The World Is Flat: Chapters 5–9

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.

Those American low-skilled workers doing fungible jobs—jobs that can easily be moved to China—will have a problem.

By automating these jobs, Opsware enables companies to save money and free up talented brainpower from relatively mundane tasks to start new businesses in other areas.

“Untouchables,” in my lexicon, are people whose jobs cannot be outsourced, digitized, or automated.

Traditionally, any item that can be put in a box and shipped (roughly, manufactured goods) was considered tradable, while anything that cannot be put in a box (like services) or was too heavy for shipping (like cement) was thought of as non-tradable. But that is now vestigial thinking.

Interestingly, the Princeton economist Alan Blinder argues in his paper on outsourcing that because so many new middle jobs will require this kind of personal touch, it may actually produce a revival in human interactive skills, skills that have atrophied to some degree because of the industrial age and the Internet.

While society will clearly need and demand more high-end, genius mathematicians who can design and execute the sorts of algorithms that drive search engines and Wall Street derivative strategies, we also need more people trained in basic calculus, because more and more math and quantitative skills will be needed to do more and more standard new middle jobs.

Simply providing more education is probably a good thing on balance, especially if a more educated labor force is a more flexible labor force that can cope more readily with non-routine tasks and occupational change. But it is far from a panacea ...

At one point, one of candidate Williams’s aides remarks to him that the problem with television is that it makes everything and everyone “seem credible”—and when everyone is credible, no one is credible.

But it is no accident that when you talk to Indian and Chinese business people and even educators, some now openly express their concerns that if math and science are not leavened by art, literature, music, and the humanities, their countries will be at a competitive disadvantage as they try to get to the next level of global competition.

In a world upended by outsourcing, deluged with data, and choked with choices, the abilities that matter most are now closer in spirit to the specialties of the right hemisphere—artistry, empathy, seeing the big picture, and pursuing the transcendent.

High touch involves the capacity to empathize, to understand the subtleties of human interaction, to find joy in one's self and to elicit it in others, and to stretch beyond the quotidian in pursuit of purpose and meaning.

After the dot-com bubble burst, computer science enrollment at Georgia Tech started to drop precipitously.

What makes America unique is not Enron but Eliot Spitzer, the attorney general of New York State, who has doggedly sought to clean up the securities industry and corporate board rooms.

Chinese pity comes from their belief that we are a country in decline.

More than a few Chinese friends have quoted to me the proverb fu bu guo san dai (wealth doesn’t make it past three generations) as they wonder how we became so ill-disciplined, distracted and dissolute.

There is something about post-World War II America that reminds me of the classic wealthy family that by the third generation starts to squander its wealth.

That gave us a huge head of steam but also gradually bred a sense of entitlement and a culture of complacency.

[Meteorologists emphasized] the unlikely confluence of conditions [which] converged to bring about an event of devastating magnitude.

As economist Jeffrey Sachs has pointed out, until the scientific revolution began in the seventeenth century, virtually everyone everywhere was living on the edge of subsistence.

In the Cold War, one of the deepest concerns of American society was the putative missile gap between us and the Soviet Union, which threatened America from outside.

By attracting scientists and engineers born and trained in other countries, we have maintained the growth of the S&E labor force without a commensurate increase in support for the long-term costs of training and attracting native U.S citizens to these fields, the NSB said.

Later that day in another conference, Irena Mikeladze, an immigrant from Eastern Europe, wanted to know why her son Timothy had no science book and such a flimsy science curriculum.

It’s also the attitude of workers who take pride and are willing to do what is necessary to succeed, even if it means outsourcing parts production or working on weekends or altering vacation schedules—things that would almost certainly trigger months of acrimony and negotiation in Western Europe.

When I asked Bill Gates about the supposed American education
advantage—an education that stresses creativity, not rote learning—he was utterly dismissive.

There is an old techie adage that in places like China and Japan the nail that stands up gets hammered, while in Silicon Valley the nail that stands up drives a Ferrari and has stock options.

No, that voice on the help line just has a friendly Indian lilt that masks any sense of threat or challenge.

It is to embrace globalization and understand that a fairer, more compassionate, and more egalitarian society lies in a web of policies aimed not at strengthening the old welfare state—or in abolishing it and just letting the market rip—but at reconfiguring it to give more Americans the outlook, education, skills, and safety nets they will need to compete against other individuals in the flat world.

I am not saying we should require all politicians to hold engineering degrees, but it would be helpful if they had a basic understanding of the forces that are flattening the world, were able to educate constituents about them and galvanize a response.

What is needed is one simple universal portable pension scheme, along the lines proposed by the Progressive Policy Institute, that would get rid of the confusing welter of sixteen different tax-deferred options now offered by the government and consolidate them all into a single vehicle.

The universal pension format would make rollover simple, easy, and expected, so pension lockup per se would never keep someone from moving from one job to another.

it is essential that we develop a scheme for portable health insurance that reduces some of the burden on employers for providing and managing coverage.

But employers would not be responsible for negotiating plans with insurance companies, where they have little individual clout.

In a flattening world, where worker security can no longer be guaranteed by Fortune 500 corporations with top-down pension and health plans, we need more collaborative solutions—among government, labor, and business—that will promote self-reliant workers but not just leave them to fend for themselves.

Education begins in a home where reading is intrinsically valuable and necessary; where recognition of the hard work associated with education and doing well in school are top priorities; and where parents join schools in having high expectations for their children’s success.

In July 2004, comedian Bill Cosby used an appearance at Jesse Jackson’s Rainbow/PUSH Coalition & Citizenship Education Fund’s annual conference to upbraid African Americans for not teaching their children proper grammar and for black kids not striving to learn more themselves.

She pounded the fundamentals of journalism into her students—not simply how to write a lead or accurately transcribe a quote but, more important, how to comport yourself in a professional way.

She was a woman of clarity and principles in an age of uncertainty.

America’s status as a leading nation is growing increasingly tenuous because we have become such a low-savings society.

But the Indias and Chinas are increasingly adding one more thing to low-cost labor and high-power technology: unfettered imagination—that is, high innovative and creative capacities.