Inside the Capitol

Monday, May 01, 2006

5-03 The World Is Flat

Syndicated Columnist
SANTA FE -- The World is Flat. That phrase is everywhere lately. At first I dismissed it as a likely pronouncement from the flat-earthers that Columbus and Copernicus were wrong.
When I realized the words were coming from economists, I bought Thomas Friedman's book by the same name and had my eyes opened.
Friedman has taken a level playing field and extended it worldwide. His thesis is that the convergence of a number of "flatteners" in the last few years has leveled the playing field for anyone in the world with a computer and Internet access.
That means anyone in the least developed countries of the world now has the tools to become a player on the world's stage. And individuals and institutions that don't realize this will soon be left in the dust.
When President Bush went to India recently, we heard much about outsourcing. That's when companies farm out a function, such as research, to another company, maybe on the other side of the world. Computer whizzes previously came here to do that. Now they can stay home in India.
It worked so well that U.S. companies began outsourcing other functions, like call centers or accounts receivable. Now there is no telling who is doing what from where when the phone rings.
Offshoring has been around longer. That's when companies move entire factories overseas. We're familiar with incentives local and state governments offer to attract business. It's now gone global. And developing countries can seriously underbid us.
Offshoring won't stop because it's good business for the companies that do it and for the countries that attract the factories. And since Americans can buy the foreign-produced goods cheaper, they aren't complaining.
Outsourcing won't stop either. And neither will eight other flatteners Friedman describes in The World Is Flat. Those flatteners began on 11/9/89, with the fall of the Berlin Wall.
That event tipped the balance across the world from centrally-planned economies to free-market economies, governed from the ground up, by the interests, demands and aspirations of the people, rather than the interests of a ruling clique.
The second flattener came in 1995 when the Internet began to connect people throughout the world. The third flattener came in the last few years with the development of compatibility among software programs so that work can flow smoothly.
Once these three flatteners were in place, the other seven came quickly.
To the chagrin of the Microsofts, computer geeks started writing their own software programs and even their own operating systems and making them available free for download from the Internet.
Wal-Mart created a supply chain now being referred to as the Wal-Mart Symphony. Manufacturing, reordering delivery, sorting, packing, distribution and buying have been integrated seamlessly into a system such that when a computer rings up your purchase at a counter, a machine somewhere in the world begins making another of those items.
Smaller companies can't play the Wal-Mart Symphony themselves so UPS has created the opposite of outsourcing. It goes into a company and creates a global supply chain. You've seen the ad in which a company manager unwittingly names a guy in funny brown shorts the employee of the month.
Then came Google and its derivatives, bringing all the world's knowledge to our fingertips. That was followed by all the digital, mobile, personal and virtual gadgets that completed the flattening of the world.
Now all the world is America's competition. Are we up to it? Friedman tells of a sign in a Chinese factory.
"Every morning in Africa, a gazelle wakes up and knows it must run faster than the fastest lion or die. Every morning a lion wakes up and knows it must run faster than the slowest gazelle or starve. It doesn't matter whether you are a lion or a gazelle, when the sun comes up, you better start running."
WED, 5-03-06

JAY MILLER, 3 La Tusa, Santa Fe, NM 87505
(ph) 982-2723, (fax) 984-0982, (e-mail)



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