FLAT NO. STUPID YES.

There's no doubt the earth ain't flat—it's about as round as a ball. Its deviation from a perfect sphere is known to a fraction of an inch. The world ain't flat either. Its deviation from equality of income can be guessed accurately enough. Its deviation from equality of power is profound—and profoundly to be accepted.

We would like to be ruled by the best. In their place we are ruled by the ambitious—who were struck by lightning — some with virtue and some without it.

Outsourcing (by which we usually mean contracting piecework to captive foreign firms,) and offshore manufacturing (usually, locating a major manufacturing activity offshore—which may also include outsourcing piecework and/or complete production lines,) makes for a flatter world measured by potential manufacturing skills.

Tom Friedman and Joseph Stiglitz, two brains who ought to know, tell us India and China are coming on fast. They will be able to compete against us in less than fifty years.

What should we do about it? Stiglitz fears it may further diminish the standard of living of America's unskilled workers.

Neither writer discusses national options for the future of American workers—can they all be trained to produce a high standard of living for themselves?

If not, will their neighbors, (who count on them to provide workers and soldiers a free America cannot survive without,) decide to raise the minimum standard of living high enough to continue to lead—high enough to prove our exceptionalism?

Will our talented, who can be trained, be protected from national rot that would otherwise tend to bring the nation down—as disorder and conflict undo the good we thought would come our way?

National options are not discussed because, in a way, they do not exist.

Democracy, as we see it, is built on profit and market institutions that do not invite command decisions by government leaders.

We are convinced that government leaders follow their nose looking for money profits and personal fame and power.

So we do not empower them to do much more than skim the cream from the top of the milk.

Socialism has proved in our lifetime that the urge to command markets gives way at once to the urge to silence all voices but your own.

If we are right that markets are mindless and government is without conscience or innovative power, the implication is that India and China will do no better than we have done. They will end up producing more than we do—but needing more than they produce—a lot more.

Just as we cannot get it together, they will not get it together.

The real imperative will be to avoid another world war (or equivalent loss of life and property). And beyond that, we will have to avoid environmental losses and natural disasters from which there will be no recovery.

Let us have a nice day—and read yesterday's blog which at least had hope for solutions: they were based on production-backed money and a monetized national debt that was never bigger than we are.

John Gelles

BOOKS OF THE TIMES
http://www.nytimes.com/

'THE WORLD IS FLAT'
By Thomas L. Friedman

Review:
Global Playing Field: More Level, but It Still Has Bumps
By JOSEPH E. STIGLITZ
Published: April 30, 2005

The world is flat, or at least becoming flatter very quickly, Thomas L. Friedman says in his exciting and very readable account of globalization.

In this flat new world, there is a level (or at least more level) playing field in which countries like India and China, long marginalized in the global economy, are able to compete. And while Mr. Friedman, a Pulitzer Prize-winning columnist for The New York Times, celebrates the new vistas opening up for these countries, he describes forcefully the challenges globalization presents for the older industrialized nations - especially the United States.

America is still the global leader in science and technology, but its dominance is eroding. As Mr. Friedman points out in "The World Is Flat," Asian countries now produce eight times as many bachelor's degrees in engineering as the United States; the proportion of foreign-born Ph.D.'s in the American science and engineering labor force has risen to 38 percent; and federal financing for research in physical and mathematical sciences and engineering as a share of gross domestic product declined by 37 percent from 1970 to 2004.

About a third of "The World Is Flat" is devoted to describing the forces of leveling - from the fall of the Berlin Wall, which eliminated the ideological divide separating much of the world, to the rise of the Internet and technological changes that have led to new models of production and collaboration, including outsourcing and offshore manufacturing.

The rest of the book is devoted to exploring the implications of this flattening, both for the advanced industrial countries and the developing world. In truth, Mr. Friedman's major points would come across more strongly if his 488 pages were edited more tightly. But he provides a compelling case that something big is going on. I was in Bangalore, India, in January 2004 - just a month before Mr. Friedman - visiting Infosys, one of India's new leading high-technology companies. I, too, was bowled over by what I saw: "campuses" more modern than anything I had seen on the West Coast, and business leaders as dynamic and thoughtful as anywhere in the world.

It may be true that fears of outsourcing have been exaggerated: there are only a limited number of radiologists, software programmers and back-office people whose jobs can be performed at a distance. But I side with Mr. Friedman: the integration of some three billion people into the global economy is a big deal. Even if only a limited number of American jobs are lost, the new competition will have striking effects, particularly on the wages of unskilled workers. While free trade may ultimately make every country better off, not every individual will be better off. There are winners and there are losers; and while, in principle, the winners could compensate the losers, that typically does not happen. Among other things, a flatter world means a less flat America - more inequality.

The playing field may be getting more level, but not everyone is equipped to play on it. On that same trip to India, I spent more than half my time in the countryside surrounding Bangalore, where traveling 10 miles was like traveling back 2,000 years. Peasants were farming as their ancestors must have. What has enabled Bangalore to become a high-tech success story is that companies like Infosys have removed themselves from what is going on nearby. They communicate directly by satellite with the United States, and in a place where local newspapers list the number of brownouts the previous day, these companies can have their own sources of power. And while new technologies may close the gap between parts of India and China and the advanced industrial countries, they will also increase the gap between those countries and Africa.

Mr. Friedman is right that there are forces flattening the world, but there are other forces making it less flat. At issue is the balance between them. So is the world really much flatter than before?

Copyright 2005 The New York Times Company

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