The World Is Flat: A Brief History of the Twenty-First Century

This chapter discusses the changes needed for individuals, businesses, and nations to adapt to the horizontal nature of the flat world after so many years of vertical structures. Friedman learns that Karl Marx and Friedrich Engels described a flat world a century and a half ago in their book The Communist Manifesto. He quotes a passage from their book that describes the role of capitalism in reducing the friction created by national boundaries and traditional systems like religion, barriers that the authors argue will eventually be erased. From here, Friedman weighs the pros and cons of doing away with the old structures versus keeping some of them.

The world and how we interact with it will change as the flattening effects intensify. Friedman uses his own profession as an example of this: The newspaper industry is undergoing a profound shift as Google siphons off ad revenue and more readers consume their news online. As a result, “[s]ome people will respond to this disintegrating phase with a sense of exhilaration and freedom—seeing an opportunity to soar, expand, dig, or build in any direction with a whole new set of tools. Others will react with the anxiety of people in free fall, with nothing to hold them up or in place” (238).

The nation state is the largest and main source of friction within a flat world. As a flat world seeks to level everything, which protections will we want to preserve? (After all, some protections, such as copyrights and worker protections, are beneficial.) Certain mutually agreed upon norms and standards must be kept, but which ones and how? Some argue that specific communities will answer these questions for themselves, like eBay did when it adopted a system of buyer and seller ratings to inspire trust in its business model. However, Friedman cautions that a self-governing system can be subverted. Models that blend old and new methods will likely be adopted to provide better protections than a self-governing system.

Friedman uses an example from the state of Indiana to illustrate how tricky the new flat-world environment can be. In 2003, the state sought bids to upgrade its computer system that processes unemployment claims. The winner was the United States subsidiary of the Indian firm Tata. A political backlash ensued, and the Democratic governor canceled the contract after receiving criticism from Republicans. Almost $1 million was reportedly paid to Tata for work already performed, and the rest of the job was divided up into smaller projects that Indiana-based firms could take on at a higher cost to taxpayers. Friedman challenges the reader to question who was exploiting whom in this story. One might argue that Indiana should protect state workers from outsourcing to underpaid Indian workers, but a counterargument would be that Indian workers should be given an opportunity to compete for lucrative jobs. Is free trade or some level of protectionism the answer?

Another confusing issue in a flat world is the relationship between companies and communities. As the “home nation” of multinational companies becomes increasingly hard to define, where these companies’ loyalties lie will need to be sorted out. Take computer company Lenovo for example. It was created in 2004 when a Chinese firm acquired IBM’s personal computer business. IBM purchased almost one-fifth of Lenovo’s stock, and the new company was led by a mix of executives from both IBM and the Chinese firm that became Lenovo. It was hard to pin down which country Lenovo was headquartered in because it had offices around the world.

The flat world may be great for capital but less advantageous for individuals— citizens, workers, consumers, taxpayers, etc.; therefore, individuals, too, will need to sort out their various identities in a flat world. Friedman compares Walmart and Costco to illustrate his point. Overall, Walmart provides fewer employee benefits than Costco does, so one could argue that Costco is better for workers. However, providing fewer employee benefits allows Walmart to have a higher profit margin, which is beneficial to shareholders. On the other hand, by providing the lowest possible prices for consumer items, Walmart indirectly benefits its employees. As one economist noted, “[a]s a force for poverty relief, Wal-Mart's $200 billion-plus assistance to consumers may rival many federal programs” (251).

Finally, there’s the issue of how people feel in a world that values nothing but the lowest costs and highest profits. The human touch is often missing in a world like that, and people can feel out of sorts with this loss of community. A friend complains to Friedman that companies cut out all the fat to become as lean as possible, but fat is what gives meat its taste. In this metaphor, “fats” are the intangibles that give life meaning.