The World Is Flat: Chapters 10–11

But at the end of the day, countries that preserve their green spaces are much more likely to preserve and attract the knowledge workers—who are mobile, have choices, and can make the decisive difference in turning a developing economy into a developed one.

They pushed their countries into more export-oriented, free-market strategies—based on privatization of state companies, deregulation of financial markets, currency adjustments, foreign direct investment, shrinking subsidies, lowering of protectionist tariff barriers, and introduction of more flexible labor laws—from the top down without ever really asking the people.

How many people do you suppose Deng Xiaoping consulted before he declared, “To get rich is glorious,” and uncorked the Chinese economy, or when he dismissed those who questioned China’s move from communism to free markets by saying that what mattered was jobs and incomes, not ideology? Deng tossed over decades of Communist ideology with one sentence: “Black cat, white cat, all that matters is that it catches mice.”

Their neighborhood is a big teeming market, made up of small shops and one-room factories, interspersed with Stanley Kaplan SAT prep schools and engineering colleges.

Egypt guarantees all college graduates a job each year, and it has been mired in poverty with a slow-growing economy for fifty years.

Faced with a 10-year-long process of going through bankruptcy, Avik absconds, leaving his workers, the bank, and the tax agency with nothing.

In the United Kingdom, laws on collateral and bankruptcy give creditors strong powers to recover their money if a debtor defaults.

The rich and the well-connected just buy or hustle their way around onerous regulations.

In a quite unusual development, the government, the main trade unions, farmers, and industrialists came together and agreed on a program of fiscal austerity, slashing corporate taxes to 12.5 percent (far below the rest of Europe), moderating wages and prices, and aggressively courting foreign investment.

He argues that although climate, natural resources, and geography all help to explain why some countries are able to make the leap to industrialization and others are not, the key factor is actually a country’s cultural endowments, particularly the degree to which it has internalized the values of hard work, thrift, honesty, patience, and tenacity, as well as the degree to which it is open to change, new technology, and equality for women.

Harrison argues that a society maintains cultural continuity through a variety of instruments and institutions “that transmit its values and attitudes from generation to generation [through] child-rearing, education, the media, and leadership,” as well as religion, which may be the most salient of all.

By that I mean, to what degree is there a sense of national solidarity and a focus on development, to what degree is there trust within the society for strangers to collaborate together, and to what degree are the elites in the country concerned with the masses and ready to invest at home, or are they indifferent to their own poor and more interested in investing abroad?

Tribal culture and thinking still dominate in many Arab countries, and the tribal mind-set is also anathema to collaboration.

What is the motto of the tribalist? “Me and my brother against my cousin; me, my brother, and my cousin against the outsider.”

They had an ideology of accusing others of being infidels and giving themselves a free hand to kill them, be it Westerners—who, according to them, ought to be kicked out of the Arabian Peninsula—or the Muslim believer who does not follow their path.

China began its astounding commercial and industrial takeoff only when Mao Zedong’s odiously intolerant form of communism was scrapped in favor of what might be called totalitarian laissez-faire

China during the Cultural Revolution seemed like a nation in the grip of a culture of ideological madness. China today is a synonym for pragmatism.

And some countries simply have venal elites, who use their time in office to line their pockets and then invest those riches in Swiss real estate.

So just when Mexico needs to summon all its will and energy for reform retail on the micro level, it has to go through the much slower, albeit more legitimate, democratic process of constituency building.

In other words, any Mexican president who wants to make changes has to aggregate so many more interest groups—like herding cats—to implement a reform than his autocratic predecessors, who could have done it by fiat.

Mexico got itself on the right track with reform wholesale, but then, for a lot of tangible and intangible reasons, it just sat there and reform retail stalled.

Of course, there are costs to this growth as well—in terms of environment, social cohesion, and economic equality, which governments need to monitor and mitigate—but let’s stop downplaying the economic benefits, and let’s stop pretending that the anti-globalization advocates have any realistic strategy for bringing as many people out of poverty as quickly—if at all.

As the driving force of the world economy since the mid-1970s, globalization has become a lodestone for a wide-ranging attack across a large expanse of the developing world for its alleged malign consequences.

Reduced to its essentials, the attack posits the impact of globalization to be economic stagnation, deindustrialization, economic destabilization and growing inequality.

After a stringent regime of “autarky and command and control economy,” from 1956 to 1975, India started on a slow path of reintegration into the world economy, albeit in nascent form.

Interestingly, India’s reintegration coincides with the onset of the larger process of globalization.

Not until 1991 did India, amidst enormous economic crisis, make a paradigm shift to liberalization, though still limited.

India’s rate of growth from 1975 to 2007 has been over 5.5 percent, compared to the derisively termed “Hindu” rate of growth of 3.4 percent over the period 1956 to 1975, and especially to the pathetic 2.6 percent over the decade prior to the nascent liberalization in 1975.

It has indeed transformed a country that had been mocked as “the sick man of Asia”—an inveterate supplicant for foreign aid—into a credible contender for a major role in the balance of power in Asia.

Similarly, far from the specter of deindustrialization held out by the critics, foreign imports have not swamped Indian industry after tariffs were lowered as part of India’s reintegration into the world economy.

Indeed, the persistence of poverty for massive numbers, inherited from the past, underscores the passion that goes into critiques of globalization.

However, the conclusion that flows from a comparative analysis of the trends since the beginning of liberalization in 1975—when set against the condition prior to it, of staggeringly high poverty and economic stagnation—is different.

Higher rates of economic growth, facilitated by periodic doses of liberalization, pushed forward poverty reduction.

The policy implication therefore is that more, not less, liberalization fosters and sustains rapid economic growth.

When, as a result of the flattening of the world, so many people have so much connectivity, and so many people have access to low-cost tools of innovation, and so many people are able to tap into each other’s markets, workforces, brainpower, and ideas to discover and invent new things—and then quickly disseminate them around the globe—well, then, whatever can be done will be done.

Ghandour returned home and saw a niche business he thought he could develop: He and an American cofounder, William Kingson, raised some money and in 1982 started a mini-Federal Express to do parcel delivery for the Middle East.

Products get worked on in parallel by all departments at once—design, hardware, software—in endless rounds of interdisciplinary design reviews.

The historical way of developing products just doesn’t work when you’re as ambitious as we are

Going to India gave me an inkling that the world was flat, but only when I went back to my roots and spoke to my friends from Minnesota did I realize just how flat.

When everything is the same and supply is plentiful, said Greer, clients have too many choices and no basis on which to make the right choice. And when that happens, you’re a commodity.