The World is Flat

Finished reading Thomas Friedman's latest offering The World is Flat this weekend. Actually not a bad book. Friedman is at his best when he's engaged in real reporting and telling you what business leaders and other analysts have to say about globalization. The scale of global collaboration between and within companies is truly astounding, and you get a real feel for just how the information age has leveled the playing field.

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Things get problematic, however, when he starts lecturing and giving his own analysis and public policy recommendations. I also think that he worries too much about China and India, who he seems to think are going to eat our lunch. In fact he declares we are already in the midst of a crisis that we have yet to recognize given our poor public schools and the lack of scientists and engineers we are producing.

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Well, sorry, I disagree. China and -- especially India -- are both home to grinding poverty and numerous problems that have yet to be overcome before they begin to approach U.S. competitiveness. Even Friedman notes, for example, that in in conversations with CEOs that they are reluctant to set up manufacturing hubs in India due to the frequent power shortages. I have already detailed China's many problems here.

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The emergence of China and India as news hubs of scientific and engineering talent is absolutely a good thing, not something to be concerned about. More scientists and engineers mean more products and discoveries that can improve our lives. Their gain is not our loss. While Friedman wrings his hands over the relative dearth of new scientists and engineers in the U.S. perhaps that is not our comparative advantage. Let the Indians lead the way in IT, the Chinese in science, and Americans can do health care. Or finance. Or multimedia. Or whatever.

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Now, granted, bad public schools are certainly not a good thing, and something we should strive to improve regardless of what the Chinese and Indians are doing. But I don't buy into this notion that their gain will be our loss, which seems to be a curious position for a free-trade advocate like Friedman. I also disagree with Friedman's remedy to the education crisis, which he seems to believe lies in greater centralization. He would be well advised to note that the decline in American education actually corresponds with the increased federal role that took hold in the 1950s -- as a response to the Sputnik launch.

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Edit: In the book Friedman describes India as a resource-poor country. As today's Wall Street Journal notes, however, that's not entirely accurate as it is home to the 4th largest coal reserves in the world. And yet the country still can't meet domestic demand for coal:

The biggest problem, though, is that mining remains largely the exclusive domain of the inefficient state monopoly, established after coal mines were nationalized in the early 1970s. The McKinsey/CII report identified bloated staffing and a lack of funds for growth at Coal India, and recommended it be exposed to more private-sector competition.

But successive governments have been more interested in placating aggressive coal unions. Private miners may set up coal mines to feed specific projects, such as steel plants, but otherwise don't have a free hand to mine coal or sell it.

The government of Prime Minister Manmohan Singh has identified boosting coal production as a national priority. But legislation to open the sector to competition has been stuck in Parliament for the past five years. Although Mr. Kumar of Coal India says he supports the bill, coal unions, anxious about job losses, threaten nationwide strikes if it's revived.

"We want the bill withdrawn," says M. K. Pandhe, president of the 150,000-member All India Coal Workers Federation. "Our nation's resources should be controlled by public-sector companies." He believes Coal India can close the production gap with a classic prescription: financial assistance from New Delhi.

Like I said, these guys still have a way to go.