Monday, October 31, 2011

The Flattened World

This book review was  done by Mr. Sangchu while in Second Year in the year 2008 at College of Science and Technology. He is currently Tariff Officer at Bhutan Electricity Authority.

THE WORLD IS FLAT  by Thomas L. Friedman
Ap Sangchu
Running with Gazelles, Eating with lions. 

Thomas L. Friedman has probably written the single most important book of this century. Globalization has/will supercede all traditional boundaries of sex, class, race and nationality. This is one of the chapters discussed by the author as the one of the ten forces that flattened the world. I too find this particular topic very important and will influence the lives of millions of people globally. And it is very important that all Bhutanese prepare themselves before this force hit our country and create a change which we are unaware of.
On December 11, 2001, China formally joined the world trade organization, which meant Beijing agreed to follow the same global rules governing imports, exports, and foreign investments that most countries in the world were following. It meant China was agreeing, in principle, to make its own playing field as level as the rest of the world.
Ever since the Chinese joined the WTO, both they and the rest of the world have had to run faster and faster. This is because china joining the WTO gave a huge boost to the form of collaboration – off shoring. Off shoring which has been for decades is different from outsourcing. Off shoring, by contrast, is when a company takes one of its factories that is operating in canton, Ohio and moves the whole factory offshore to canton, China. There it produces the very same product in the very same way, only at cheaper labour, lower taxes, subsidised energy and lower health care costs. Just as Y2K took India and the world to a whole new level of outsourcing and china joining the WTO took Beijing and the whole world to a new level of off shoring – with more companies shifting production offshore and then integrating it into their global supply chain.
 Once that offshoring process began in a range of industries – from textiles to electronics to furniture to eyeglass frame to auto parts – the only ways other companies could compete was by offshoring to china as well (taking advantage of its low cost, high quality platform), or by looking for other alternative manufacturing centers in eastern Europe, the Caribbean, or somewhere else in the developing world.
Most countries build off shore factories not simply to obtain cheaper labour. Another motivation is to serve foreign market without having to worry about trade barriers and to gain a dominant foothold there. The average wage of a high skilled mechanist in America is $3,000 to $4,000 a month. The average wage of factory worker in china is about $150 a month. The fact that health insurance in China is so much cheaper – because of lower wages, much more limited health services offerings, and no malpractice suits. This is a fact similar to our country where human resource is available (unskilled, semiskilled, and skilled) at willing to work at a lower wages compared with their counterparts in other developed countries.
 The work force at all levels in our country is increasing very rapidly and I am sure that with time if Bhutan joins WTO, with the offshoring taking precedence to all other trades, we will have huge work force to sell any foreign investors. The main force that will advance offshoring in our country can be cheap power, cheaper health insurances and low wages.
Google headquarters in Mountain View, California, has a certain Epcot Center feel to it, adds the author – so many fun space age toys to play with. In one corner is a spinning globe that emits light beams based on the volume of people searching on Google. As you would expect most of the lights are shooting up from North America, Europe, Korea, Japan, and costal china. The Middle East and Africa remains pretty dark. In another corner is a screen that shows the sample of what things people are searching for at that moment. When the author asked what had been the most frequent searches lately. One of course was “sex”, a perennial favourite of Googlers. Another was god, lots of people searching him or her. A third was “jobs” – you can’t find enough of those. Remarkable diversity of searches via Google, in so many different tongues, that makes Google search engine (and search engines in general) such huge flatteners. Never before in the history of the planet have so many people on their own had the ability to find so much information about so many things and so many other people.
Last century, machines proved they could do replace human muscle. This century, technologies are proving they can outperform human left brains – they can execute sequential, reductive, computational work better, faster and more accurately than even those with highest IQs. [Just ask chess grand master Garry Kasparov, who lost a match to a chess playing computer]... to flourish in this age we need to supplement our well developed abilities with aptitude that are high concept and high touch. Developing these high concepts and touch won’t be easy for everyone. Fear not, or at least fear less, the challenge is to work them back in shape.
Lets us face it, we have very little chance of working in the same company for 25 years as our parents have, we have got to be adaptable. Gene Sperling, the former economic advisor to President Clinton and author of The Pro-Growth Progressive, has a nice way of expressing it. He remarked that, today’s workers need to approach work place much like athletes preparing for Olympics, with one difference. “They have to prepare like someone who is training for the Olympic but doesn’t know what sport they are going to enter, they have to be ready for anything”.
The best simple example is the job of typist being replaced by other people with computer basics. This doesn’t imply that anybody’s profession may get replaced in future. Either get a job where nobody can replace you (evergreen) or be a great adapter by upgrading your knowledge and skill to cope with changing job market and demands being made by your employer. Or otherwise you might be replaced any time. An American auto parts manufacturer in China, posted at the following African proverb, translated into Mandarin, on his factory floor:

"Every morning in Africa, a gazzelle wakes up. 
It knows it must run faster than the fastest lion or it will be killed. 
Every morning a lion wakes up. 
It knows it must outrun the slowest gazelle or it will starve to death. 
It doesn't matter whether you are a lion or the gazelle, 
When the sun comes up, you better start running. "

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