprised of a Penicillin injection and an inhaler—comparable treatment in India or Pakistan would cost 10-20 dollars.

Even though Friedman touches on this issue, he apologizes that he cannot explore it here. But the truth is that health insurance in US is a complete scam. Ostensibly health care insurance (the HMO system) was privatized to increase efficiency, unfortunately it isn’t. The costs of health care are so high that people cannot afford them without health insurance. And now the cost of insurance is so high that millions do not have health insurance. The insurance money recovered from US businesses is going into the coffers of insurance shareholders, and the pharmaceutical companies who sell overpriced, under researched medicines.

Friedman recommends wage insurance; the idea that workers who lose jobs and cannot re-skill because of limitations get some kind of wage protection. Friedman calls this ‘good fat,’ since it will prevent a backlash of political strife. Friedman recommends regulating the standards of behavior of the global supply chain and better parenting i.e., taking a leaf out of Asian parenting. He backs this with the better performance of second-generation immigrant children in schools.

The deja vu for the last is overwhelming.
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In the 1980s, there was a lot of hype about the Japanese child and how the American child does not compare with the hardworking Japanese. Best-selling business books recommended that American businesses must learn from Japan. In 2005, American schools remain just the same with American corporates unchanged—e.g., today CEO compensation is legendary, unaffected by the Japanese style of management.

What happened? Simple. The exchange rate was adjusted. Ricardo`s Theory of Comparative Advantage couldn`t withstand the exchange rate.

BYOC (Bring Your Own Conclusion).

Friedman spends some quality time on terrorism. He speaks of the need to replace the Muslim imagination with dreams of grand achievement rather than martyrdom. His premise is that the root of discontent is the lack of Muslim progress that, as we can now predict, the capitalist dream can solve.

Friedman derides the terrorist networks of Al-Qaida, their sick imagination and the passive acceptance of Al-Qaida in Muslim states. Even though he criticizes the Bush administration for the debacle in Iraq, quite overwhelmingly, he puts the blame squarely on the Muslim identity as the real cause of the conflict. He cites India as the largest Muslim country, (o man, he has been talking so much to the Indian elite) but with no terrorists. He concludes that it is the context that matters. Muslims in a non-majority democratic state are successfully neutered and acceptable to the world. However Muslims in majority Muslim states are a danger to the free world that works on trust (and capital).

Read this book to understand a few things:

1. If you want to negotiate with America, the language of measurable outcomes and business i.e., prices and trade are the only kind of negotiation that America is able to understand and relate with. The reason why terrorism fails to renegotiate the terms of engagement is because it does not provide a consistent, predictable reward or punishment for the “oppressors.” In the American flat world, taking the American jobs away works better than killing them. To beat America, you have to join America.

2. Capitalism will be shoved down the world`s throats till kingdom comes regardless of failures such as Russia. Get used to it and protect your people as India did somewhat.

3. For America, Islamism is equivalent to Leninism and the Islamic world the new USSR. There will be ever increasing propaganda on the evils of Islam (older ideologies come off looking really awful in front of modern moral codes). Perhaps the problem is that the propaganda is not intended for the emancipation of the Muslim but rather to humiliate and subjugate this civilization—to sort of show that their way of life is worthless. There will be `defectors` as before in the cold war and whistle blowers found and touted in the press…one sees the Irshad Manjis of Canada and the Asra Nomanis of America. It would be much better if they were found in the Muslim countries, but they are not, which is quite clearly part of the problem that Friedman recognizes.

4. America might continue to support the dictatorial regimes in the Middle East since it will fear an independent Muslim bloc even more. Even though Friedman speaks about the approval he receives in Middle East countries from Arab youth, he betrays himself when he ridicules the terrorists` endeavor to change the Muslim world to a caliphate—an idea that he does not take seriously or explore. His analysis stops after explaining the humiliation of the Muslim world. He admits that Muslim youth is frustrated at the way the US is propping up dictatorial regimes for oil, or Israel, but keeps reiterating that it is the Muslim civilization’s problem since it does not enter a ‘war of ideas’ about Islam. His solution for the Muslim world is that the Muslim world should reinvent itself as either a pacifist obsure world or compete on a capitalist basis.

5. The free market underestimates ideological identity, language and culture, but it is slowly realizing that adopting technology does not mean adopting a culture and its values. This is a shock to the American mind. But in fact, technology has enhanced the hatred and the power of extreme ideology. The nation state may be even stronger as a result than ever before. Four years after 9/11 and much research on the Middle East, the naïve conviction that technology rather than negotiation can solve conflict is stunning. Would it mean then that a brain transplant is the only way to bring peace—and Friedman recommends joining in the American dream as the best brain transplant. Perhaps Friedman seeks to inspire the Muslims to rise out of passive support of terrorism, get in the game as it were and in that he is indeed speaking for many Muslims.

6. The Muslim world`s abstruse responses coupled with ridiculous suicides are not exactly great leadership. On the other hand, the whiter than white Sheikhs who celebrate Christmas in Dubai are perhaps just as bad. The Muslims desperately need sound leadership. Quite obviously, the extremists just needed an enemy to ‘unify’ the Muslim world, and US provided itself on a platter as a hateful enemy. The bombing of Al Jazeera and the kidnappings of Muslims in the West, tortures and interrogations abroad add the terrible fangs and nails to the dragon of America.

Even though Osama wanted the Muslim world to `unify` (perhaps into a blood thirsty mass of revolutionaries) but a great sorting out might just be happening. What will the Muslim world metamorphosize into? The whiter than white apologists or blood thirsty terrorists? The fact is that Al Qaida is successful and America clueless, since Al Qaida is more firmly entrenched after the US response to 9/11.

7. American policy will continue to be affected deeply by the idea that all conflict can be solved with money—that a richer world will hate them less and that America`s conflict with the world is about global jealousy. America has been buying off Pakistan for years and propping army rule for dubious benefits to itself. The irony is that money is oppressing the Third World more than poverty.

8. In a recent WSJ article, a Nobel laureate economist at the Hoover Institute recommended that engineers and students from Saudi Arabia and Pakistan should not be given work or study visas to America, however engineers from other countries should be allowed into America and made permanent citizens. Global trends such as newer visa restrictions in the last year also support the view that the world is being polarized into non-Muslim and Muslim. Coupled with Friedman`s work, one can guess that newer policies may tend to be even more exclusionary of the Muslim world. Ostensibly this will reduce insecurity in America, but enhance global conflict, since gray will become either black or white.

9. Quite possibly, America will try to reduce dependence on the global world. It will forge alliances with China, India and all the East Asian countries to protect from pan Islamism.

Selective interdependence is the name of the game. It smacks of an elitism that only the G8 can call fair. The nation state will be alive and well but important interregional alliances will dictate the flow of capital. Perhaps the book is a herald that India, China and US will have a preferred trading pipeline. India had better learn to work with old foe China to get more from this selective flattening.

10. And what of Pakistan? Pakistan has to strengthen its workforce with quality education. It has to reinvent the Muslim identity instead of flowing along with extreme ideology. Wear a burqa but work, grow a beard but reason, go to the mosque but think. Pakistan must form beneficial alliances with India and China, improve working conditions and provide equal opportunity for scientific and technological education. Some of this may be happening, a lot more needs to be done. Pakistan must resist becoming a symbol of ‘Muslim’ discontent with a half-educated elite exemplifying the failure of capitalist adventurism coupled with religious obscurantism.
Footnote: References

Wall Street Journal, Page A18, ‘Give Us Your Skilled Masses’, by Gary S. Becker, November 30, 2005

New York Review of Books, Volume 52, Number 13, ‘The World Is Round,’ by John Gray, August 11, 2005

Wired Magazine Issue 13.05, ‘Why the World Is Flat’ (an interview of Tom Friedman), By Daniel H. Pink, May 2005

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