The World is Flat

Well Tom I think you are becoming a rock star no no n n n keep working Tom good afternoon welcome a year ago or so I told I told Tom fredman I fully understood that given his stand his very high stand as the New York Times um foreign first columnist he would be writing so frequently and sometimes almost only about what seemed To be the chief uh American foreign policy issue the war in Iraq I was complaining and but uh I also told him that I like many others truly regretted that he had a stop

being the Keen Observer of globalization that uh he used to be I said Tom it's sad that uh your Writings on globalization have become one more in the long list of collateral damages caused by the war he stopped me and said hey Ernesto not so fast I am planning and in fact working already on a new book on globalization how about that obviously he put me on the defensive but after a few seconds of hesitation I decided to go on the Offensive again and said well well if that's the case Tom you must promise that

as soon as the book is published you come and present it to our University in consistency with his uh proverbial uh bomy Tom said that's a deal last all Nan Chanda our real Global editor raise your hand Nan who is also an old friend of of Tom and and and I nian and I had the privilege of having a long conversation with with Tom fredman at our Center in which Tom graciously gave us uh some U Advanced presentation of the ideas that he was uh writing in his new book and reiterated his commitment to come

and present the book as soon as it would be published well today ladies and gentlemen uh Tom fredman is honoring his word again and he's here to tell us why the Earth is uh becoming flat and what are the consequences for countries like mine Mexico but certainly Uh the challenges that this is also posing for countries as powerful as the United States of America so Tom welcome again and thanks for being here [Applause] and esto thank you very much um it's a it's a treat to be here I've uh been on the road the last

uh few days um presenting the book and um of all the events I've been doing this is truly the one I've uh looked forward to most um uh I don't think um um the Yale Community Appreciates uh the incredible gem um that it has here in the globalization Center that Nan chonda and Ernesto zido have uh have put together uh the Yale Global website has uh been a constant source of uh insight and and uh information for me so there's really nowhere more um that I would like to you know begin talking about this book

then uh at an event hosted by uh Ernesto and and Nan um and my daughter also goes to school here So um uh what I thought I would do in the next uh just sort of 30 minutes is try to just give you the this is a long book 488 pages so try to just give you the core uh thesis and um if you all are uncomfortable over there there's sort of room on the stage and I don't you won't bother me if you sit up there so I don't want anyone to wants to be

into be out I'm actually going to take off my jacket if you don't mind um um uh You know Ernesto's story about us having this conversation probably about 14 months ago is uh is very accurate and to really understand uh what this book is about you have to understand U where it came from um as readers the my column know I became the Foreign Affairs columnist in 1995 and uh my interest in that column really oscillated between kind of Lexus issues of technology and and finance and globalization and Olive Tree issues of um uh uh

you know uh Conflict and and uh traditional geopolitics and I was in that kind of you know oscillation mode I would go from one theme uh to the other right up till September 11th 2001 um at which point I really dropped the globalization uh theme like a stone and really went off and covered the 911 Wars uh really from September 11th on I I spent my whole time in the Arab Muslim world uh trying to really understand the roots of n 11 uh and the impact of of Our response to it and um uh I

took one trip I think during those three years to Silicon Valley I went out to visit a startup company that some friends of mine were involved in it was it's something called Google and um uh I did exactly one column about Google and went back to Kabul um basically um uh kind of metaphorically and um uh I I realized I had sort of lost the thread of the globalization uh story anyways um during this three-year period I started doing Documentaries for the Discovery Channel uh in in coordination with the New York Times and we did

one on the roots of 911 we did another on um uh the wall uh that Israel had built in the West Bank and last January that is 14 months ago um January of 2004 we were sitting around with our Discovery team um thinking about what what to do next and at the time of course the whole question of America's image in the world was a big issue and I thought well maybe we do Something around that and I had this idea that why don't we go to call centers around the world and interview young people

who spend their days imitating Americans on what they thought of America I thought it could make a very interesting kind of double you know perspective and we were literally budgeting that out um where to go you know Philippines you know here there Costa Rica Poland when um John krey came Out with his blast against Benedict Arnold Executives who engage in Outsourcing and um that immediately exploded the whole issue of Outsourcing onto the world stage and on the American Stage Business Week Fortune Forbes The Wall Street Journal the New York Times everyone did series about Outsourcing

and so just watching all that unfold in a period of really a couple weeks I said you know what stop why don't we why don't we just go to Bangalore the High-tech capital of India the Silicon Valley of India and let's do a do documentary on the other side of Outsourcing can I ask people to turn their cell phones off if you haven't um just so your cell phones pacemakers anything just turn them off so um very disturbing um so we had this idea that we would do a documentary on the other side of Outsourcing

so uh off we went um on February 15 2004 to uh to Bangalore and we did about um 60 hours of Interviews in um in a space of about 10 11 days and um through the course of these interviews uh I basically got sicker and sicker uh it wasn't the food it was a Dawning awareness that while I had been sleeping something really big had happened in this globalization story and I had totally missed it it hit me somewhere where between the Indian entrepreneur who wanted to do my taxes From Bangalore and the one who

wanted to write my software from Bangalore and the one who wanted to read my x-rays from Bangalore and the one who wanted to trace my lost luggage on Delta Airlines from Bangalore that something had happened in fact I wish I could show you just the outtakes from these interviews I'd be sitting across from Jerry Ral the head of nascom the Indian high-tech Association and he's literally saying Tom I can do your taxes I can do your family's taxes I can do your wife's family's taxes from here and with me saying Jerry what what did I

miss I missed something how can you be doing this what did I miss well the last interview we had was with Nandan lakani the head of nasis the CEO of nasis which is kind of the Microsoft of India and we were nun's an old friend we were sitting on the couch Outside his office and before the camera started he said Tom I've got to tell you the global economic playing field is being leveled and you Americans you're not ready oh I wrote that down in my notebook the global playing field is being leveled anyways we

went we did our interview and after that got into our Jeep and drove back to our hotel with my Indian driver driving Barefoot over the Poth hold streets of Bangalore and I just kept rolling over in my head what Nandan had said that playing field is being leveled what he's telling me is that the playing field is being flattened oh oh oh my God he's telling me the World is Flat and he's citing this as a great advance in human development that we'd made the world flat That evening I got on the phone I called

my wife from Bangalore and I said honey I'm going to write a book called The World is Flat she thought I had completely lost my mind but I came home from that trip I called the publisher of the New York Times Mr salzberger and I said Arthur I have to go on leave immediately because my framework on globalization Which I laid out in Lexus and the Olive Tree needs updating and if I don't do that I'm gonna write something really stupid in the New York Times and so we we sat down and we we plotted

out a plan and from that day on beginning basically March 15th um uh of uh 2005 now 2004 yeah um uh 12 months ago basically a little over 12 months ago I started this book and I've been doing nothing else since except writing two columns a week okay and um it became a complete Obsession uh for me to get my mind around what had happened and to answer that question now the um book uh opens the first chapter is called um appropriately enough while you were sleeping and the book begins by me noting that Christopher

Columbus actually set sail in 1492 looking for a shorter route to India that's where Columbus was going he Sailed West he had the Nina the Pinta the Santa Maria he never did find India but he called the people he met Indians and we still call them that to this day and he came home and told his wife honey I've accidentally discovered the world is round I set off for India 512 years later I knew just which direction I was going I went East I had Lanza business class and a GPS satellite that popped up in

my Seat and I came home and reported to my wife honey I've accidentally discovered the World is Flat and what this first chapter is about is all the encounters I had first in India um but then beyond I went to dalan China the Outsourcing capital of Japan now tens of thousands of Japanese speakers speak in Chinese get your mind around that in light of the recent headlines out of China okay um tens of thousands of japanese-speaking Chinese Managing the bookkeeping and back room now for hundreds of Japanese multinationals and American multinationals formerly based in Tokyo

and then I kept going east I went to Colorado and um needed to make a plane reservation one day so I called Jet Blue most successful Airline in America I kind of knew what I was doing asked them if they flew from Washington to Atlanta no they said had a wonderfully friendly uh woman on the Phone sounded a little matronly I said ma'am would you mind could I ask you your name she said sure my name is Betty I said Betty could you tell me where are you right now she said honey I'm up in

my bedroom I got my slippers on in my bathrobe and I'm looking out at the most beautiful scene of Salt Lake City because Jet Blue has completely outsourced its reservation system to retirees um uh in the Salt Lake City area Um so when you when you call JetBlue for a reservation you may get Betty um or Bob or Susie uh up in their bedroom or in their kitchen or around the dinner table because they're making your reservation on their home computer uh JetBlue was founded by a man named David nemman who's a devout Mormon um

who believes families would be held together better if uh parents um were able to work at home and so he has designed a complete home reservation System um that's who makes your Jet Blue reservation your phone call is routed automatically to somebody in their bedroom so I kept moving East uh got got back home to Washington read a piece in the Washington post about McDonald's new pilot project how when you drive into McDonald's now and you go to the uh Drive-In thing and you press the button say I'd like you know three Big Macs six

milkshakes 18 fries you you're not speaking to the people in that McDonald's you're speaking to a McDonald's call center in Colorado that's taking down your order and taking your picture um and they flash your picture together with your order back into that McDonald's McDonald's discovered they saved 30 seconds on each order and drove down their error rate by a significant degree this just a beginning program it's not everywhere but I kept bumping into these flattening experiences kind of around every corner So the this chapter really ends with a a meta argument The Meta argument um

underlining this book is that there have been three great eras of globalization one I call globalization 1.0 and I would argue that lasted from about 1492 until uh around 1800 which is the beginning of global Arbitrage 1820 and that ER of globalization really Shrunk The World from a size large to a size medium and that era of globalization was Really built around countries globalizing uh Spain discovering the new world Britain colonizing India um Portugal um in East Asia the the dynamic agent of globalization in that era was the country you went Global through your country

the second great year of globalization was from the early 1800s till 2000 yeah it it just ended and that year of globalization Shrunk The World from size medium to size small and the dynamic Agent of Change in that year of globalization was not the country but the company the multinational which went Global in search of markets and and labor so in globalization 2.0 you went Global through your your company that was the dynamic agent of globalization while you were sleeping while I was sleeping we entered globalization 3.0 from 2000 to the present it's why the

book is called The World is Flat a brief history of the 21st century and this era this globalization 3.0 is shrinking the world from size small to size tiny and flattening the playing field at the same time only what's really new about this era is it's not built around companies globalizing and it's not built around countryes globalizing the new new thing in this era is that the dynamic agent of globalization in this era is the ability of individuals and small Groups to globalize so we've gone from a global globalization built around countries to one built

around companies to one increasingly built around individuals and small groups and be advised it ain't going to be a bunch of white Western individuals who dominated globalization 1.0 and 2.0 it's going to be individuals of every color of the rainbow who are going to be able to Plug and Play so that's really kind of the the The Meta Meta um theme of the book The second chapter and I'm just going to do the first three just to give the kind of cores so then we can talk more about it the second chapter of the book

which really took me the longest time uh is called the 10 days that flatten the world and it's about the 10 really days uh events Technologies and companies that came together to actually create this Level Playing Field and let me go through them uh for you quickly um the First date um is uh 119 uh 11989 not 911 119 in a wonderful cabalistic accident of dates the Berlin Wall came down on 119 November 9th 1989 and the fall of the Berlin Wall was a huge flattener I call these the 10 flatteners because it allowed us

to actually see and think of the world as a single flat plane you know um I would bet if we I mean Yale didn't even think of having a globalization center before 1989 any more than IBM would have Described its business plan as a global plan you had a western policy you had an Eastern policy you had a northern policy had a southern policy but no one was using the word globalization before 1989 because there was a wall in the way so the fall of the wall was hugely important perceptually for how people could think

of the world as a single seamless space now actually call this flattener when the walls came down and the windows came up because the windows Operated system 3.0 the breakthrough system shipped 5 months after the fall of the Berlin Wall so these two things happened at the same time the Wall came down and the windows came up we suddenly had a single graphical user interface with universal application so that was the first flattener um the second flattener which I consider to be one of the most important Days In Our Lifetime and in the lifetime of

this planet of equal importance to 119 is 89 95 August 9th 1995 August 9th 1995 is the day a small startups company in Mountain View California called Netscape went public and Netscape going public was a huge flater uh the for three reasons the first reason is Netscape Netscape really gave us the internet yes yes the internet of course it was there it was being used by scientists but thanks to Mark andrean's remarkable invention of the internet browser which allowed us to actually illustrate on Computer screens all the data words music and information locked away in

websites it was the internet browser invented by Netscape which brought the internet alive so that was the first important flattening effect of Netscape second thing Netscape did a little more technical was Netscape actually commercialized a set of open transmission protocols for the internet so no company could dominate the internet and that helped make the Internet so much more interconnected you'll recall when you first got email your wife was on Compu serve and you were on AOL it was really hard to communicate thanks to Netscape all those walls got blown down and never came back the

third and most important thing of course Netscape did was trigger the dot boom which triggered the dot bubble which triggered the accidental overinvestment of $1 trillion in fiber optic cable in five years And that crazy wild ridiculous absurd overinvestment in fiber optic cable under sea and Overland accidentally made Bangalore and New Haven and Bethesda next door neighbors without anyone realizing what had happened it so drove down the cost of transmitting voice and words and data um over fiber optic lines that it basically made it free and that had a huge leveling effect Netscape went public

on $89.95 stock was priced that day at $28 it opened at 71 it closed the first day at 56 everyone looked at that and said there is gold over them their Hills and every every Yahoo from Global Crossing to Lucent to flyby night. Telecom said we are going to lay fiber optic cable because the demand is going to be infinite and they all tried to do it at the same time and The Accidental effect was to drive down the cost of Telecommunications globally to virtually zero now we went through a boom like this our own

country you recall a century ago with the railroads there was a similar bubble and um a similar overinvestment there's one difference when we built the railroads we got to ride for free when we laid the global Telecom Network India and China got to ride for free and this was a huge flattener so in some what the Netscape moment did was Bring peop to- people connectivity to a whole new level suddenly more more people could connect with more people more cheaply from more different places than ever before the third flattener is something I simply call workflow

and workflow is my name for all that software and all the standards that connected all that bandwidth with all those PCS and workflows everything from Microsoft Word to Microsoft NET meeting To proprietary software that any of you have you know to run your businesses or schools now again you'll go back just to the mid 1990s in the mid 19 90s Yale's admissions Department was running Microsoft the the accounting department though was running Noel each department was much more efficient because they had computers and email you know there was just one problem the admissions Department couldn't

communicate with the accounting Department because applications did not connect to Applications well there was a quiet Revolution during the late 1990s that basically enabled everyone 's application to connect with everyone else's application no matter what software you were running and no matter what computer you were running it on so you suddenly woke up one day and discovered you could do ebanking and your bank didn't care what software you Had what computer you had and you didn't care what computer the bank had or what software they were running friends that was a revolution because suddenly everyone's

applications could connect with everyone else's applications which meant suddenly people could work together in manifold new ways so now we come to the Genesis moment of the flat world when you take the Netscape moment you bring people to People together like never before and then you take the workflow moment and enable people to connect applications with applications like never before what we created willy-nilly at the end of the 1990s was a global platform for multiple forms of collaboration suddenly more people could collaborate on more different things from more different places than ever before off this

platform now the next six flatteners I Argue are the six new forms of collaboration that sprung from this platform and flattened the world even more the first is outsourcing whole new form of collaboration now Yale if it wants can take its accounting department and move it to North Dakota uh to Mexico City or to Bangalore either one is equally easy on this platform Outsourcing new form of collaboration second new form of collaboration is offshoring I build each one of these Around a date so I build the Outsourcing around Y2K um I build the next one

offshoring around China joining the World Trade Organization now I take my whole Factory and move it from Canton Ohio to Canton China and integrated into my production chain offshoring whole new form of collaboration third new form of collaboration is open sourcing bunch of Geeks sitting at home maybe some people in this room working online for free Writing the next operating system Linux open sourcing whole new form of collaboration I mean how would you like to be Bill Gates well how would you like to be Bill Gates actually um your whole business model all these years

is that any company Rises up to challenge you you underprice them you undercut them one day you wake up and you discover that Linux has 15% of the world operating system Market and it's sold for free it's hard to to beat free it's hard to undercut free now what is this open sourcing about well some of it's driven by people a lot of it's driven by people who hate Microsoft okay um and a lot of it is driven by scientists who love the pure science of it and the pure review look at this algorithm I

came up with look at this patch I came up with and that's a big part of the open- source movement But it is becoming a whole new industrial model of production in the book I profiled Brian Bendorf the young man from Berkeley who drove the Apache web server project yeah all your computers run in Apache that's the web server that goes from your computer and gets that thing out of your website every um computer needs a web server in order to Dish up websites and uh Apache was a completely open-source project that basically developed a

web server so Good that IBM eventually threw in the how junked its own commercial server and sent its Engineers to join this open source chat room in fact as I tell the story in the book IBM at first they said bunch of silly College Geeks we'll give them the B team that took about one day and the Apache people sent the IBM people back home so you send us The A Team okay what you're sending this is junk we're not going to use this so a lot of uh I know they've got a big stage

Crowd here but I guarantee you everyone under 22 here knows what Firefox is about okay Firefox is the hottest new web browser it now has 5% of the global web browser Market in one month Firefox was produced in an open source collaboration between a 19-year-old at Stanford and a 2 24 year old in New Zealand I have no idea whether they've ever even met in one month the first month Firefox was put up it was downloaded 10 million Times okay um and it's the hottest thing on college campuses today so open- sourcing in my book

I in writing this book I use Wikipedia constantly which is an open source encyclopedia um where people around the world send in entries you know somebody's written Ernesto zido biography there someone wrote in and corrected it you know maybe Mrs a deal you know maybe mr's a deal um um Ernesto's son then wrote in and changed The spelling of his name and you know got that right um but this is a completely globally produced open source encyclopedia and it's certainly replaced in Carta in my in my computer so open sourcing whole new form of collaboration

the fourth new form of collaboration I build around Walmart um and this I simply call Supply chaining where you design a global supply chain down to the last atom of efficiency the likes of which we've never really seen before so You take an item Off the Shelf at the Walmart in West Haven and another exact replica of that item is immediately produced in Shenzhen China if Walmart were a company sorry if Walmart were a country today it would be China's eighth largest trading partner um ahead of Canada and Australia so we're talking about a supply

chain down to the last atom of efficiency whole new form of collaboration empowered by this world The fifth new form of collaboration this was the one that was the most interesting for me to discover and learn about um it very interesting writing this book um if you go to the acknowledgements you'll see that the first two people uh acknowledged my two primary tutors for this book were two Indian entrepreneurs Nanda Nan of infosis and his arch rival VC Paul the president of wiipro which are the two leading Indian Outsourcing firms in in Bangalore and um

which itself is kind of an interesting story I interviewed one person in the Bush Administration to write this book and I live in Washington DC okay um but the people who really broke the code for me um uh were were two Indian entrepreneurs who were really in the epicenter of this anyways I was in Beijing and I got an email um last June from Nandan who said I've got another flattener for you um you have to add UPS so I really didn't know what he was talking about but I got home and went down to

UPS and and then I discovered exactly what he was talking about so UPS is my fourth flattener um my fifth flattener excuse me it does something called that I call in the book insourcing and insourcing is I come right inside your company right up to your neck right up to your headquarters and I take over your entire internal Logistics so say you have a Toshiba Laptop and it breaks one day and so you go to the warranty and it says call 1 1800 help so you call 1 1800 help and it says take your Toshiba

laptop down to the UPS Store send it to us and we'll fix it no problem what you don't know is your Toshiba laptop goes from The UPS Store to UPS's Hub at Louisville airport in Kentucky where in an airline hanger at Louisville airport in a clean room a UPS employee repairs your Toshiba laptop it never touches the hands of Toshiba you go to nike.com you want to get a new pair of sneakers for the kids um UPS answers the email um they're on the other side of the screen they Pick and Pack the shoes they

ship them they collect the money see the Papa John's Pizza truck Goot guess who's driving it's someone in funny Brown shorts okay UPS today is inside okay hundreds and hundreds of companies who no longer ever touch their products anymore um They are simply marketing shells and everything has been insourced to UPS this is a whole new form of collaboration which is going to become an incredible flattener because the standards to make this work seamlessly have a huge flattening effect that's the fifth so now we have to say we got Outsourcing offshoring open sourcing Supply chaining

and insourcing that's five I said there are six the six I simply call informing and informing is Um a new form of collaboration that really my name for Google Yahoo and Microsoft search because I can now inform myself I can collaborate with data and mind data all by myself so that's really nine we've got the first three they create the platform we've got the next six they really are the new forms of collaboration that spring from this platform the 10th as I said there were 10 flatteners I simply call the steroids and the excuse me

the Steroids are wireless and voice over the internet and what these steroids do is turbocharge all six of these new forms of collaboration so now I can do anyone from anywhere with any device totally Moby now the next chapter of the book is really in some ways where I just tie all of this together it's called the triple convergence and the simple argument here um and I'll end with this chapter is that sometime right around the year 2000 there was a triple convergence Three things converged the first thing that converged were all 10 of these

flatteners right around the year 2000 a Tipping Point was reached and all 10 flatteners started to work together the complimentarity between them all started to reinforce each other so the Outsourcing was enabled by the informing the informing helped the open sourcing the open sourcing drove the insourcing the complementarities between all these flatteners started to work together and That friends is what I argue flattened the world that is what flattened the world because the product of that first convergence was a web enabled Global platform for multiple forms of sharing of work and knowledge irrespective of distance

time geography and increasingly even language that is the moment when the world got flat the second convergence I said there were three is that we're now learning We're just at the beginning of this to horizontalization created in vertical silos of command and control to a world where value is increasingly being created in horizontal collaborations of connect and collaborate now there's a very famous economics article by Paul David of Stanford who asked the question when when electricity first came out electric motors why didn't we get a boost in productivity and his answer was because People had

to actually redesign factories around small electric motors and away from Big Ste steam engines and pulleys which required multi-story factories so it was really only when Architects changed their designs managers changed their designs and we all changed our habits basically that um uh we got the most out of electrification so what we're in the process of right now is what I call horizontalization ourselves we're Learning we're just at the beginning how to collaborate differently around this platform so um can you just start it stay still yeah um now the best illustration I can give you

actually is a story that involves Yale and this really will will bring it alive to you it did to me um I said you know my my daughter is a uh I can finally say my daughter's I've been giving this speech you know a couple weeks now say my daughter Goes to School In New Haven my daughter's a student here okay so um uh so I um uh and we live in Bethesda Maryland now I don't know how many of you from Maryland but if you are from Maryland you know it's a complete pain in

the butt to get here from Bethesda you have to drive to BWI airport in Baltimore take Southwest Airlines from Baltimore to Hartford and then drive a hour from Hartford to to to to New Haven so last spring I was coming up to visit my daughter in March and I Was bringing a couple bags of spring clothes for and whatnot and um uh I'm a big Southwest fan and so we I I uh and I if I may have flown Southwest but you may know that there's no reserve seats on Southwest you get just get a

ticket that says a b or c you do not want to be a SE on Southwest stair lines okay um especially if you're taking a couple of bags of carry-ons um because there'll be no room in the bin above the seat you don't even want to be a b where you'll Be stuck in the middle no problem I'm a hip guy I did the E ticket thing you know called American Express and you know got my e tiet on Southwest well I arrived at BWI airport in Baltimore 95 minutes before my flight because I was

going to be an a because I have my stuff for my daughter and um stuck my credit card into the Southwest e ticket machine and out came that ticket and it said B I said Son of a this thing is fixed this is rigged this is worse than Las Vegas there is no way I'm a bee I'm here 95 minutes before this flight there's no way I'm a be went and got my Cinnabon and sat in the back of the [Music] beeline well well about 45 could he he stop it's really distract can you can

you just stop thanks okay well about 45 minutes later um they called the flight and uh and then I saw it all the A's seemed to be getting on carrying crumpled pieces of what looked like home printer paper as if they had downloaded and printed out the their boarding passes and barcodes at 12:01 a.m. the night before well of course what I didn't realize was that Southwest Airlines thanks to this convergence had just begun a program that says you can now download and print out your boarding pass at 12:01 a.m. the night before and Just

show up at the gate with your home printer paper oh friends I looked at that and I said fredman you are so 20th century you are so globalization 2.0 think about it in globalization 1.0 there was a ticket agent when I moved to Washington to get a ticket I used to have to go on to the United Airlines office pull a number out of the machine wait in line there was a physical person in front of me we did a transaction I Got my tickets then we got the EET machine we thought that was cool

While You Were Sleeping Southwest Airlines made you the ticket agent and they made you their employee and excuse me if you value your own time staying up at 12:01 a.m. the night before you are paying Southwest Airlines to be their employee so all of that is a result of this convergence but because I hadn't Horizontalization a I showed up at BWI Airport 95 minutes before the flight wasting all that time basically when I had had a horizontaly myself the night before I could have gotten the productivity boost we're just at the beginning of this phenomena

and it's happening in every single industry but I said that's the second convergence the third and last convergence is that this flattening happened happened to Coincide with a huge event in the world three billion people called Russia China and India walking onto the playing field and when do they arrive on the playing field just when it's been flattened just when they and their kids can plug and play more directly than ever before in the history of the world yes yes I know maybe only 10% of those three billion can really Plug and Play see 10%

of three billion one carry the zero that that's 300 million that's Twice the size of the American Workforce so the simple thesis of this book is that it is the convergence of these 10 Technologies and events with these new business processes with these three billion new players that is really going to Define and shape the brief history of the 21st century now before I finish let me simply point out that this flattening this triple converion Orin of these Technologies habits and people coincided with a political Perfect Storm And the political Perfect Storm was called 911

Enron and the do bust the dot bust made some very silly people write that globalization was over don't to think about that anymore 9911 completely distracted us as a country and an Administration and as journalists and of course Enron made every CEO guilty until proven innocent and therefore no one wanted to think about or talk to them so it was a really Interesting experience researching this book because I everything I told you I didn't know a year ago and I really learned from going around interviewing people technologists who were in the middle of it but

but these CEOs who were doing it they they were like it was like being in a science fiction movie they're like pod people okay they they know the secret okay they know just what's happening and they're doing it like Crazy but nobody's told the kids nobody's told the kids so right at a moment when we have reached an incredible inflection point we're moving from a world of vertical to horizontal nobody's talking about it we have a president who's trying to unravel the new deal at a time when what we really need is a new New

Deal to deal with a world gone flat so nobody is we just had an election where the Democrats were Debating whether NAFTA was a good idea and the Republicans put duct tape over the mouth of chief White House Economist Greg Manu when he said Outsourcing made a lot of sense and stashed him in Dick Cheney's basement so right when we've reached the this really defining transforming moment of the beginning of the flattening process nobody's talking about it the debate about globalization is so out Ofd I mean you know with all due respect to the nation

but you know these magazines are dining out on the carcass of a debate from about 1996 about IMF conditionality in World Bank condition I just met with a Indian Finance official who said the IMF is begging us to borrow money now we don't even think about the IMF anymore and so the whole debate about globalization hasn't even begun to catch up with what's actually been happening In the world so let me simply End by saying I wrote this book to tell the kids at least tell my own kids what I think is happening in the

world and what I think is happening was best described by Carly fiorina the former CEO of of uh of HP who saidyou know everything we called the it Revolution these last 20 years sorry to tell you just the warm-up act that was just the sharpening forging And distribution of the tools of collaboration what you we're now just at the end of the beginning what you now are about to see is the real it Revolution with the with what's happened here so ladies and Gentlemen please fasten your seat belts put your seatbacks and tray tables into

a fixed and upright position because the World is Flat thank you very much thank you thank you thank You thank you well H Tom has uh agreed to take a few questions let me use my privilege as host and go back to an old argument that Tom and I had had for many years I believe everything that Tom says in this book ER but I would like to argue that all of this which I think it's a wonderful world I think prosperity and even uh peace and Security H could stem very powerfully from this kind

of globalization but the other side of the story for me is that all of this can be at risk and Tom being as he calls himself I think in page uh 374 he says I am a technological determinist guilty a charge you said it here um well I'm not a technological determinist I think that indeed globalization has been driven to a great extent by technological Advances but also by political decisions and political decisions to open up economies to allow investment to to do many things through those political decisions and sometimes they are good but other

times they can be stupid and aren we risking all of this Tom by stupid political decisions that could stop the process or are you still a Die Hard er um 374 374 I just uh I got to find yes I I just have to read the next Sense the chapter is called the unflat world this is so let me try to answer it I am a technological determinist guilty is charged but while I am a technological determinist I am not a historical determinist there is absolutely no guarantee that everyone will use these new technologies or

the triple convergence for the benefit of themselves their countries or Humanity these are just Technologies using them does not make you modern smart moral Wise fair or decent it just makes you able to communicate compete and collaborate farther and faster in the absence of a World destabilizing War every one of these technologies will become cheaper lighter smaller and more personal mobile digital and virtual therefore more and more people will find more and more ways to use them we can only hope that more people and more places will use them to create collaborate and grow their

living Standards not the opposite but it doesn't have to happen to put it another way I don't know how the flattening of the world will come out indeed this is the point in the book where I have to make a confession I know the world is not flat so but I have to tell you fairness Desto um and his question um that chapter was very much stimulated by um not only Ernesto's questions but when you read the book you'll see his Input um because we have had this conversation uh for a long time and um

Ernesto knows from person experience um uh as someone who had to try to manage NAFTA how politically explosive the backlash uh can be and especially when the world goes flat and we now have a whole new group of people who could be affected not just blue collar workers or white collar workers um and and knowledge workers who um who also vote and write oped pieces for the New York Times um and and that's why um uh I think and I quote Ernesto in the book as making the point which he just provocatively made here as

saying there's you know the chapter that that um this is all in is called no guns or cell phones allowed and it's a sign from a health club in Minneapolis where I'm where I grew up um because Minnesota passed a law um a couple years ago saying that you could bring a uh a handgun or a weapon into a public place Unless they explicitly had a sign on the door that said no guns allowed and then health clubs discovered that people were bringing cameras into locker rooms and unfortunately taking pictures of people with their clothes

off and then emailing them around the world so they really just put a two together there one after the other no guns or cell phones allowed and I really use that in my head to Simply say yeah I'm a technological determinist if people have the Technologies they will use them but what they will use them for is not predetermined and that's why I think it's so important um uh that's why I I agree with Ernesto that um we have to tell the kids um and we we don't have to tell the kids and the way

to say this is not um yeah there something it's not the loubs way okay something terrible a terrible tragedy is is we have to educate people um and we have to create what I call the new new deal that will Make more people employable uh here and abroad uh when the world goes flat and I actually lay my own philosophy out in the book which I call comp passionate flat ISM um and um uh I go through um the different things we need and of course the first thing I argue is a new kind of

leadership um a new kind of leadership that doesn't use what's going on in the world to frighten us to make us stupid um but to try to educate us on what's going on out there where are the Incredible opportunities you know we're connecting all the knowledge pools in the world together that's one meaning of the flat world um when Bangalore is connected to Yale um when Fudan University I just I've been on President Levan's International Advisory Board we this morning all we heard about the incredible collaborations Yale is now doing with Fudan University um on

genetics and um empowered and enabled entirely by uh a flat world so we're Connecting all the knowledge pools in the world together that's really exciting the next grade breakthrough in bioscience could come from a 15-year-old in Mexico City who downloads the human genome but this the the frightening thing about this or the challenging thing about it is that you do um have to constantly be upgrading your your knowledge skills in order to get a share in this world and that's true whether you're in India or in Mexico or in New Haven it's also true if

you're a journalist um I just spent the last year retooling myself I mean I spent the last year in Bentonville Arkansas with Walmart um in Louisville Kentucky with UPS um in Bangalore with wiipro and infosis um I all I've been doing last the last year is really just completely retooling myself out of sheer panic because if I didn't upgrade sort of my own knowledge skills I wouldn't be able to write a column that would be able to Make sense to the world um and so um I have great sympathy with anyone else who has to

do this and I have a lot easier time doing it because I can manage my own time it's not like I'm working for someone who can limit my time but the main argument here um and and in response to Ernesto's point this to me is the discussion we should be having in the country right now not about privatizing social security um that's that's a complete ideological Jag okay Um we need to be talking about the world as it really is what are the challenges it poses and what are the incredible opportunities it holds out that's

what we should be talking about right now and that's you know one of the debates I hope to trigger with the book erest uh uh yeah would go ahead yeah I'm in to favor of students if that's okay you look I hope you're a student can I see your ID please sorry I'd like to ask for Few more details on your new New Deal um you mention Walmart andp the thing comes to my mind unions um unions during the last campaign were anti-globalization in America so what's the prescription for unions and if unions aren the

future how can workers push back against operations no it's a really important question um I don't frame it in terms of Union non-union so but my the kind of priorities I lay out in this u in my own sort of compassion and flat first I have Whole section on leadership which I simply say we have to have leaders who are Educators who tell us who who describe the world to us as it really is okay um and and that we all know and I don't have to belabor that what kind of political discussion we're having

in this country and um and just the level of it how disconnected it really is from the world around us um then I I kind of break break it down into what I call muscles And fat Okay um there's new muscles we have to acquire um and to me uh the first I I believe we should have National Health Care personally but until we get that one thing we absolutely must have is fully portable health care so no one should be trapped in a job um for a dying company and I feel sorry for anyone

working for for a General Motors right now or whatever you know um that people have got to be able to be as mobile and flexible with their Healthare we have to have fully portable Health Care two we have to have fully portable pensions so I can pay in at this company and then take it and move to the next company okay so I can take advantage of of growth where it is um that's what I think of in in terms of of partly in terms of muscles the third thing I believe we need is wage

insurance for about7 billion dollar a year and this really is chump change um in in the budget we could have a program Um Bob lighton and Lorie ketzer from Berkeley have designed a whole program for wage insurance that doesn't fully compensate you if you lose your job to Outsourcing or to foreign trade but does give you a far bigger cushion than you'd have now not only gives you a cushion but actually encourages you to take a new job and you actually still get you know $10,000 over a certain period of time or 10,000 over over

a couple years depending on the situation you're in That encourages you to take a new job quickly which is actually the best way to get new skills um uh the fourth thing I I I think we need is is uh tertiary education postsecondary education I believe that um it was the high school movement um that got us you know 150 years ago 98% of Americans worked in agriculture today 2% work in agriculture how did we get all those people from one to the other from the agricultural world to the mechanical World industrial world We did

it by making everyone go to high school I believe now we have to enable everyone to have postsecondary education that if we're thinking how we should be spending our money it should be to create either a subsidy tax break or whatever that any American who wants postsecondary education can get it and then I go through a whole section about what companies can be doing to Res skill people um in order because we have a new social compact now it's no longer Lifetime employment no one can guarantee you that but that I believe the new social

contract between government and individual and Company and individual should be lifetime employability that by gosh while you're here I'm going to guarantee you the educational opportunities either inside this company which will make you more valuable to me if I can teach you a lot of different skills or make you more valuable to somebody else outside here through Lifetime learning possibilities and um the last um uh thing I call for is new parenting um we're we're now blending in we're the world's gone flat and we're now meeting up with with two cultures in particular Chinese and

Indian culture that have a huge value on on education and um uh you know there's no getting around this mom dad throw away the Game Boy um shut off the TV um as as I've said ad nauseum you know when I was growing up my parents used to say to me Tom finish your dinner people in China and India are starving and I say to my girls girls finish your homework people in China and India are starving for your jobs okay so um uh there's one entitlement we do really need to get rid of and

that is our sense of entitlement because in a flat world there ain't no such thing as an American job there's just no such thing but the good news is no such thing as an Indian job or Mexican job either I mean you know it's Going to be there but you're going to have to globalize yourself you're going to have to think of yourself as competing against and with a much wider Workforce so those are the kind of things I don't pretend they're comprehensive but I'm trying to kick off a discussion and I don't know where

unions you know fit into that or not but that we at least talk about about the world as it is and what are some of the tools we need to prepare our people for That world so that's where I come from um yeah no behind you the the him I want to get the student if I could I'll come back to the old guys it seems that countries with large educ yeah to be up um to get up there um you know I I don't want to pretend like I have a magic cure for kind

of every problem that I've race I I have and there's prob sure huge gaps in this book um but to me um a lot of it is about um well first of All explain to people the world they're in and the world we're in is that the countries that will succeed are those that have the best infrastructure with the best education system with the most investment friendly environment with the most stable government so there's no rocket science to this and whether it's again Mexico America or um Upper Volta or or or um uh it's not

Upper Volta anymore whatever it is um uh you know applies to to everybody and so um you Know one of the things I examples I give because I I I use to me the key word in all this is collaboration we're moving to this world where it's all about how we collaborate and so I give the example of different ways of collaborating um with different parts of the world that are caught up in this so this chapter the unflat world identifies four sort of communities that are really out of it one I call the too

sick okay and that's communities and countries caught up in HIV AIDS malaria tuberculosis these people are too sick to collaborate and plug and play on this platform second are the uh two unable that's rural India rural China rural Mexico they're kind of half flat in the sense they've been to Mexico City they've been to Bangalore they've seen the big cars and the riches and the big they'd like to be part of it but they don't have the tools okay and so the third group I call the too frustrated and that's really the Arab World today

um because when the world goes flat you get your humiliation fiber optically okay you get it at 56k right in the face because in a flat world you can see just where the Caravan is and just how far behind you are and that produces enormous and dangerous resentments and the fourth is too many Toyotas because when three billion people walk onto the flat world and they all have their own version of an American Dream a house a car a Toaster and a microwave if we don't find an alternative source of energy we're either going to

burn up this planet or we're going to be in a war with China over oil because if you haven't noticed I mean China's foreign policy today is very simple it's called Taiwan and looking for oil that's it okay so um uh so you know back really to your to your question um uh in the two sick part I actually talk about the Gates Foundation and what they have done looking for Innovative ways to collaborate um with people in in the two sick communities um in the two unbled um here I really laid down a challenge

to the anti-globalization movement because I believe what the anti-globalization movement should be about today all that energy and there was enormous energy there moral energy okay but I believe it was really squ wed um by uh it may have had a moment before but it's completely irrelevant now and you know dressing up Like a turtle and throwing a stone through McDonald's window isn't going to feed you know one person in the world today but I don't want that energy to go away I think where the anti-globalization where the left should be on this issue is

understanding you know poor people don't resent people rich people anywhere nearly as much as the left sometimes think what they resent is not having the chance to get rich and you take a look at India Today Here's a country that in 1991 before it adopted a globalization strategy had $100 million in the bank today it has $118 billion in foreign reserves that's great news but here's the problem now when they budget a million rupees from New Deli to that school just south of Bangalore by the time it arrives at that school it's 50,000 Rupees okay

and I believe where the anti-globalization movement should be is focused entirely on local governance transparency Accountability using the internet using um all the tools we have to trace every dollar that comes out of Mexico City and where it ends up in the countryside and every dollar that needs New Delhi and where it gets to the Village my own personal feeling is poverty is a governance issue overpopulation is a governance issue environmental degradation is a governance issue you know that in unless you get governance at Works you're really not going to be Able to tackle any

of these problems so that's where I think to the extent that we in the developed you know flat world think about how we can help it's really there the other example I give in that chapter is HP did a very interesting project they did a pilot project in a village in India it's in the book I don't remember the name um where they it always starts with listening the best collaborators are listeners so HP sent A team out to this Village and they simply Live there and said what do people need okay and um the

answer they came up with after about two months was that these people really need someone to take pictures they have all kinds of Need for pictures for licenses and whatnot and to get a picture they have to walk an hour to the next town so HP said no problem pictures is us we do pictures we just send them a bunch of uh you know cameras and and um uh you know developer machines great no problem No electricity okay so the HP sent their Engineers out and sort of scratched their head well we can do this

so they created mobile Photo Labs using solar panels okay designed the whole thing you know came just out of listening to the problems here and um then they went to a women's NGO and said we're going to rent this to you because they really wanted to see what people would do with it and so they rented it to this women's group and they went out they rented two of Them they built two and they rented them and they went out started using it well it turns out Indian villagers just like New Haven residents love to

have family pictures and they want their weddings and their family celebrations and and so suddenly these women started making a wonderful little business not just taking pictures for farmers who needed licenses but Grandma and Grandpa and birthdays and weddings and bar mitzvah and whatever else you know um so uh So this work great and they were thrilled they're making money from it so um six months went by and I tell the whole story in the book I don't remember how much time and they uh HP came to the women's group and said this is great

this is so neat what you have done with it now we want our camera back they said what what do you mean you want your camera back we're I mean we got a nice little business and HP said and they knew what they were doing they Said we're we're not an NGO we're HP okay we're looking to make this a sustainable business model so here's the deal you find a way to pay us x amount each month and you can keep the cameras and that's what they did so they set up a payment system where

they you know rent them and they pay them I think it's $9 a month or whatever it is and then they buy the paper and stuff so from hp's point of view like if this takes off that's a huge Market you know Um that's what you want they don't want charity okay the people don't want charity and HP is not a charity so that's not sustainable so it's looking for ways to collaborate with people in really creative ways that start by listening to them first and then working the technology back so yeah Rel never right

on human beings on yeah it's an interesting question um Uh did you hear that um she wants to know if there'll be a book signing afterwards and there will be thank you I'll be signing books afterwards and uh they're all out there and I'll be very happy thank you so much for your question no um uh um the question was really we all crave human interaction and what happens when you know we're interacting but with more people but really virtually is really the the question um and I I I I'm not Going to dodge it

I I just have to say I think it's a really good question and I don't know I think that we're really at the beginning of something and I and I say that many times in the book I don't know where this goes you know I think the job of the analyst is to try to um see something and Define it right when it's reached a Tipping Point but other people haven't seen it yet and that's what I've tried to do here but I really say many times in the book I don't know Where this is

going and I think that's one of them one of the areas all I can say to you though is like in doing the book um I realized I was I was both writing about and interacting with this platform I mean it was so neat like um so many people like um rajish ra who's a young Indian game designer in Bangalore who today owns the global writes to Charlie chaplain's image for cell phone games this is a 32y old kid in Bangalore okay who started from nowhere um and uh Read his section in the book it'll

knock your socks off you know um but he and I God we'd be exchanging email at 2: in the morning and it may not have been face to face but wow we were sure connected like never before and um uh and I've had so many experiences like that in writing the book that I don't feel really impoverished you know um by this but I might I I I just don't know I think you're asking something very important it's too early uh for me to Tell really yeah so I'm wondering if you talk Michael about this

you know a lot what he Focus clusters you know regard of techology in the US many years New York City is still ground zero right right what will keep what will we keep yeah it's a it's a good it's a really important question and again I I don't know because I think a were too early you know in this but you know the my kind of General model is this um when The I think what happens in simple economics terms when the world goes flat like this is the global market gets much bigger you suddenly

encompass is many more people so that's really good if you sell the kind of services or software or good idea Goods that can be actually sold to everyone in the Market at the same time so if you sell Microsoft Windows so the market gets bigger and at the same time the good news is it also gets more Complex and so because people often say my God what's going to happen to my job and I said I have a chapter in the book is free trade still relate I believe in free trade is that good for

my kid actually described the scene at emphasis at the shift change in Bangalore with you know thousands of young Engineers going and thousands coming everyone looks like they got 1600 on their SATs you know and um and I'm just sitting there watching this sea of people coming And going and then the emphasis spokeswoman sidles up to me and says we had a million applications last year for 9,000 jobs have a nice day okay so you think wow Jesus this good you know I mean um but that would only be bad if you believed in the

kind of lump of Labor theory that there was one lump of Labor in the world we've had it and now India and China are going to grab it you know But that's actually not what happens and what what really happens is um I know there's some parents here and and and so uh Mom Dad don't be surprised if your son or daughter comes home at the end of this year and says um uh Mom Dad I've thought about it I really want to be a search engine optimizer when I grow up you say what in

the world couldn't you be a doctor or a lawyer you you you have to be a what is that well you know in 10 years ago there was no such thing As Google today Google is hiring mathematicians by The Bushel okay um because they invented something called search a whole new industry well then somebody came along and said now if I type in the word suitcase into Google press I'm feeling lucky um um and Samsonite comes up before Tom fredman suitcase company the benefits to Samsonite are Monster Benefits that people see Samsonite before they see

mine so this has now spawned a whole new industry called search engine optimizing where I will work with you to get Tom fredman suitcase company up above Samson night well this Google you know it's just math it's just an algorithm so this combines math and marketing it's a whole new industry so this is going on every day the challenge I think for us in terms of the question you the worst thing I think Is going to happen to any y who gets a good education and anyone who graduates from the University of Minnesota is you're

going to have to move horizontally that is some specialty we had may go somewhere else and we'll develop new niches and new Specialties if you don't have that education you got to move vertically and society's job is is to enable more people to move vertically that's really the challenge for us but remember you know after World War II we stood arride the world you know um totally dominant and what we did the craziest thing in the world we rebuilt Europe into a competitor and what happened our standard of living grew six straight decades so I

think the same will happen you know to India and China but this is a little bit of a crisis and we've got to meet it I think were best in a crisis but as my my friend Paul rer says a crisis is a terrible thing to waste and We don't want to waste this crisis thank you very much