Tuesday, July 16, 2013

Final Reflective Paper - Post Cal Poly MBA India Trip

Final Reflective Paper

            During the last 9 months we have read and written reviews of two books, wrote fifty responses on articles about India, and read and reflected on India’s five year economic plan in preparation for the two weeks journey abroad. During our time in India we had thirteen meet-and-greets with leaders of Indian business, some purely Indian companies and others Indian extensions of world-wide corporations. We also accomplished some vital sight-seeing, such as visiting Qutb-Minar, the tallest minar (a tower-monument attached to a Muslim mosque) in India and built around 1200 as a signifier of the beginning of Muslim rule in India. We also saw Akshardham, the largest Hindu temple in the world, built by 3,000 volunteers and 7,000 artisans. Finally, we made the long trek to Agra to visit the Taj Mahal.
            The trip was a highly valuable one personally. I grew to know my classmates better as we shared the unique experiences. We all now have a spiritual connection to a far away place and culture. We also had the privilege of meeting some truly special people that I would not have met outside of Cal Poly. I have made it a point to take away at least one lesson or piece of knowledge from each experience. For example, through the lecture at the Yoga Ashram we received a lesson from an intelligent, passionate, insightful teacher about the path from knowledge to wisdom, the eastern view on the benefits of the destruction of the self, and Yoga’s role in aiding mediation. From Lemon Tree’s Rahul Jagiasi we leaned of the importance of rigorously controlling costs because costs are the one thing management has complete control over. We also learned of the problem of India’s poor attitude hiring the disabled. Those who believe in reincarnation view down upon the disabled because bad deeds committed in a past life have condemned them to their disabilities. Lemon Tree is helping shift that attitude by hiring 6% handicapped workers, to be risen to 10% in the next few years due to their success as productive employees.

            However, I don’t want this paper to ramble on and on like this listing off each experience. Instead I would like to address some of the suggested topics listed in the course syllabus, since I believe what I learned on our trip and our through my preparation is valuable for answering them. To begin, I believe a service that could be very successful is a medical tourism travel agency. Through the book Billions of Entrepreneurs I learned that an American can buy a round trip ticket to India, receive a top notch heart surgery, and spend a week recovering in Goa all for around $10,000 out of pocket. In America, just the surgery can cost $150,000. Why not offer a service that plans a hotel, meals, private transportation, the hospital treatment, a recovery plan, and airfare all for the customer/patient. Even with a 100% profit margin I can charge the customer/patient $30,000 tops for the most complex of surgeries, which is still one-fifth the cost of American healthcare! The big hurdle will be overcoming the stigma that Indian hospitals and doctors are inferior to American facilities, however after a few success stories I believe Americans will be more open to it. Personally, when I was treated for my stomach infection I was a little hesitant to receive an injection, but my care was excellent and I only paid $20 for a doctor’s consultation, injections, and prescription drugs delivered to my hotel room!

            On this trip I was forced out of my comfort zone in many ways. In fact, the furthest I have been out of the country before this trip was Mexico and that was a decade ago. The heat in Agra, the long plane rides, the constant stomach illness, sharing a bedroom, the terribly uncomfortable dress shoes (but that one is my own fault!), the panhandling in Delhi’s open air market all pushed me far outside of my comfort zone. But the worst of all was the train ride. I felt afraid to touch anything, even to sit down at the station. I wasn’t excited to sleep in a cramped bed above complete strangers. And of course the food gave me terrible indigestion forcing me to brave the railway restrooms. What I learned from these experiences is that we cannot grow in comfort. Even when studying in the physical comfort of my home, the library or a café the reading, writing, thinking, and memorizing is forcing my mind to extend itself beyond its comfort zone. When we are comfortable we are standing still, absorbing or producing nothing that will push us to the next level of achievement. I think this is the most valuable thing I learned in India.
            So how did I grow from all of this nasty un-comfortableness? That’s a hard question, and I think the full answer will only be seen with more time. I can say that I feel proud of myself for choosing the hard path. As a two-year student I didn’t need take this class for credit to graduate. But I knew that this was too good and too special of an opportunity to pass up. Almost all higher-cost MBA programs have a required trip like this one telling me that this is a vital part of a full MBA education. If I had not taken the trip I would have regretted it, felling that my education was incomplete. Aside from pride, I feel appreciative of my education. Seeing the coolies carrying our water and bags at the train station made me truly believe that education is the key to a better life. I also know that education isn’t everything though; the hunger that Indian’s feel to better themselves and their country is something that complacent Americans can learn from. I know of many Americans who are threatened by China’s growth; instead of fear and hatred, inspiration can be wrought out of China and India’s stories of ambition for a better life. If education is the key ambition is the push that bursts the door wide open.

            What surprised me the most about India is the disparity of the rich and poor. In America the level of inequality in the distribution of wealth is a hot social topic. In Downtown Los Angeles I have walked the streets filled with homeless and only a handful of miles away sat inside the corner offices of the elite law firms, but nothing could have prepared me for the $1 billion single-family monolith standing tall above the city-within-a-city of the slums. Or Delhi’s massive construction projects contrasted with forgotten, decaying street-side ruins. India is a country of agonizing growing pains. It cannot be denied that the last ten years have been beneficial, but not to everyone. 81.1% live on less than $2.50 a day, and 96.9% live below $5 a day.

Being in India is like being in the middle of a fulcrum, with stubborn attitudes and practices of old, refusing to be lost to time, balancing with the growing pressure of modernization and globalization pushing down ever harder. At some point the bad habits that are tragically taken for granted, such at the untrustworthy government and legal system, will become weightless under their obsolescence. And it is India’s private sector that will lead its government towards efficiency. We have seen victories such as strong CSR initiatives coexisting with the financial success of Lemon Tree hotels, competition from the National Stock Exchange cleaning up the inefficiencies of the Bombay Stock Exchange back in 1992, and the success of private hospitals to provide (relatively) inexpensive high quality healthcare. The private sector is forcing the public sector to realize its own glut. The public sector must trim its fat or feel the pain of holding its country behind.

This has been a marvelous experience for me. Reading about India and visiting are two completely different things. I now have a personal connection to this far away land and culture that I did not have before and feel that I can have a meaningful conversation about India with anyone else who has this connection. I got to see the wonders of the Taj Mahal and Akshardham, tasted the street food, contracted Delhi Belly, rode the railway, met the movers and shakers of Indian business, experienced the heat of Delhi and the monsoons of Mumbai, felt the instability of the Rupee, and connected with my classmate on a new level. A trip like this is once in a lifetime and should be required for all MBA students, so it pains me to hear that it will not be offered next year at Cal Poly. I urge the powers to be to bring it back; it’s too good of a thing to let die.

Friday, June 14, 2013

12th 5-Year Plan

India’s 12th 5-Year Plan: What does the future of India’s economy look like?


            While India has seen major growth in GDP in the last decade, not all of the population has realized economic gains. It is no secret that India has done a poor job of solving its social problems like poverty and discrimination stemming from the ancient and lamentably prevalent caste system. Leaders are now forced to solve this issue, not only because it is the humane thing to do but also because the key to further economic growth is tapping into this massive potential labor force. The authors of the 12th 5-Year Plan called this inclusiveness and it is the overarching theme from the beginning to the end of the paper. While evidence supporting how inclusiveness will strengthen Indian business can be found in almost every chapter of the 12th Plan, for this paper I will focus on the chapters detailing the future of India’s farm sector, manufacturing, infrastructure projects, and innovation.

            The Farm Sector

            If India is serious about empowering and including the impoverished in its growth, the place to start is the farm sector. Half of the population of India is dependent on some sort of farm activity and expansion of farm incomes is the most potent weapon for reducing poverty. The gap between rural and non-rural incomes is enormous and employment growth in non-agricultural careers has not grown sufficiently to reduce the population dependent on agriculture. The attitude of the 12th Plan is that beyond the next five years a goal should be to reduce India’s dependence on agricultural jobs, but for now that will not change and India should make the agricultural sector as efficient, comfortable, and high-paying as can be.
            There are a few tactics that can be employed to achieve this goal. The first is improvement of water management. The agricultural sector is in desperate need of modernization of irrigation systems like a move away from flood irrigation towards sprinkler and drip irrigation, extensive rainwater harvesting combined with a groundwater recharge, and steps to improve governance in water management. Water management improvements also mean more clean drinking water, a basic resource that India still has trouble providing. With high quantities of cleaner water available, the overall health of the population will increase, leading to higher levels of productivity. It will also put less of a burden on India’s troubled public healthcare system.
Another problem is the overuse of inefficient or downright bad farming practices. For example, chemical fertilizers widely used because they are heavily subsidized. This needs to end in favor of organic fertilizers as overuse of chemicals degrades the quality of soil. Adoption of a farming systems approach which adopts livestock, fertilizer, crop rotations and composting as soil nutrient enhancers would do a world of good for the farm sector.

            As time passes, India’s population will be less dependent on agriculture as the youth decides to pursue urban career choices. While India’s service sector has exploded, primarily in providing IT services for foreign countries, the manufacturing of goods has not. Manufacturing is only 15% of GDP, very low when compared to other developing nations China and Thailand, at 34% and 40% respectively. The services sector alone cannot support the 250 million additional income-seekers that will join the labor force in the next 15 years. Unless the manufacturing sector can provide at least 100 million additional decent jobs, it will be difficult for India’s growth to be inclusive.
            One challenge facing manufacturing is the fact that the best of India’s engineering talent is going into IT. Many later on go through business management school and end up working for financial, consulting, and other service industries. Skilled workers, good supervisors and managers are essential for the success of any industry and India is faced with the question of how to attract these workers to manufacturing.
            Another reason why manufacturing is struggling is due to poor policy. For example, in a study of countries with strong manufacturing industries it was revealed that there was a very good consultation process between producers and policy-makers and for establishing coordination amongst policy-makers. In these countries, the primary goal of planning is to achieve learning and improving processes, not for budgets and allocations like it is in India.
            To turn things around, India has developed the National Manufacturing Plan. The objective of the plan is to increase growth 12-14% in the medium term. This growth must be sustainable in the long term and create the jobs needed. Special focus will be placed on some sectors of manufacturing which will enable the country to rapidly achieve its goals. Such sectors include textiles, garments, leather, footwear, gems and jewelry, and food processing for job creation. Sectors that will deepen technological capabilities in manufacturing include machine tools and IT hardware and electronics. Manufacturing technology for energy security include solar energy, clean coal*, and nuclear power generation. If infrastructure growth is to be a reality in India, manufacturing of heavy electrical equipment and heavy transport, earth-moving equipment is necessary. Finally, sectors where India already has a competitive advantage, such as the automotive, pharmaceuticals and medical equipment, must not be ignored. Policy makers and consultants must analyze the best practices of these sectors and see if they can fit into sectors in need of growth.
            Infrastructure / Public Transit
            Inadequate infrastructure was recognized in the 11th plan as a major bottleneck to growth. The total investment in infrastructure had risen from 5.7% of GDP in the base year to 8.0% in the final year. A large contributor of this growth is due to the successful implementation of PPP  (Public-Private Partnership) financing projects. However the pace of investment had favored some sectors, such as telecommunication, oil and gas pipelines, while neglecting others, such as electricity, railways, roads and ports. In the 12th year plan these neglected sectors need special attention.
            As inclusiveness of India’s poor into the economy increases, requirements of transport are likely to grow significantly faster than overall GDP growth. India has the second largest road network in the world totaling 4.2 million kilometers, but only half of it is paved and 2% of the length is national highway. Expect big changes here. A master plan for adding 18,637 kilometers of expressways will be taken up. These roads will be 4 or 6 lane and feature both passenger and freight movements. In addition, neglected single lane national highways will be repaved and upgraded to two-lane standards. Finally, it is essential for India to develop state highways and rural roads to ensure full connectivity. Rural roads are known to be a very effective catalyst for economic transformation due to connecting India’s rural poor to markets, hospitals and schools. It is necessary that universalization of rural connectivity be completed during the 12th Plan.

            The President of India that this is the “decade of innovation.” Innovation is indeed key to growth, for any nation, but there are three distinct values that make “Indian Innovation” unique. These values are also squarely in line with the theme of inclusiveness:
1.     Focus on finding affordable solutions for the needs of the people without compromising quality. This is especially evident in India’s automotive and private healthcare industries, where one can buy a new car for $2,500 or receive a top-quality heart surgery for $5,000. In fact, it is possible for an American in need of heart surgery to pay only $10,000 for the procedure, airfare, and a one-week vacation. Compare this to $150,000 for the same surgery in the United States.
2.     Desired outcomes are produced by innovations in organizational and process models that deliver to people the benefits of technologies that may be developed in scientific laboratories.
3.     Innovations in the process of innovating to reduce costs of development. For example, management of intellectual property rights in India must me improved. There is a large fear of patent monopolies creating artificially high prices, which hurt the consumer, however without a patent there is little incentive to innovate. One innovative path to creation that was successfully used in India is Open Source Drug Development, which takes key principles in open source computing (collaboration and open access) and applies them to drug development. It accelerates the discovery process by mass-collaboration while keeping expenditures to a minimum by encouraging incremental contributions by volunteer scientists, removing the ability to patent any results. It de-links the research and development costs to the end sales-price of the product, giving drug manufacturers the ability to produce new drugs at a very low cost.

The Indian approach to innovation focuses on the efficiency of innovation and how the outcomes of innovation will benefit India’s people, especially the poor. This contrasts sharply with the conventional approach, mostly focused on increasing the inputs of science and technology R&D and measurements of the number of papers and patents produced. This is primarily a research-based approach to innovation. In contrast, conversion of R&D results to products for the people requires the efforts of an ecosystem of players: entrepreneurs, researchers, finance providers, business enterprises and policy-makers. Therefore, India must provide for the needs of these enterprises and encourage collaborative communication amongst them.
It is often said that India is a country with many successful experiments that never achieve scale. By having India’s innovation ecosystem operating collaboratively, Indian businesses will be connected to a larger pool of customers and good ideas will swiftly transform into needed products.


The most endearing characteristic of this latest plan is its humanity. India is not a nation that will tolerate its poverty problem any longer. India's social problems have caused a painful divide among the people that is weighing her down in the past. In the new plan, India does not separate social progress from economic progress; as the poor become educated, healthy, and included in the new bustling economy all of India will grow with them.
Of course this will not be easy. The current infrastructure is not compatible with the inclusion of India’s poor; new roads must be built to connect them with schools, hospitals and markets. The farm sector must be modernized to improve the wages of India’s rural workers, still the majority of the population. The manufacturing sector must be strengthened to offer needed future employment opportunities. And frugal, practical innovation must be encouraged, because without innovation that can change the lives of the many India is doomed to remain stagnant.

*<Gets on my soapbox> Personally I am against the adoption of coal. Policy to move away from this ancient fuel should be embraced, and towards it discouraged. Coal is one of the dirtiest forms of energy on the planet and is literally suffocating the people of China.  I would hate to see India in the same predicament. It is also once of the biggest carbon emission polluters of any fuel, making the act of burning coal largely responsible for climate change. “Clean” coal is a lie; the only difference is that the emissions are captured and buried deep underground in a process called carbon sequestration. This is not solving any problems, only sweeping them under the carpet.

Friday, March 22, 2013

Billions of Entrepreneurs Book Review

Stephen Allison

Billions of Entrepreneurs Book Review

1.    Overview
It’s no secret that the rise of China and India has been on the minds and tongues of Americans for the better part of the last decade. Tarun Khanna, professor at Harvard and expert on emerging markets, attempts to give readers insight into these two countries by explaining their differences, such as:

“Why can China build cities overnight while India has trouble building roads?”
“Why does China prohibit free elections while Indians, in free and fair elections, vote in officials with criminal records?”
“Why has China ‘Indianized’ in the past while India shunned China?”

Khanna concludes that due to cultural, religious, and ideological differences in their histories, India’s strengths have become China’s weaknesses and vice-versa. For example, because of China’s communist history, China now has developed a very strong public sector but weak private sector. In contrast, India’s history of British rule has influenced its current democratic model, which promotes a strong private sector and underdeveloped public sector.

2.    How China and India Differ
i)     Information Transmission
For years China has claimed that media channels, like television and newspapers, can be used to promote destabilizing propaganda. “Stability overrides everything” is a central belief in the Chinese government and censorship is a long accepted tool to promote stability. The problem is that censorship can potentially interfere with profitable communication. As the world is now listens to China and China listens to the world, transparency of information can lead to valuable connections.
In India, no subject is taboo for the press. Every shade of opinion is expressed free of government influence. Every political crisis is reported and politicians are openly criticized in magazines, newspapers, and on television. But although India’s information transmission is transparent, it is affected by what statisticians call white noise. Because everyone is free to express whatever he or she likes, the truth is hidden in a sea of irrelevant, although not necessarily inaccurate, information.
ii)   Private Rights vs Public Interest
China excels at providing public services at the expense of private rights. For example, in the early 1990’s China began development of the marshy farmland Pudong (on the side of the river furthest from the photographer) into a sprawling metropolis:

Three hundred thousand farmers were displaced as a result. Many farmers received cash compensation for the land they lost and now work in the factories of Pudong. To Americans this may not seem fair, but in China the needs of the state always trump the property rights of individuals.
In contrast this would never happen in India. Hundreds of thousands live in desperate poverty in India’s slums. The rich want the slums bulldozed, however the poor have the rights to the land and the state fears treading violating these rights. Democracy is upheld even if it results in underdevelopment. It is up to private land development firms, such as Delhi’s DLF Group, to transform farmland into cities.
In China, development is the result of fiat authority of the state. In India, it is the result of entrepreneurship.
iii) Financial Infrastructure
A major difference has emerged in the two countries’ banking landscapes. China has made no effort to separate banks from CCP (China Communist Party) control. The result is banks that lend money based on political rather than economic criteria. Funds were wasted in unprofitable “state-owned enterprises” totaling $300 billion in bad loans, 40% of all loans made in China.
Unfortunately, the Chinese stock market doesn’t run any better than their banks. On any given day the majority of stock prices move together. In contrast, about half of the stocks on the NYSE move in tandem. When stock prices move together to the degree they do on the Chinese exchange, it means that the stock price of a company isn’t an indicator of their performance. With no firm specific information available, no market can exist because particular investors cannot determine if one company is worth investing over another.
In India, the state of banking is better but still flawed. Despite many reforms enacted since a 1991 fiscal crisis, the public does not trust banks to service their needs. This is due to bankers’ reluctance to loan to anyone outside of the government. Seasoned bankers have made careers out of government-approved loans set at government-approved interest rates and are exceedingly cautious of loaning to the private sector. Even worse, bankers’ salaries are fixed so they have no incentive to loan beyond the minimum required to be active. This overinvestment in government securities means less financing available for entrepreneurs.
India’s stock exchange is a different story. The Bombay Stock Exchange (BSE) is India’s original stock market, with history going back to 1875. However, the BSE had a monopoly on stock trading in India making it an inefficient, underperforming institution. The BSE was another target of the 1991 reforms, but instead of imposing new regulations on the BSE a competitor was formed called the National Stock Exchange (NSE). The NSE was a well-run, transparent system for stock trading that dominated the BSE. To remain competitive, the BSE had to clean up their act or go out of business. Competition worked where reform and threats did not.

iv)  Soft Power
Much of China’s strength lies in its hard power, or power to motivate/attract people based on economic forces. Soft power is the ability to motivate/attract people based on cultural influences. Soft power is where China is weak and India is strong.
Consider India’s film industry, Bollywood, which now produces more movies than Hollywood. Or Buddhism, which was heavily adopted by the Chinese at the end of the strictly Confucian Han dynasty. Or Yoga, which was introduced to the United States by Swami Vivekananda and popularized by Deepak Chopra. Or Ravi Shankar, who taught George Harrison Indian classical music and influenced some of the most well loved popular music in history.
In contrast, China has no cultural ambassadors that have shaped the world like India’s have.

3.    Khanna’s Strengths
What I loved about this book was the thoroughness of it. Tarun Khanna is obviously an extremely intelligent individual and passionate about the subjects of his book. Khanna writes with the confidence of a true authority on these two emerging markets, as he leaves no stone unturned in his goal to educate his readers about his subject.
I believe many Americans have a foggy idea of what is happening in China and India but are generally clueless as to the details. Even worse, I have see true hatred I the form of xenophobia from some people regarding China (but not India, most likely a result of India’s supreme soft power). I believe that anyone afraid of China should make an effort to understand its importance in the 21st century and Khanna’s book is an excellent way to achieve this.
Khanna makes fascinating contrasts between the two countries that I will not soon forget. Because of this book I now have a clear understanding of the cultural differences between China and India that have substantial impacts on their economies and societies. The best thing of all is that Khanna backs up every point made with evidence that he himself found venturing into the real world and meeting with powerful figures in both countries. It must have taken him many years to acquire the first-hand the level of understanding he has gained, as it shows in his writing.

4.    Khanna’s Weaknesses
The one weakness that I found is that this is one thick read. Unlike “The World Is Flat,” which I can imagine almost anyone with a college education to find readable without squinting too hard, “Billions of Entrepreneurs” asks much of the reader. This is especially true if, like me, you go into it with an average American’s understanding of India and China and much of the information here is new to you.
Also, due to Khanna’s intensely detailed writing, the book can feel unfocused at times. There were a couple chapters when I had to go back to the beginning to remind myself what the main idea/point being made was due to becoming lost in the details. Also, I had trouble finding a narrative, especially in Part II: Enterprise. Khanna goes from discussing the rise of Infosys to Microsoft’s troubles in China to India and China’s differing attitudes towards their diaspora. It reads very much like a collection of scholarly journals instead of a book. Not that this is necessarily a bad thing, as the stories and information here are gold, but because of this I think that “Billions of Entrepreneurs” is a book best read the second time when the reader knows what to expect in Khanna’s flow.
      Finally, the title of the book is misleading. While catchy, at no point did I believe that there are "billions of entrepreneurs" in China and India from the evidence provided here. In fact, in China private entrepreneurship is very hard to pull off in the face of overpowering government.

5.    Closing Thoughts
“Billions of Entrepreneurs” is an excellent book in throwing the reader deep into the emerging markets of India and China. Khanna goes into the utmost detail, providing numerous real-world examples he himself observed to prove his main point: that China and India are mirror images of each other, with one country’s strengths the others' weaknesses. This is not a “China” book or “India” book; It is both because understanding one without the other is not seeing the whole picture.
This is a thick book, demanding more than just one read-through. But the readers efforts will be rewarded as the knowledge contained here cannot be underestimated for those about to visit China or India, international business professionals, politicians, and thinkers.
“Billions of Entrepreneurs” is a tremendous achievement because after reading it I feel much more informed on the book’s subject and able to have an intelligent conversation about China and India when the topic comes up. Really, what better praise is there?


Friday, December 7, 2012

The World Is Flat Book Review


In his book “The World Is Flat: A Brief History of the Twenty-First Century,” Thomas Friedman writes about the events that triggered “Globalization 3.0,” and its effects on the individual, national and international levels. Friedman calls these effects a “flattening” of the world because as the 21st century progresses, little people have the power to act big and big people are able to connect on the smallest level, thus bringing us closer to operating on a flat plane. Globalization 3.0 has leveled cultural walls and shattered national barriers as business, government, individuals, and even terrorists have the ability to share and connect like never before.

Friedman begins by explaining how it happened in his “Ten Forces That Flattened The World,” which are:
1)   Collapse of the Berlin Wall on 11/9/1989 (Friedman later contrasts this event to 9/11, calling 11/9 “creative imagination” and 9/11 “destructive imagination.”)
2)   Netscape brings the internet browser to the installed base of millions of PCs
3)   Work flow software allows computers to communicate without people
4)   Open-source projects and the self-organizing collaborative communities that make them possible. Examples include Wikipedia and Linux.
5)   Outsourcing has allowed companies to split manufacturing and services into stages, and hire outside parties to complete certain stages in a more cost-efficient way
6)   Offshoring differs from outsourcing in that Offshoring allows a company to take a factory that used to be in the USA, and move it to China or India where the exact same tasks can be done cheaper. Offshored tasks are still internal to the company.
7)   Supply-chaining. Friedman uses Wal-Mart as an example of how business uses technology to manage the supply chain for maximum efficiency.
8)   Insourcing. Friedman uses UPS as an example of a company that creates value for other companies who cannot afford a complex supply chain management system.
9)   In-forming, or the ability to find information.
10)  “The Steriods,” or the cell phones, tablets and laptops. All of the wireless, portable, ubiquitous and relatively affordable ways we connect.

Friedman then writes how these flatteners have and will change world culture, business, economics and politics. For example, on page 183 Friedman writes, “We tend to think of global trade and economics as something driven by the IMF, the G-8, the World Bank, the WTO, and the trade treaties forged by trade ministers. I don’t want to suggest that these governmental agencies are irrelevant. They are not. But they are going to become less important. In the future globalization is going to be increasingly driven by the individuals who understand the flat world, adapt themselves quickly to its processes and technologies, and start to march forward – without any treaties or advice from the IMF. They will be from every color of the rainbow and from every corner of the world.”

Relevance and Analysis:

All who read this book should be alarmed if its contents is news to them, for those who cannot keep up with the flattening of the world will be left behind. This is true on the individual or national level. Before Globalization 3.0, a B student from an American college was more highly valued than a genius from India or China. Now employers will hire that latter. As the world flattens talent becomes more valued than geography and the entire world must compete with each other.

Some fear this shift and want to build barriers such as banning outsourcing. The argument is that outsourcing harms America by giving away American jobs to foreigners. However, by running as efficient as possible, businesses can produce products and services at a lower cost and pass along these saving to the consumer as competition forces prices down. If we don’t utilize the global labor market to remain competitive, other countries will, allowing them to produce superior products at better prices. These products could steal enough market share to put American companies out of business, thus leaving even more Americans out of a job!

We must not bury our heads in the sand regarding what is happening around the globe. As more and more countries become highly educated and economically developed, America won’t be so special anymore.  If America remains ignorant by resisting forces that it cannot control we risk losing our status as the world superpower to smarter, hungrier nations. The fear of being surpassed will stimulate positive change, such as a higher skilled labor force.

Friedman makes another very interesting point regarding the benefits of outsourcing, free trade and modern supply chains in Chapter 12, which begins with the quote, “Free Trade is God’s diplomacy. There is no other certain way of uniting people under the bonds of peace.” If two countries are invested in a business together, they are less likely to go to war because war becomes more costly. Now imagine a world where every superpower is interconnected through business. The cost of war would be a global economic meltdown! This is both good and bad thing. It is good because no superpower would willingly go to war with costs that high. Outsourcing, free trade, and global business would effectually create world peace. The down side is that while the great leaders of nations would not willingly go to war, war can still be brought about by the actions of terrorist organizations. Friedman believes that we cannot separate the good from the bad; Globalization 3.0 unites business, politics, art and culture as well as terrorists.

In Chapter 11, ‘The Unflat World,’ Friedman addresses criticisms of his theory. He admits to being a technological determinist (a reductionist theory that presumes that a society's technology drives the development of its social structure and cultural values) and not a historical determinist. A critique can be quoted on page 373: “To listen to you, Friedman, there are these ten flatteners, they are converging and flattening the earth, and there is nothing that people can do but bow to them and join the parade. And after a transition, everyone will get richer and smarter and it will all be fine. But you’re wrong, because the history of the world suggests that ideological alternatives, and power alternatives, have always arisen to any system, and globalization will be no different.”

There is no guarantee that everyone will use these new technologies for the benefit of themselves or their countries. Technology is only a tool; it does not make us smart, moral, wise, fair, or decent. We can only hope that technology will be used for creation and growth, but that does not have to happen. The world is not yet flat and we do not know how it will look when it is.

In ‘The Unflat World’ Friedman lists three constituencies impeding the flattening process: the sick, the disempowered and the frustrated. The sick are the millions of people in India, Africa, China, and Latin America who are not taking off like the middle and high classes. These are the people who are afflicted by HIV, malaria, TB, polio, alcoholism, crime and broken governments. They do not have clean water or electricity. They have much bigger concerns than how Globalization affects them. The disempowered live in between the unflat and flat world. These are the Chinese and Indian peasants and farmers who see the effects of the flattened world, but lack the tools, skills or infrastructure to participate in any meaningful way. The frustrated are the groups who resist Globalization, sometimes to an extreme level such as al-Qaeda suicide bombers.

Assuming that the world does become ever-flatter and the sick, disempowered and frustrated end up joining the flat world, a problem that is already at crisis point will be pushed further into the red zone: pollution. Friedman lists the alarming statistic that in April 2004, over 1,300 cars were added to the streets of Beijing daily. Smog has become so bad that Beijing keeps track of “blue sky days.” The use of clean energy will be necessary in the flat world; its growth must coincide with world flattening or we will choke ourselves in clouds of pollution.

Personal Takeaways:

This is a truly comprehensive guide to the newest phase of Globalization. Friedman covers the past, present and future of the flat world and makes sure to admit that the world is flatter, not entirely flat. With the individual having the power to offer goods and services globally borders no longer restrict the marketplace. Soft powers such as culture and language are bigger barriers than geography in today’s world. Perhaps Globalization 4.0 will see a unification of diverse of culture and language. Until world peace is achieved and borders between nations dissolve I would not say the world is completely flat, and I do not see that happening until more “soft” barriers are broken.

For soon-to-graduate students like myself the book is a scary read. Employers can recruit from anywhere in the world, not just locally anymore. And with the amount of high quality entertainment readily available at extremely low cost, it is becoming increasingly difficult for American students to leave childish pursuits behind and reach adulthood. A portion of America’s youth is amusing themselves to death (as Neil Postman would say). I believe countries where Xbox, Television, Netflix are not so readily available and do not adopt an advertisement-saturated consumption culture may produce a higher quality workforce than America. The geniuses will do fine but the B-students will find it increasingly difficult to find satisfying employment. And as American students continue to amuse themselves to death, we will produce more B-students and fewer geniuses.

One “issue” I have with the book is that it is a little dated. I would love to read a new edition, or “The World Is Flat Part 2.” One flattener that I feel has become more relevant that Friedman only briefly touched on is online education. Online education began with a social stigma but as time passes it is becoming more serious. For example, MIT and Harvard provide free online courses with its website edX. And not just college/professional courses, but something as simple as watching a recorded speeches/lectures online and tutorial videos on Youtube can provide valuable online educational resources.

In conclusion I would recommend this book to anyone who wants a better understanding of just how different 21st century business and culture is compared to last century. Our world is changing exponentially and if we do not understand this we run the risk of being left behind.