Now for a lengthy tour behind enemy lines, to show how the globalization economy is working right now and why it seems like such a good idea to a lot of people, even though exponential growth and thermodynamics make it completely f*cking suicidal.

I really liked The World is Flat, because Mr. Friedman does what I do in his own way:  He focuses on how different forces in the world are interacting to create trends and patterns of events, and on the root causes of those forces; he doesn’t get bogged down focusing on intermediate causes and the effects of the interactions.  In effect, his book is a giant systems theory of the current stage of globalization, in which he shows how we got here, how it works now, where it’s leading us, and where else it could lead us if we act differently.

He starts by outlining ten things that came together to start the current stage of globalization.  This is going to sound a lot like Dr. Diamond’s outline of the characteristics that all the original centers of agriculture had in common and that distinguished them from the rest of the world, and the additional characteristics of Mesopotamia that set it ahead of the other original centers of agriculture.  As usual, if you want to learn more about this, go read his book.

First was the destruction of the Berlin Wall and the end of the Cold War.  Before, the people of the world were divided up between two major factions.  When that ended, people all over the world perceived that the most effective means of preserving the survival of their DNA was to start trading goods and services with each other instead of preparing for a huge war against each other.  Imagine that!  He talked about that a lot in The Lexus and the Olive Tree, and I talked about it a lot in the first book.

Second was telephone networks, fax machines, personal computers, the Windows 3.0 operating system, and the internet all reaching critical masses and coming together, as people searched for and found more efficient ways to communicate with each other.  The more you can communicate with other people, the more ways you can perceive of preserving the survival of your DNA and the more you can cooperate with other people to your mutual benefit.  In the Soviet Union the Communists tried to prevent people from communicating with each other and instead tried telling everyone what to do, supposedly for their own good.  But that highly centralized hierarchal political structure wasn’t very efficient for making decisions that fit people’s individual situations well.  People resisted that, the Communists tried to make their political system function by forcing people to cooperate with it, and that just made everyone cooperate with it as little as they could get away with.

Netscape was the final stage of this process, because it was the first internet browser that was written for Windows, which made it really easy to use.   That brought all the individual forms of communication together and started merging them into one.

This started the dot-com boom.  People started setting up web-based businesses, and other people started investing in them.  There seemed to be no end of possibility here, so people assumed there was no end to the investment opportunity.  But we all know what happens when people who only have a partial understanding of how the physical world works assume they’ve found an infinite supply of something, don’t we?  They over-invested in it.

The mistake the investors made (or at least, one of the big mistakes they made) was in assuming that fiber optic cable worked the same way as copper wire.  They saw a huge demand for sending e-mail, photos, music, and videos over the internet, searching for things on Google, ordering things on E-Bay and Amazon, etc., etc., so they assumed that never-ending demand for digital transmission would bring with it a never-ending demand for fiber optic cable.  So everyone raced around in a frenzy, trying to lay cable everywhere they could.  The more cable they laid, the more business people did.  The more business people did, the more cable they laid.  This was an autocatalytic process, like the one that began with the Mesopotamians developing a food supply that let them support people who could invent more things that made their food production even more efficient, support even more non-food-producing people and invent even more new things.
The limiting factor on how much information you can send through a copper wire is the amount of electricity you can move through the wire, which is a product of the electrical conductivity of the copper.  The limiting factor on how much information you can send through a fiber optic cable is the efficiency of the optical transmitters and receivers at the ends of the cable.  The fiber optic cable itself carries beams of light from one place to another.  The optical transmitters encode the information in the beams of light and transmit that down the cable.  That meant that as the optical transmitters and receivers became more and more efficient, the entire communications infrastructure became more and more efficient, because the cable itself carries information at the speed of light. That meant that thanks to all the investment that had been made in laying the fiber optic cable, plus the increasing efficiency of the optical transmitters that nobody had counted on, there was way the hell more cable in place than anyone knew what to do with.  Since they laid a huge amount of fiber optic cable and set up a huge network at first, now the huge network kept getting huger and huger without anyone needing to lay any more cable.  That also meant the people in each company had invested their money in laying more cable than anyone really needed, so nobody was paying any money back on their investments, because they weren’t using the cable.  So to try to attract more customers, the people at the communications companies tried lowering their prices.  That led to a bidding war, and eventually a lot of companies went bankrupt.

Third was all the web-based applications that were developed during the dot-com boom.  Mr. Friedman gives the example of an animated TV show that people from all over the world work on, by each doing their part of the job and then e-mailing the results to the next person in the process.  In America, artists could live wherever they wanted and work from home, in India, technicians could work in telecom centers doing the manual labor involved in the cartoons, and only a few people have to live in the actual cities where the TV show is broadcast.

To this point, lots of different people had been developing lots of different software for their own companies, and even for their own departments within companies.  Now that people all over the world had the opportunity to work together thanks to all the fiber-optic cable strung everywhere, people began developing and using software that was compatible with other people’s software, so they could work together.

These first three stages of development let a lot of different people from a lot of different places communicate and work with each other in a lot of different ways, so naturally, they found lots of different ways to work together, including a lot that nobody expected going into the process.  A lot of uses people came up with for the combination of resources they had now started pushing the globalized economy forward even faster.

The fourth step was open sourcing.  Open-source software is software that people develop and then post on the internet for free.   Computer programmers do this a lot.  If you have an idea for a computer program, you write it, and then you post it on the internet for free.  Then if another computer programmer downloads it, likes it, but thinks of something else to add to it, he gets into the programming, makes his alteration, and then posts the new version on the internet for free.  Then you can download his version, see what he did to it, and use the new version.  And of course you can add something else to it too.  And so can any other computer programmer.  You can also review each other’s work, so if someone made an addition that didn’t work because they made some mistake, someone else can fix it.

What you end up with are computer programs that just keep growing and growing all the time.  Linux is an operating system that works this way, and every application you can buy for a PC or a Macintosh has a Linux counterpart that you can download for free.  The Wikipedia encyclopedia works this way too, except that instead of being written by an invisible collective of computer programmers, it’s written by an invisible collective of people who know lots of stuff about different things.

Mr. Friedman seemed to have trouble understanding how a non-financial economic system like this could work.  He seemed to think it was all made up of weird people who like writing computer programs and encyclopedia entries so much that they were willing to do it for free.  But on the contrary, it’s a process by which people combine matter and energy to turn things that aren’t useful to people into things that are useful to people.  It works just like any other economic system; it’s just that there isn’t any money involved.

If you’re a computer programmer and you want a new computer program, you have the choice between paying a bunch of money for one, or downloading one for free.  The one you download for free might not work exactly the way you want it to, but if it doesn’t, you can change it yourself.  Alternately, you might be able to download a base program and then choose whichever additions people have written for it that you want to add on.  If you don’t like what you find there, you can write your own add-on and then post it with the others.   You might find a program or an add-on that does what you want it to do, but doesn’t work quite the way you wished it did.  But if using it as-is is easier than writing your own, that’s what you do.  In other words, you perceive that using the existing program is a more effective means of preserving the survival of your DNA than going to the trouble of writing your own, slightly better version.

Most of the computer programmers I know are involved in the open-source community.
This economic system seems completely alien to Mr. Friedman because it’s non-Capitalistic.  It’s not an economic system based on anyone’s control of the capital; it’s an economic system based on no one controlling the capital.  It is a Use-Value economic system, in which value is measured by how useful the thing is—not by how badly you can make people want whatever it is that you have.  This is also an evolutionary economic system—indeed, an evolutionary process itself.  It is adaptation to an environmental pressure.  The economic system is governed not by individual people but by the collective will of the group.  Everyone involved either wants the same thing, or else slightly different variations of the same basic thing.  So when each person exerts their effort toward getting what they want, they all end up exerting their efforts in the same direction.
If you want a computer program, and find that someone else has already written one that’s pretty close to what you want, you can start with that and then add your efforts to their efforts, as opposed to everyone who wants a computer program having to write it from scratch themselves.  Then when you post your addition on the net, the person who wrote the original program can also add your efforts to their efforts.  The result is a cooperative economic system rather than a competitive one—which is why it seems completely alien to Capitalists.

The fifth stage was outsourcing.  This was jump-started by Y2K.  For those of you who aren’t old enough to remember Y2K, everyone who had been building PC computers had only been using two digits for the year date.  That meant that on December 31st of 1999, about 90% of computers in America were going to switch to January 1, 1900.  Then all the elevators in America would stop, air traffic control would shut down, all the electrical power stations in America were going to shut down, all the new cars with onboard computers were going to lock up and crash into each other, turning our interstate system into a killing field of mayhem and carnage, all the nuclear power plants in America were going to melt down, and hundreds of millions of people were going to die horrible screaming bloody deaths… or some crap like that.  I remember an awful lot of Christian fundamentalists were holding their breaths waiting for the Y2K glitch to herald the end of the world and their immanent salvation.

But as a friend of mine pointed out to me, “Do you have any idea how much money people would lose in a total global apocalypse?  There’s no way they’re ever going to let that happen.”  And sure enough, at the stroke of midnight on Decemeber 31st, the world failed to end.

While all those Christian fundamentalists were jerking off in preparation for an orgasmic ecstasy of slaughter and destruction, the Capitalists were busy hiring and training a bunch of people in India to fix the problem.  Thanks to all that fiber optic cable that had been strung all over the world in the dot-com boom, it was easy to set up telecom centers in India where they could train and equip Indians to fix all of our computers for 1/5 the cost of paying Americans to do it.
Well, on January 2nd, 2000, a lot of American business owners had telecom centers operating in India, with trained people working in them for a lot less money than Americans would work for (or could afford to work for), and the Indians had proved they could do the job.
And the internet economy was changed forever.

Sixth was off shoring.  That was basically the manufacturing equivalent of outsourcing.  We’ve been importing cheap stuff from China for decades.  Now, with all the fiber optic cable strung between the U.S. and China, all the compatible software, and everything else, it’s gotten easier and easier for Americans to set up factories in China—or any other country—and produce their goods there.  It’s also gotten easier for Chinese to set up their own factories and produce stuff to sell to Americans.  It’s gotten easier to keep track of who in the world wants or needs what, so you can find someone who needs what you’re selling, and you can find someone who’s selling what you need.  All of that means that there’s a lot more money to be made building factories in countries with huge labor pools and low costs of living—regardless of who builds the factories.
“Made in China” used to mean that the cheap thing you were buying was a piece of junk.  But that’s changing.  Now that Americans and Chinese can communicate with each other so effectively, companies that need high-quality products can set up factories in China and train workers to manufacture their parts just as easily.  Alternately, Chinese workers can manufacture parts partway, and then ship the parts to America for the highly trained and highly experienced workers who live there and who already know how to do the job to do the really complicated parts of the job.

Now that all these factories are getting built in China, and Chinese are learning how to manufacture so many things, the Chinese can also manufacture stuff for themselves, and for everyone  else in the world.  Over time, they’re going to learn how to do all the parts of the manufacturing process, including inventing new things in the first place.  They don’t want to be our servants forever, they’re just working for us while they accumulate the skills and the resources they need to do all the things we do.  And since the population of China is about 4 times the population of the U.S., and fully 1/6 of the world’s population lives in China, this is a gigantic labor market that’s being connected to an even more gigantic worldwide sales market.
You remember what I said in the first book about the parallel developments of European and Chinese agricultural civilization?  The Mesopotamians got a 1,000-year head start at agriculture.  Then the Chinese pulled ahead early on because their two large rivers made political unification easy for them.  But then the Chinese became the dominant power of their part of the world by far and got lazy (you might say), so as the Europeans kept competing against each other, they pulled ahead of the Chinese again in the process.  Well now we’re ahead of them, they’re competing against us, and they’ve got four times as many people as we do.  That means four times as big of a labor market and four times as big of a sales market.  The wheel never stops turning, does it?
Seventh was Wal-Mart.  No, I’m serious.  You remember what happened when all those Europeans competed against each other trying to colonize the world back in Globalization 1.0?  The Wal-Mart superpower originated in Bentonville, Arkansas, which is basically nowhere.  The founders of Wal-Mart were at a disadvantage to all the other major retail chains because they were starting out in an economic backwater, which meant the combination of abilities, skills, and resources available to them weren’t as favorable as the combinations their competitors had.  They couldn’t compete against their rivals by brute force, so they had to outsmart their rivals and find every possible way they could to cut expenses from their business operations.  Basically, they were the North Vietnam of the business world.

The founders of Wal-Mart started out by building their own warehouses and distribution network, to save themselves having to depend on anyone else’s warehouses or distribution networks.  That means they can save money by buying directly from manufacturers instead of having to buy from wholesalers.  They sell their products more cheaply by literally cutting out the middleman.  That means cutting out his profit margin also.  They still have to charge some of the profit he would’ve made to cover their additional overhead, but that’s only the part of the profit the middleman would’ve charged to cover his own overhead instead.  All the profit he would’ve charged on top of that is gone from the economic transaction.

Also, once a product enters the Wal-Mart system, it’s theirs, and they never have to wonder where it is or when it will arrive ever again.  Combined with all that fiber optic cable, computer software, and those Chinese factories that can manufacture anything, that’s given them another opportunity.  Now when anyone buys anything at Wal-Mart, anywhere in the world, and the cashier runs the laser over the bar code, the computer sends a signal to the manufacturer to tell him to manufacture another one of those things.

This is called supply chaining.  It basically means smoothing out the whole progression from manufacturing to shipping to warehousing to retail as much as possible, automating as much of it as possible, and eliminating as many steps from the process as possible.  Now that the people at Wal-Mart have been so successful at it, business people all over the world are copying them.  But the people at Wal-Mart started the process, which means it’s their biggest advantage and their specialty.  So they keep investing in refining their supply chain further and further and keep leading the world forward in supply chaining.

The people at Wal-Mart have gotten so good at keeping track of what they have in the stores and where everything is in their supply chains that their computers can plan ahead for even the slightest variations in market demand.  If the calendar says that the Superbowl is coming up, a week ahead of it the computers start ordering lots more beer and chips for their stores.  If the weather report says that there’s a huge hurricane approaching Florida, their computers start ordering lots more bottled water for the stores in the affected area prior to the hurricane and then order lots more beer to arrive at their stores right after the hurricane.  Whatever.

It’s worth mentioning here that India is a country with a population over a billion people, and they have basically no material resources.  So they’re basically Wal-Mart, four times the size of the United States.  Currently, they can’t compete against us by brute force because they don’t have the material resources available to let them do it.  So they’re outsmarting us instead.  That starts with building a better education system than we have.  If they figure out how to compete against us effectively, they’re going to do it by figuring out how to do things we haven’t figured out how to do, and by finding new ways to do things that work better than the way we’re doing them.  And if they ever reach an economic level that’s comparable to our own, they’ll have the same advantage over us as the Wal-Mart people have over their competitors:  A specialty at figuring out how to do things more efficiently than anyone else.  And they’ll still have a population that’s four times bigger than ours.  That means they’ll be to internet business what China is to manufacturing.

Eighth is UPS.  Yeah, those people who drive the big brown trucks everywhere.  They figured out a trick called in sourcing.  They’re basically the Wal-Mart of the transportation industry.  They’ve devoted a whole lot of thought into making people’s supply chains work as smoothly as possible.  And of course, now a lot of other people are copying them, and now the UPS people are putting their new specialty to use and are continuing to develop ever more ways to make people’s supply chains function smoothly.

However much you thought it was possible for the UPS people to smooth out other people’s supply chains, you don’t even know the half of it.  For one example, once upon a time a lot of people who had to send their Toshiba laptop computers back to Toshiba for repairs complained about how long it was taking for them to get their computers back.  So the Toshiba people asked the UPS people if there was any way they could speed up the turn-around time.  So you know the UPS people did?  They hired a bunch of computer repair techs and got them trained and certified to work on Toshiba computers.  So now when you call up the people at Toshiba and they tell you to send your computer back and you take it to the UPS store to send it to them, the computer never actually reaches the Toshiba factory, because UPS employees repair it themselves!

Now UPS coordinates the delivery of supplies to Papa John’s pizza restaurants, and the drivers of the trucks all work for UPS.  UPS manages the Nike warehouse where you order Nike shoes online, and the Jockey Wearhouse where you order Jockey underwear.  The field service techs who go to people’s houses to repair HP printers work for UPS now.  UPS employees design their own packaging now, in case your shipment is really exotic, like shipping tropical fish from Florida to Canada.  And any time you sell anything from E-Bay, the UPS people e-mail you a shipping barcode and they e-mail the barcode to your customer too, so he can find out where in the world his shipment is at any time.

Now UPS also has its own meteorology department to route its shipments around bad weather.  Now it has its own strategic threat analysis department to route its shipments around wars and political upheavals.  Now it has its own financing department and consultancy department to help business owners build their own supply chains and ship their products to customers all over the world.

Ninth was Google, and web-search engines in general.  Thanks to Google, anyone in the world who has access to a computer and an internet link can find out anything.  This is called in-forming, and it basically means building your own information supply chain.  The more you can find out about things that interest you, the more you can perceive about effective means of preserving the survival of your DNA.  Or more simply put, the more information you have to work with, the more empowered you are.  That ranges from things as simple as finding songs you want to listen to, to finding long-lost friends or relatives, meeting up with people who share your interests, getting degrees from online colleges, and even meeting the man or woman of your dreams.    And if you Google search for my books, you can download the audio versions for free and help spread them through the world like a personal enlightenment virus.
Tenth was digital, mobile, personal, and virtual—that is, ever-easier ways to do all these things and customize them to your needs.

Computing on any scale depends on three things:  computation, memory, and input/output speed.  All of these things have been growing at exponential rates.  You remember five years ago when we didn’t have cheap I-Pods that could store thousands of songs and we didn’t have camera phones that could keep track of all your phone numbers and appointments, and couldn’t send text-messages and e-mail?  See what I mean?  For $100 a month, anyone in America can practically fit an entire office in their pocket.

Can you imagine what all this is going to mean in five more years from now?  Or ten?  Or twenty?  Or fifty?  Combine this with open sourcing, out-sourcing, off shoring, supply chaining, in sourcing, and in-forming, and now pretty much anyone in the industrialized world can get in touch with anyone they want and do anything they want.  People can communicate and collaborate with each other, you can access your computer over the phone, your computer can send you information over the phone, your computer can call someone else’s computer, that person’s computer can call send them information over the phone… and so on.

Taken together, this is the reason Mr. Friedman called his book The World Is Flat, because all of these things are leveling the field among people all over the world, breaking down hierarchies, and replacing them with horizontally constructed social networks.  Now that everyone in the industrialized world has access to all the free software they want, they can have anything manufactured cheaply, they can get pretty much any information service they need cheaply, they can supply themselves with anything they want, they can specialize any skill they’re good at, and they can find out anything they want to know.

This makes concentrations of material wealth a lot less important now than they used to be.  In a digitized economy, making things happen in that economy depends you moving a lot less matter and energy around directly, which, in effect, makes everyone more materially wealthy.
What Mr. Friedman doesn’t point out in his book is that it also makes the people who are already materially wealthy more materially wealthy.  They started out with an advantage in material resources, and they used those material resources to manipulate other people, to hire people with the highest abilities, and to develop their own skills to enable them to manipulate other people ever more effectively.  If you have to work at a full-time job to support yourself, you don’t have as much time to spend going to college as someone who doesn’t have to work at a full time job.  Period.  You can take classes online, but so can someone who has an additional 40 hours per week to devote to their education.

To use myself for an example, I possess abilities that are far in excess of those of most people in the world.  And what do I have to show for it?  I have to work 40 hours a week to support myself.  Writing these books and trying to get people to buy them are each full-time occupations also.  I don’t have time to do all three, and I can’t afford to quit my job.  So I have to make the choice between writing books or trying to sell them.  After the first book came out I spent a year and a half trying to figure out how to get people to buy enough copies of it to let me quit my job, and that’s a year and a half of my life that’s gone forever.  As I type these words I haven’t sold a book in over a year.  All these advantages of Globalization 3.0 that have the effect of making me more materially wealthy are making all the people I’m competing against more materially wealthy also.  You can order as many copies of my books from the internet you want, but you can also download as many Brittney Spears videos from the internet you want.  The Capitalists who spread Brittney Spears videos all over the internet have more money to start with than I do, which means they pay for more advertizements, they can hire more people to help them, they can hire people who have specialized skills at getting people to come to their websites, they can hire people who have exceptional innate abilities at marketing, and they can pay for fancy special effects for their videos.  I could produce videos too, but they wouldn’t look as good, and I would have to do all the work myself, and I simply don’t have the time.  So here I am, a part-time intellectual militia of one trying to compete against the entire Capitalist economy all by myself.  They have more material resources on their side, so they can attract more people to their side, and those people have more skills and more abilities.  I have some people on my side indirectly at least, but pound for pound they don’t possess as much scientific ability or skill as the people on the Capitalists’ side.  That means that the Capitalists can devote more man-hours to getting what they want, they can equip themselves with bigger tools to use in each of those man-hours so they can move more matter and energy around in the world in each man-hour, and each person knows more about how to move matter and energy around in the world so for each man-hour they can move energy and matter around more effectively.  What do I have on my side?  A handful of rebels who feel like the world shouldn’t work this way, who think science is evil because it’s the root of all the world’s problems, and who cling so desperately to ancient superstitions to give them the feeling of personal empowerment that they can’t agree on how to work together to make things actually happen, because they’re each clinging to different superstitions.  So they’re each waiting around for different imaginary forces to come save the day.  And in the meantime, their enemies go right on using their functional understanding of how the world actually works to keep on moving matter and energy around in the way they want it to move, getting what they want, and paving over everything in sight.

That’s the bad news…

The good news is that the anti-Capitalist revolutionaries still have the Laws of Thermodynamics on their side.  With the exception of the fall of the Berlin Wall making it possible for people all over the world to come together, everything that has made Globalization 3.0 happen depends on an industrialized technological level to make it work.  That will not last forever, no matter how much the Capitalists wish it would.  The anti-Capitalist revolutionaries, on the other hand, are at least trying to build a global civilization whose survival is physically possible.

So we have a window of opportunity here.  Capitalism depends on inequality and on keeping people divided.  The more capital you control, the more successful that makes you in the Capitalist economy.  That necessarily means that the more capital other people control, the less successful you are in the Capitalist economy.  If 90% of people in the world hate you because your idea of economic success means hoarding all the material wealth for yourself instead of using it for the benefit of your society, and they want to overthrow you so they can redistribute your material wealth, your ability to maintain this economic system depends on your keeping the people divided.  If you can prevent them from figuring out how to unite and pool their resources, then you can prevent them from building a more physically powerful economic unit that you have.  That means you can continue making matter and energy move around in the world in the way you want them to, and prevent the other people from making matter and energy move in the way they want them to.  That means that the path of least resistance that you’ve created for your workers is for them to keep competing against each other, because without being united, competing against each other instead of competing against you is the competition they have the best chance of winning.

On the other hand, if 90% of people in the world hate you and want to overthrow you, and they do figure out how to unite, you’re f*cked.  Game on!

Oh, and here’s one other thing I guess I ought to point out.  77% of Americans believe that evolution is bullsh*t, and we have 51 different state (and district) boards of education in charge of our public education.  People clinging desperately to ancient superstitions and obsolete political traditions cuts both ways.

In China, they have not only a secular government, but an Atheistic government.  And all their government officials are scientists.  That means that at the moment they get hold of my books, they could pretty much snap their fingers and put everything I’m talking about here into effect.  Whether or not all of my work should be taught in every school in China comes down to the decision of a small group of scientists.  And with that, a sixth of the human race will start applying an up-to-date understanding of how the physical world actually works to their political system, and they will start educating their children accordingly.  Within three generations, all of China will be a province of my empire.  And Americans are still going to be clinging to their religious superstitions and wondering why their political system isn’t working anymore.  If the future of the world unfolds this way, the Chinese are just going to buy America on my behalf.

Anyway, back to Mr. Friedman’s systems theory of globalization…

Speaking of ways Americans are burying their heads in the sand and are about to get run over by Globalization 3.0, Mr. Friedman outlines three pitfalls Americans are falling into right now.
First, you remember what I said in the Black Ops section of the Civilization chapter, about what happens if the political system people want isn’t capable of making the economy they want function?  You have to start cutting corners and making a lot of political decisions in secret.  Well what happens if the people in your country don’t know enough to make their economy function?
Back in the 20th century, the answer was to import talent from other countries.  If you’ve ever spent much time around the science or engineering departments of American universities, you probably noticed a hell of a lot of Asians walking around.  Back in the days when there wasn’t fiber optic cable strung all over the world, bright students who were born in third-world countries pretty much had only one choice in how to get educations and careers that would let them put their abilities to use.  That was:  move to America.  The alternative was to be a peasant farmer or something, because lacking an industrialized economy, your country didn’t have the technological level that was necessary to support enough non-food-producing people to open up many other job opportunities, it didn’t have the technology you needed to do any other job anyway, and you ended up with an education system to match that economy.  So you ended up like me, being left to fend for yourself working at a menial job and watching your whole life go to waste.  So if you could get out of your country and into America, that’s what you did.

Now that we do have all that fiber optic cable, those people don’t have to come to America anymore.   Now they can all stay at home with their families and work at American jobs anyway.  So the education systems of their countries are being adapted accordingly.

That means that a lot of the scientists and engineers we depend on importing from other countries to make our economic system function are no longer coming to our country.  Instead they’re staying in their own countries and making their own economic systems function.
Second, the education system in America isn’t keeping up with the changing world.  We have grown so accustomed to being the economic superpower of the world that we’ve fallen into the same trap the Chinese did back in the days when their agricultural economy and political unification made them the dominant superpower of their part of the world.  We’ve gotten so used to the idea that our education system is good enough that we haven’t bothered to keep it advancing as much as it could be.  So now the Chinese, the Indians, the Russians, the east Europeans, and the Latin Americans are all rushing up behind us and we don’t see them coming.  But their goal is not to be as good as we are; their goal is to be better than we are.   So they’re adapting their education systems to meet the changing world, and we aren’t.

Third, you remember what I said in the first book about how the only way you can raise heroic children is by leading a heroic life while you’re raising them?  If you’re satisfied with your life and all you ever do anymore is sit around drinking beer and watching TV, that’s fine if you don’t have kids.  But if you do have kids, that’s the example you’re going to set for them.  They’re going to grow up watching their primary role model drink beer and watch TV.

Meanwhile, on the other side of the world, those 2 billion Indian and Chinese peasants all grew up watching their primary role models work on farms and in factories, working as hard as they could to make lives for themselves even though they never got very far in life.  Now those 2 billion people are being offered a new economic system.  The jobs are different, but the people who are doing the jobs learned how to work just as hard as their parents worked.  And now their hard work will get them about a hundred times further in life than it got their parents, so who’s going to say no to that?

A lot of Americans think this isn’t fair.  But that’s because they’ve made such strong emotional connections to the idea that America is supposed to be an economic superpower that they think it’s fair—and that it’s even possible—for them to write some kind of laws or something that say Asians shouldn’t be allowed to work hard.  These American are trying to limit the number of Asians that are admitted to American universities in order to protect their right to be lazy.  But the only reason they can afford to be lazy is because of all the scientists and engineers who make our economy function.

So as you can see, these three pitfalls are all closely intertwined.

Mr. Friedman outlines some basic problems that the people of a lot of third-world countries are facing in breaking themselves out of poverty, which are very insightful because they have nothing to do with technological levels, but with social developments.

The first is pretty straightforward.  It’s the stereotypical Capitalist solution to economic growth:  Open the markets to competition.  Remove government control of the market.  Privatize a lot of the country’s industries.  Encourage people to take the initiative in advancing their businesses.  This was a big landmark that China and the Soviet Union have passed on the road to economic development and their participation in Globalization 3.0.  India had a socialistic economy for about 50 years also, and they passed this landmark recently too.

The second obstacle to third-world countries lifting themselves out of poverty is specific localized obstacles to economic growth.  That is, the people of each country looking at how their economy works, how they want it to work, and what they’re going to have to do differently within their own country from however they’re doing things now to get from here to there.  These localized obstacles break down into four basic categories:  infrastructure, regulatory institutions, education, and culture.   I’ve talked a lot about the importance of infrastructure and education already.
The people at the World Bank’s International Finance Commission have studied a lot of this problem.  According to their reports, economic development depends on people’s abilities to: start businesses in terms of licenses, regulations, and fees; hire and fire workers; enforce contracts; get credit; and close businesses that go bankrupt.  If any one of those five things is difficult for people in your country to do, you have a big obstacle for people setting up their own businesses and then contributing their energy and creativity to your country’s economy.  And sure enough, a lot third-world countries have barriers in one or more of these five areas.

Cultural values affect countries’ economic development in Globalization 3.0 according to how well the people of the country can adapt to their changing situations, how well they can integrate new ideas that work well for other people, and (ironically) how much sense of community they have.    Mr. Friedman and I agree that these things are critical to economic and social development.  The difference between us is our definition of an economy.  Mr. Friedman defines an economy as a financial economy, which these other things are necessary to support.  I define an economy as the entire realm of human endeavor, and the continued health of the environment we depend on for our livelihoods, of which the financial economy is just a small part.

You can see a lot of examples of how cultural values affect economic development right here in America between the red states and the blue states.  If your people aren’t very well connected to the rest of the world and don’t get the opportunity to learn from other people, or are so caught up in believing their way of doing everything is right and everyone else’s way of doing things is wrong that they refuse to adopt ideas that work well for other people, their cultural values are going to prevent them from advancing economically—regardless of whether you define economics in strictly financial terms or in social terms.

For instance, if women in your community are discouraged or prevented from working outside the home, you’ve just cut your potential labor pool in half.  If you believe that thinking about certain things will make you burn in hell forever and ever and ever and ever, you’ve walled yourself off from participating in certain areas of human endeavor that other people haven’t.  If we talk about the differences between America and Iran or between California and Texas, what do you notice?  Wherever ideas flow the most freely, people make the most money and have more cultural diversity.  Weird people have money too, and they have to work for a living one way or another just like you do.  If you accept people who are different from you and accept their ideas and perspectives, you can learn from them, trade with them, sell things to them, and buy things from them.  If you try to chase the weird people out of town with torches and pitchforks, you can’t do any of those things.

A lot of people talk about how conservative Muslims are, and why that’s made the Middle East such a f*cked up place.  But on the contrary, India, Spain, and some other countries have large Muslim populations too, and the Muslims there don’t have trouble keeping up in the world economically or socially.  So obviously, the problem isn’t caused by Islam itself, the problem is caused by the people who practice Islam—just like problems that are caused by anyone doing anything aren’t caused by the thing itself but by the people who are doing it.  Guns don’t kill people, marijuana doesn’t kill people, Capitalism doesn’t kill people, Communism doesn’t kill people, Christianity doesn’t kill people, and Islam doesn’t kill people—people kill people.  I’ll talk more about what Mr. Friedman had to say about Islam in the Religious Left chapter.
As for sense of community, that’s pretty much the value of community I’ve been talking about all along.  The less energy people in your group devote to fighting each other—meaning undoing what each other are trying to do—the more energy they’ll have to devote to accomplishing whatever they’re trying to accomplish.  Monarchy didn’t create a cultural background for economic advancement, because even if the people in the country weren’t literally struggling against each other, the king (or the czar or whoever) was hoarding all the material wealth to himself and preventing anyone from using it for anything, or being able to apply any creative thought to how else it could be used.  The legal institutions were in place to make this economic system possible, which created problems I’ve talked about already.  But the additional problem was that the monarchs didn’t feel like there was anything wrong with that, so they didn’t do anything to change the situation.  I’ve talked a lot about how monarchies were overthrown in America and Russia, and the economic results of that.  Some countries in the world still use monarchies to this day.  Some of them are in the Middle East where the countries have so much oil income that they can afford to be socially inefficient, because they can make up the difference in economic brute force.  Other countries that compete against them, which don’t have as much material wealth, have to become more efficient to compete, just like the people in Wal-Mart and India had to become so much more efficient than their competitors.  But nobody has gotten efficient enough yet to be able to compete against oil monarchies, so no environmental pressure has yet materialized to force the oil monarchs to adapt.  They make so much money that the old way of doing things still works, so they can still get away with not figuring out new ways of doing things.

Another obstacle to third-world countries lifting themselves out of poverty is the poverty itself.  If the country is so impoverished—or the people of an area are so impoverished—that they can barely even keep themselves alive from one day to the next, they sure as hell can’t devote any of their energy or resources toward moving their economy forward.  That was exactly the problem that Dr. Sachs encountered in the remote African villages where AIDS had wiped out all the working age adults.  So I’ve already told you all about that problem.

Another obstacle to third-world countries lifting themselves out of poverty and into Globalization 3.0 is that a lot of people live close enough to the results of Globalization 3.0 to see that a few people are benefiting from it, and that most people aren’t.  Peasant farmers generally aren’t experts at global economics, so if 5% of people in their country start making a lot of money and the other 95% don’t, that looks like a lot of inequality.  The simplest solution to that problem seems to be to elect whoever promises to take all the money from those 5% of people and spread it around to everyone else.  And as we here in America have learned the hard way over the past 8 years, as long as a majority of people are willing to vote for you, it doesn’t matter whether you know what the f*ck you’re doing or not.

If 5% of people in a country have made a lot of money on Globalization 3.0 and the other 95% haven’t, odds are that it’s because that 5% of people haven’t yet gotten the chance to invest any of that money in their communities.  As I’ve said, it’s not the goal of Indians to be the servants of Americans and process fast food orders for the rest of their lives.  They, like everyone else, want to be the masters of their own destinies, and that means working for themselves, doing things that are going to benefit them.  And when they’ve made enough money processing McDonald’s orders (or whatever they do) to set up their own businesses, who do you think they’re going to hire to work for them?  Expensive Americans?  Or people from their own country where the cost of living is a hell of a lot cheaper?

Mr. Friedman outlines five things that Americans will need to do differently to keep from getting trampled by the Chinese, the Indians, and all the rest of the 3 billion people who are suddenly rushing up behind us.

First of all, leadership.  President Bush isn’t worth sh*t for this, but with any luck, the next president will be.  But I doubt it.

President Bush is trying to meet the threat of terrorism by waging a war that nobody knows how to win.  That worked for a little while, but now everybody realizes what a mistake it was.  And on top of that, the War on Terror isn’t helping us produce anything that will help us move forward.  Quite the contrary.  You know all those Asians we depend on coming to America to go to our universities and then work as the scientists and engineers we depend on to keep our economy functioning?  And you know all those foreigners we’re trying to keep out of America now?  And you know all those foreigners we’re trying to keep from learning how to do highly skilled jobs, like flying airplanes?  And you know all those foreigners who don’t need to come to America anymore to go to our universities anyway, and can work at high-demand American jobs right there in their own countries?  Does anyone see a problem here?

The Soviet Union was a readily understandable threat to the United States, so it wasn’t all that hard for President Kennedy to focus Americans’ efforts on meeting that threat.  But he was more tactful about it.  He used the space race as a symbol of Americans’ competition with the Soviets.  Well the real competition between the Americans and the Soviets was an economic competition, which meant a science and engineering competition, which meant an educational competition.  So President Kennedy said he was determined to be the first to put a man on the moon, and a bunch of Americans joined the cause.  And what did we get out of the deal but a whole bunch of American scientists and engineers?

President Bush could be using the energy crisis and the greenhouse effect as the next big obstacle to be overcome.  He could be offering to join together with the Chinese to develop an energy strategy that would make America energy self sufficient, and would make China energy self-sufficient, and would cut everyone’s greenhouse gas emissions, but he isn’t doing it.  But a lot of politicians are talking about it now, so hopefully it will be a big debate in the 2008 elections.  That hypothetical new energy strategy won’t work, or at least, not as well as politicians would like everyone to believe it will, because it isn’t a return to an organic agricultural economy.  But my point is, even out of all the easy choices President Bush could be making, he isn’t making them.
The problem with our democratic government being practiced in a country with a Hollywood entertainment industry is that we don’t end up with political leaders; we end up with political leadership infrastructures, of which the politicians are simply the figureheads.  You remember what I said about how in Globalization 3.0 every single job that can be done by someone else will be done by someone else?  And you remember what I said in the last book about how survival in the middle and upper classes depends on developing an image that creates the most favorable emotional response among the people you meet, rather than on your actually accomplishing anything in life?  Well, the president of the United States has his cabinet so he doesn’t have to be an expert on everything himself.  But that means that every single job the president has to do that involves thinking about anything can be done by someone else now.  Then you add in speechwriters, wardrobe advisors, hair stylists, make up artists, and debate coaches.  That would leave the president free to do the one thing that no one else can do for him, which is to wrap all of those things up into a single package and present them in the way that will evoke the most favorable emotional response possible from a majority of voters.   So what do we end up with but cartoon characters running for president?  In the 2008 election, Bugs Bunny might as well run against Mickey Mouse.

Second and third, streamlining our economic structure to make it fit the economy we actually live in.  That means getting rid of everything that doesn’t contribute to the new economy, and improving upon all the things that do.

Economic success or failure begins with education or a lack of education.  I already talked about lazy American kids who grew up watching their dads sit around drinking beer and who never learned the value of hard work, and how people like that now want to pass a bunch of laws to prevent Asians from getting good educations or good jobs just so the lazy Americans can stay on the top of the economic hill.  But that’s completely impossible, because making an economy like that work would depend on supporting a lot of non-food producing people to enforce all of those laws.  But our economy depends on foreign scientists and engineers to make it work.  So building an economy that was capable of supporting enough police to prevent Asians from getting good educations would depend on Asians to make it work.  That’s even more absurd than my completely hypothetical example of the Midnight Peace Symbol Revolution where the fascist dictatorship had to try to convince the people that their own revolution deserved to be defeated, in order to convince them to pay enough taxes to hire enough police to defeat it.

So Mr. Friedman’s advice here was pretty simple:  Find all the counterproductive laws and social structures like that and get rid of them.

What we need instead is lifetime education opportunities—not unlike the education industrial complex I talked about in the first book.  Since we can’t be sure what the future of our economy is going to hold, except that it’s going to be a constant state of change, we can’t guarantee anyone that the university education they got right out of high school is still going to be useful for anything in 20 years.  No matter how promising your job looks now, within 20 years from now, your job, or some part of your job, could be exported to India and you could be left high and dry.  So in order for the Globalization 3.0 economy to work for Americans, we’re going to have to know that no matter what happens, we will remain employable.  And when old jobs are disappearing and new jobs are being created all the time, that means knowing that we’ll be able to get the training we need to do the new jobs.

For myself, I don’t waste my time learning any more about how computers work than I absolutely have to.  That puts me at a disadvantage a lot of the time because I have no way of designing my own website, or posting my audio recordings on my website, or designing illustrations for my books, or designing slide shows for presentations, or designing posters or fliers that have pictures on them that get people’s attention, or anything like that.  But in the long run, what’s the point?  In two or three years from now people are going to be using all new programs, so all the time and effort I devoted to trying to learn how the current ones work will be wasted.  I don’t learn very well from staring at a computer screen and trying to figure out what all the icons are supposed to mean, and it takes me forever to figure out the right questions to ask on the help menus.  If I could go to a class and talk to an instructor and say, “What does this do? What does that let you do?  How does the next item on the menu work?” I could pick it up no problem.  But I have no way of doing that.  So instead I devote my time and effort to learning skills that I know are going to retain their value.  Then when it comes to computers I just have to do the best I can and hope something works out.  I’m sure there must be a few other people out there somewhere who are in the same predicament.

I meet up with lots of people who use the alternative approach and constantly try to keep up with the new way of doing things.  Those are bright people, and being bright people who know the most about the newest and fastest ways to do things lets them earn a lot of money.  But at no point do these bright, well-paid people who are so good at doing things the newest and fastest ways ever have time to realize that the industrialized economic system they depend on is environmentally unsustainable, nor do they have time to comprehend the full meaning of environmental unsustainability, nor to they have time to figure out how to solve that fundamental problem with their economic system.  So considering my alternative, I have to say that doing things my way is the best.

So it’s a simple fact of life that in order for your economy to keep moving at an ever-increasing rate, you have to devote some part of that economy to giving your people what they need to keep up in that economy.  Because who else makes your economy move besides your people?
President Kennedy’s vision was to put a man on the moon. Mr. Friedman’s vision is to put every American man and woman on a college campus.

Health care, retirement, and paid time off are all important benefits that act to keep workers shackled to their jobs.  And shackling workers to their jobs is the complete opposite of what you need to participate in Globalization 3.0.  Capitalism works (to the extent that can be said about it) by giving everyone  the opportunity to work at whatever job suits them best.  Capitalists love to say that the competition that Capitalism inspires drives innovation, which is what makes the economy ever more efficient and therefore, ever more productive.  But what about those of us who sell our labor?  Our needs for health care, retirement benefits, and paid time off currently are met by things that we build up over time working at each job individually.  If you have a sh*tty work environment, but you have workers who can’t afford to quit their jobs and lose the benefits they’ve built up there, then you don’t have to improve your sh*tty work environment.  But if all your employees could afford to quit and go work somewhere else, then you would have to innovate to make your business more efficient and more productive.

So Mr. Friedman’s solution to this is pretty damn ingenious.  All you have to do is to socialize all workers’ benefits.  If they could each pay into a system that was completely independent of any employer, then they could earn their health care, retirement, and paid time off benefits over time, no matter what job they worked at.

Of course, this would be the foundation of one giant workers’ union.  If workers didn’t have to spend all their time fending for themselves, they’d be able to band together a lot better.  If you wanted to continue to operate your business with sh*tty working conditions, the only thing you would have to keep all your workers from quitting would be their job prospects elsewhere.  And that would mean that all your competitors would be competing for who could offer their workers the best job prospects.

As I talked about a lot in the Economics chapter, Capitalism is a competitive economic system that creates a lot of choices in the marketplace.  But the goal of competition is not to create choices, the goal of competition is to win the competition, eliminate your competitors so you can make as much money for yourself as possible, and eliminate the choices your competitors were offering people in the process.  So if people who pursue their goals succeed at their goals and eliminate the competition you thought Capitalism was supposed to create, what else did you expect?

So what about Capitalism creating choices in the workplace?   Capitalism is still a competitive economic system, and the goal is still victory in that competition and the consequent elimination of the choices your competitors were offering.  If we had a socialized workers’ pool that would carry workers’ benefits from one job to the next, that would give all your workers choices, and then suddenly 10 times more people would be able compete in the Capitalist economy, or whatever number.  So if our current version of Capitalism works so well by driving employers to compete against each other, just imagine how much better Capitalism would work if all the workers could compete against you effectively too.  If you’re opposed to that, then that can only mean that your goal is not to build as efficient an economy as possible, but to win the competition by eliminating your workers’ choices and keeping them loyal to you and the private benefits you’re offering them.  And that can only mean that you’re exactly the Capitalist aristocrats everyone’s accusing you of being.  So if you Capitalists don’t like the idea of adding socialized benefits for workers to the competition, what’s the problem?  Are you afraid we’re going to win?

Oh, and by the way, this socialized workers’ benefits program has already been proven to work here in America.  You know why?  All of our elected government officials already have it.
Fourth is social activism.  I’ve written almost a million words on the topic so far, so I think I’ve got this one covered.

Mr. Friedman’s version of social activism, naturally, is social activism within a Capitalist economy.  Specifically, since multinational corporations, by definition, span international borders, their success depends on their ability to span international borders.  Their ability to span international borders necessarily breaks down the political divisions that those international borders originally created.  That shifts the balance of power in favor of the corporations, because the more international corporations are capable of doing, by definition, the less national governments are capable to stopping them from doing.  I’ve talked about this already.
So if multinational corporations are going to keep getting more and more powerful, that means they’re going to have to start bearing more and more responsibility for their actions.  Some are doing this already by saying they won’t buy products produced in sweatshops or natural resources that weren’t harvested according to certain environmental regulations.

Mr. Friedman gives some examples in his book, but I can give you a personal example myself.  The model of helicopters I trained in was the Robinson R22.  Frank Robinson, the owner of the company and the designer of the helicopters, didn’t like the FAA standards of helicopter pilot certification.  So he wrote his own.  There’s a clause in the FAA regulations on pilot certification that state that a manufacturer of aircraft can add his own pilot certification standards if he designs an aircraft that requires pilots to have special skills. So Mr. Robinson wrote a long list of special certifications.   The R22 does require special skills to fly because Mr. Robinson designed it with the most sensitive controls of any helicopter, so that once people learned to fly the R22 they’d be able to fly anything.  Also, since it’s so lightweight, the air affects it differently, like in an engine failure the main rotor slows down faster than in a bigger helicopter.  But the additional certification requirements Mr. Robinson wrote for his helicopters went way beyond that.  He did that so that he could be sure that pilots who flew his helicopters would be even safer than the government was trying to keep them.  Of course, he benefited from keeping pilots extra-safe too, because fewer accidents meant fewer people who were going to try to sue him.

So take that basic idea and apply it elsewhere.  If the owners of a multinational corporation enforce their own labor and environmental regulations, they benefit their workers and their workers’ countries, and they benefit themselves by keeping people in their workers’ countries from rising up in armed revolution.

Mr. Friedman’s idea works great on paper, and it’s worked well for Frank Robinson.  But Mr. Friedman seems to have overlooked the fact that the motivational forces that power corporations are fundamentally different from the motivational forces that power national governments.  A national government is an agreement among all the people of the country to work together to keep themselves safe from individuals, other governments, or any other forces that wield more power than any of the individual citizens of the country.  Here in America we call that “United we stand, divided we fall.”  That means that a federal government is the foundation of a socialized economy.
A corporation, on the other hand, is motivated by the pursuit of profit.  That necessarily means the pursuit of profit in whatever way the owners of the corporation are best able to make profits.  That also means profit in whatever way the owners of the corporation define profit.  But the decisions the owners of the corporation make are never going to governed by the will of their workers, because last I knew, workers don’t vote for the president of their corporation, or anyone else.  It could be argued that the corporation is a tribe, in which the chiefs watch out for the interests of their people by knowing the interests of their people without their people needing to vote for anything.  And once again that works great on paper.  But we are still talking about decisions made by Homo sapiens here, who make their every decision according to their perception of the most effective means of preserving the survival of their DNA, and whose natural perceptions of the world don’t include the physical limitations of the Earth.  If you consider yourself to be the chief of a tribe, but you don’t have to drink from the same river as your tribal members, you’ve eliminated a huge environmental pressure that contributed to the evolution of traditional tribes, and you haven’t replaced it with anything else.  That alone makes it inevitable that you aren’t going to be able to adequately provide for the needs of your people.  And even if you can personally, the statistical majority of people who make the decisions in your corporation—meaning all the people who land in the middle of this particular bell curve, and create all the sociological forces that statistical majorities of people and bell curves always create—aren’t going to be able to adequately provide for the needs of their tribal members.

A federal government, as a decision-making entity, defines its success according to the will of its people.  That refers to the making of profit in whatever sense the people of that country measure profit.  Traditionally, people have defined economic success according to ever-greater mastery of the physical world, because greater mastery of the physical world is a more effective means for people to preserve the survival of their DNA than lesser mastery.  That makes corporations and federal governments seem compatible to each other, because to this point the collective will of the people who make the decisions that affect them has been identical.  Furthermore, as long as the population of a country continues to grow, its people basically have no choice but to generate greater and greater profit to provide for greater and greater numbers of people.

However, if the people of a national government changed their minds and began defining their economic success differently, their federal government would continue to serve their collective will.    The success of the government would be defined differently now, simply by the people of the country changing their minds about what success means.  Their government could survive this transition, and the people could adapt it in whatever way it needed to be adapted to meet their needs in the new situation.

A corporation, on the other hand, is an independent entity that exists for the sake of making profits.  Its bureaucratic apparatus is constructed accordingly.  If a corporation ceases to make a profit, it ceases to fulfill its function.  If it ceases to make a profit for long enough, it ceases to exist altogether.  It would be possible to construct a social structure that was similar to a corporation that was capable of serving all of the needs of its people, regardless of what they were, but that thing would no longer be a corporation.  It would be a new form of government.  You could set something like that up if you could set up a corporation that was capable of providing all the services a government provides, from health insurance to law enforcement to mail delivery, and then you could set up a universal workers’ union for everyone who didn’t wield any decision-making power within the structure of the corporation itself.  My point is, if you want to talk about a corporation whose success could be redefined by its people to meet the changing needs of the world, we are no longer talking about corporations as they exist today.

That means that when corporations are faced with the physical limitations of the Earth and the Laws of Thermodynamics and the Hubbert’s peak of world energy production, it will no longer be physically possible for them to generate financial profit, because that absence of energy can only result in people being able to make fewer things happen in the world, instead of making more things happen.  If you make fewer things happen now than you were before, your economy is in recession, by definition.  A recession means loss, not profits, and loss is the opposite of corporate success.

That means that the people who operate the bureaucratic machinery of the corporations, and who depend on continuing to operate that bureaucratic machinery for their livelihoods—meaning the effective preservation of their DNA—are going to have to do whatever it takes to continue to operate that machinery for the sake of making profits.  Now the corporations have basically become killing machines—implements of oppression and environmental destruction.  True, anyone who operates a corporation will have the choice of disbanding the corporation when it’s no longer physically possible for it to continue making a profit in any way that can be considered humane, but that depends on those individual people to make that decision.  Some of them are sure to make that decision, but it’s virtually guaranteed that all of them won’t make it.  They are all going to attempt to preserve the survival of their DNA by the most effective means perceivable to them, and they are all going to be controlling bureaucratic machinery that can be used to rob the pillars of our planet-sized coalmine.  The results are inevitable.

Fifth is parenting.  I talked about this in the first book, and Mr. Friedman agrees with me.  Here in America there are two big pitfalls parents are falling into in raising children who are prepared to cope with the future economy.

First is the middle and upper-class pitfall, in which parents work so hard to eliminate all meaningful conflict from their children’s lives that their children never learn how to face meaningful conflict.  If your children grow up taking their standard of living for granted, you aren’t teaching them the values you needed to learn to be able to earn that standard of living in the first place.  You reached this standard of living by learning to face meaningful conflict and to move forward.  Without learning how to face meaningful conflict, your children aren’t learning how to move forward, only how to stay right where they are.  And they can’t stay right where they are, because they have 3 billion people to compete against that you didn’t.

(When you put all the pieces together, Mr. Friedman’s version of working hard justifies and continues to propagate an inequitable economic system.  There are a number of problems with that, beginning with the Laws of Thermodynamics and the physical limitations of the Earth.  He and I agree that adequate parenting means preparing your children for the world they’re going to live in.  The difference between his version of adequate parenting and mine is that I don’t define “moving forward” as “maintaining or increasing your current material economic standard of living”.)

Mr. Friedman isn’t quite the expert on human behavior that I am, so his solution to teaching your children to work hard by taking away their Game Boys and telling them to do their homework isn’t going to work, because the problem isn’t quite that simple.  My parents were aware of this problem and started thinking about how to solve it back when I was young, but as luck would have it, they never needed to.  They both realized what an advantage in life they had gotten in the long run by growing up in families and cultural background without a lot of material wealth, and once upon a time they worried about how they could raise my brother and me with the same values if they ever made a lot of money.  The easiest solution they found was even easier than they thought it was going to be:  don’t make a lot of money.

The Theory of Evolutionary Relativity comes in handy here.  If your kids grow up seeing a lot of material wealth around them, it’s going to make electricity flow through their brains differently than the sight of all that material wealth is going to make electricity flow through your brain.  Your children are seeing that material wealth at a different time in their lives than you are.  Their brains are still developing, and yours isn’t, which means the presence of that material wealth is going to get built into their neural physiology.  You, on the other hand, know what it’s like not to have that much material wealth.

You could keep all your material wealth for yourself and tell your kids if they wanted any material wealth they’d have to go out and earn it for themselves.  But that would create a fundamentally unnatural parent-child relationship.  Your evolutionary role as their parent is to do all you can to help them grow up.  Which is exactly what you’re trying to do.  Your children are born expecting you to do all you can to help them grow up, but they don’t share the life experience you have, which taught you the value of hard work.  As far as your children would be able to tell, based on what they were able to perceive of the situation, you wouldn’t be doing all you could to help them grow up.  As far as your children would be able to tell, you would be hoarding resources for yourself.  They will react emotionally to that, and they will grow up accordingly.  As far as they’re concerned, that’s not education, that’s forced poverty.  The Communists tried to use forced poverty to teach their people cultural values, and where did it get them?  They ended up with a country full of hard-working people who hated their government.  And then the people worked hard to overthrow their government the first chance they got.  Why do you think your family would turn out any differently?

Alternately, you could be selectively  wealthy, and only spend money on things you cared about and knew were important.  But the result isn’t much different, because your children still don’t have the life experience to know why those things are important and other things aren’t.  So they grow up reacting emotionally to their perception that you just have a lot of really weird opinions about stuff.

Where I come from we have a name for people like that:  trust-fund hippies.  Their parents make a lot of money and then set up a trust fund at the bank, with specific conditions on which the bank is allowed to release the money to their children.  So these kids end up with expensive educations and gigantic houses and no f*cking clue how the world works.  A lot of them end up squandering all their money and then going back to their parents begging for more, because no one ever taught them how to earn that much money for themselves—or how to live with any less.  In the end it doesn’t matter whether you’re a rebellious hippy or an unrepentant imperialist, if you raise your children in a sheltered environment, sheltered children is what you end up with.

And if all you do is to take away your kids’ Game Boys and tell them they should study more, all they’re going to perceive is that you nag them all the time.  They still don’t have the life experience to see why studying is important—and you aren’t creating that life-experience for them either.
Regardless of what your material economic standard of living is or isn’t, whether you live in a mansion or a trailer park, if you want to teach your kids the value of hard work, practice what you preach.   And practice what you preach where they can see it, in a way they can understand  it.  Don’t just tell them what to do, set good examples for them.  If you’re content with your life as it is but you have children, your job isn’t done yet.  Find something you want that you don’t have yet, and get back to work!  And since this project is going to have to take place at home where your kids can see it, getting a promotion at your job so you can earn more money and buy more stuff isn’t a solution to the problem.  You could do what my dad and his dad did, and spend 25 years building or remodeling your house, and thereby do a lot of work that your kids could see and produce results that your kids could see—and end up with a lot nicer house than you started with, without having to pay someone else for the labor.  Or you could paint pictures, sculpt, build models, fix cars, fix appliances, or whatever.  As long as you have hands and intelligence you have the ability to turn materials into a finished product.  Alternately, you could work on projects with other people in your community.  You might not end up with anything to take home with you this way, but you do meet other people this way.  As long as you expend your effort in a way that’s tangible to your kids, to produce results that are tangible to your kids, you can teach them the values of hard work.  By doing work that your kids can see, you give them the opportunity to help you, you can require them to help you, and you give yourself the opportunity to teach them how to do whatever you’re doing.  Most importantly perhaps, regardless of their level of involvement, they will see that you worked on something and produced something as a result, so if they learn nothing else from that, they’ll learn that people who work produce results, and they can too.

The other pitfall Mr. Friedman talks about is the lower class pitfall.  Bill Cosby has been working on this problem a lot lately.  If you’re materially poor and all you ever do about it is to sit around hating the world, you’re not going to teach your kids the value of hard work that way, all you’re going to teach them is to hate the world.  As I’ve said, the first step toward not being able to do something is believing that you can’t.  If you teach your kids that they can’t get anywhere in life, don’t be surprised if they never get anywhere in life.

When people criticized Dr. Cosby for criticizing the African-American community for not setting good examples for their children, Reverend Jesse Jackson defended him, saying, “Bill’s right, let’s fight the right fight.  Let’s level the playing field.  Drunk people can’t do that.  Illiterate people can’t do that.”

If you can’t seem to get anywhere in life no matter how hard you work, there’s probably a reason for it.  So find that reason and work hard against that.  I’ve got a lot more to say about this in the Operation Native American Freedom chapter, but a big reason Whites have such an advantage over everyone else in America is because they used their advantages in material resources to set up living conditions for other people where the path of least resistance in the short run would create bigger problems for them in the long run.  I told you how the Colonial Americans destroyed the Yuroks’ political system by destroying their economic base, and thereby turned them against each other by destroying the ability of their community to provide for their people.  The same thing was done to the O’Odham here in the desert.  It worked so well, what do you think the odds are that it was done all over America?  And what do you think the odds are that Whites do it to a lot more people besides Native Americans?

The economics of oppression are a lot more complicated than Mr. Friedman seems to believe.  Individuals can get jobs, work hard, and make lots of money, but that isn’t an end to oppression, that’s cultural assimilation.  If the people of your culture decide how your economy is going to work, then the only way for anyone to succeed in your economy is to adopt your cultural values.  A few people who decide how economies are going to work do it intentionally, and most people just support them without realizing it.  Some oppressed people who work to get ahead in their oppressors’ economy abandon their own cultural background intentionally, and some only do it unintentionally.  Many hang on to as much of their culture as they can, but many of them don’t hang onto their culture as much as they could because they don’t realize how much of their culture it’s possible for them to hang onto.

For the Yurok and the O’Odham, and every other Native American nation I’ve ever heard of, based on the bits and pieces of the same stories I’ve heard from all of them, the Colonial Americans don’t have to oppress Native Americans anymore because they’ve built an evolutionary perpetual motion machine to oppress Native Americans for them.  I’ve already told you a little about how they did if for the Yurok, and I’ll have more to say about it in the Operation Native American Freedom chapter, but the idea behind it is pretty simple. If you make people feel bad inside, they’ll do whatever they can to try to make the feeling go away.  If their children grow up feeling bad inside, that bad feeling will get built into their developing brains, and they’ll feel bad inside for the rest of their lives.  If they feel like their lives are missing something, they’ll try to take what they need to make their lives feel complete from the people around them.  And by that I don’t mean they’re just going to try to get what they need from the people around them.  If they already feel like they don’t have enough to make their lives complete, they aren’t going to feel like they can afford to give anything in return for what other people have.  And if everyone in the group feels like they don’t have enough to make their lives complete and keeps trying to take what they need from other people, what do you end up with but a group of people who devote so much energy to conflicts within the group that they never have much energy to devote to moving forward from wherever they are?  Whether you call it a reservation or an inner city, either way you end up with a community full of crime, violence, drug and alcohol addiction, domestic abuse, depression, mental illness, teenage pregnancies, suicides, etc., etc..  And then just like in the African village Dr. Sachs visited, where all the working-age adults were dead and nobody had the muscle power to irrigate their farmland, now you have a community in America where everybody’s energy gets wasted on things that aren’t going to do anyone any good in the long run, and their economy goes nowhere.

The only difference is that here we’re talking about the spiritual muscle power people need to irrigate their spiritual farmland—and thereby grow spiritually and make their bad feelings go away.  Spiritual muscle power and spiritual farmland are invisible to the naked eye though, so it’s really easy to pretend they don’t exist, and that you’re not responsible for oppressing these people.

Ayn Rand’s evil genius in The Fountainhead figured out how to set up an invincible Soviet socialist state by teaching everyone to pursue altruism at the expense of their personal interests. That would make everyone’s lives feel incomplete, and thereby he would trick everyone into trying to get what they needed to make their lives feel complete by helping each other.  But they would be helping each other in ways that weren’t going to do anyone any good in the long run because everyone else felt like their lives were incomplete too.  So to the naked eye it would look like a community where everyone helped everyone else, but in reality it would be just another version of the African village where no one had the muscle power to irrigate their fields.  By tricking everyone into wasting all their energy on things that weren’t going to do anyone any good in the long run, the evil genius was going to trap everyone right where they were and call that an altruistic society.

Of course, The Fountainhead  is a work of fiction.  Things like that don’t really happen in real life, do they?  Well just to prove things like that don’t really happen in real life, let’s back up and start over and try changing one word…

If you make a group of people feel bad inside and trick them into trying to get what they need to make their lives feel complete under a competitive economic system, then to the naked eye they are perfectly justified in competing against each other.  But if everyone in the group feels like they don’t have enough to make their lives complete, then no one will feel like they can afford to part with what they have, so everyone will keep trying to take what other people have.  That creates a competitive economic system, and a competitive economic system is supposed to be the best kind, because it drives innovation and leads to more efficient and more productive ways of doing things.  And the fact that a competitive economy isn’t doing these people any good must prove that they deserve to be lower class, and deserve to be your servants.  But on the contrary, a competitive economy has led to innovation on reservations and especially in the inner cities.  Kids in the inner cities used to compete against each other to get the things they needed to make their lives feel complete by bare-knuckle brawling.  Then they moved on to brass knuckles and lead pipes.  Then broken bottles and switchblades.  Then nine-millimeter pistols.  Then double-barrel shotguns.  Then Uzis.  Then AK47s.  And they used to sell each other weed.  Then they started selling coke.  Then crack.  Then crystal meth.  Just look at all that innovation their competitive economy has led to, and look at all those more efficient, more productive ways they’ve found of doing things.  If you make people feel like their lives are incomplete and they have to compete against each other to get the things they need, now you’ve built an indestructible Capitalist economy instead of Ayn Rand’s fictional indestructible socialist economy.

And I haven’t even mentioned how creating a class of lower-class savages makes them seem like a threat to the middle and upper class people, which makes those people compete against them and makes them more willing to pay more taxes to hire more police and build more prisons, etc., etc..  And that leads to whole bunch of innovation in better guns and better body armor for the police, better police cars, better security cameras, better prisons, etc., etc..  Now how much spiritual muscle power is being devoted to things that aren’t going to do anyone any good in the long run?  But this is a Capitalist economy, where the more people compete the better, right?

Since spiritual muscle power and spiritual farmland are invisible to the naked eye, it lets you build an evolutionary perpetual motion machine of oppression that’s invisible to the naked eye.  If you can destroy people’s spiritual muscle power you can prevent them from irrigating their spiritual farmland.  Then when people who all feel bad inside keep competing against each other and their economy goes nowhere, to the naked eye you’re no longer responsible for that.  You no longer have to oppress the people directly, because now you’ve tricked them into oppressing themselves.  In fact, now you can offer to help the people out by offering to help them solve the symptoms of their problems.  But if you don’t solve the causes of the problems, it doesn’t matter how much you help them solve their symptoms, because their problems are never going to go away.  So now you make it look like no matter how much you try to help the people solve their problems, their problems never get solved.  And to the naked eye, that makes it look like those people just aren’t smart enough to figure out how to make their communities function no matter how much you help them, and that makes it look like you did them a favor by conquering them.

There’s a saying among Native Americans:  Before you can decolonize your land, you have to decolonize your mind.  And that’s exactly what they’re talking about.

Oh but anyway, back to the Capitalists’ side of the story…

Mr. Friedman shows four ways individual Americans can prepare themselves for the changing economy.

First, you can anchor yourself.  You can learn how to do a job that depends on your physically being in a certain place in order to do the job.  If you’re a waitress in Boise, Idaho, or a plumber in Topeka, Kansas, you only have to compete for jobs against people from the Boise or Topeka areas, because Indians can’t wait tables or fix leaky pipes over the internet, no matter how cheaply they’re willing to work.

Second, you can be special.  You can be so good at doing something that you’re irreplaceable.  Bill Gates, Tom Cruise, and Paul McCartney will never have to worry about their jobs being exported overseas.  Of course, not everyone can get a job like this.

Third, you can specialize.  You can learn a job skill or combination of job skills that make you irreplaceable to a company.  That way, when all the easy jobs get exported overseas, your employer will keep you around to do some really complicated stuff that’s virtually impossible for him to find someone over the internet to do.  Of course, if you’re specialized you could also work for yourself.

Fourth, you can be adaptable.  You can learn a general background of skills that have lots of different applications, so that when one type of job gets exported overseas, you still have plenty left to choose from.  Then you just have to learn a few new skills specific to the new job.  And the wider the variety of skills you learn, the more ways you can combine your skills to do new jobs.  To use myself for an example, I have dual associates’ degrees in Building Construction and Automotive Technology, and between the two, I know at least something about how to work on every single thing ever invented by humankind—with the exception of computers.

Mr. Friedman also gives a list of seven things business owners can do to prepare for the Globalization 3.0 economy.  Anyone who works in any kind of a group can apply these things to whatever they do.

First, adapt to the changing environment; don’t try to fight off Globalization 3.0.  If you try to stop Globalization 3.0 from happening, you’re going to lose.  There are so many people who are joining in Globalization 3.0 that no individual or small group of people can hold them back.  That large group of people control an ever-increasing amount of material resources, and they have the same goals, so that huge amount of people is using their huge amount of resources to make the things they want to happen, happen.  And what they want is Globalization 3.0.

Instead of trying to fight off Globalization 3.0, figure out what you have that you can use to compete against everyone else.  It worked for the owners of Wal-Mart, and it’s worked for all those people in India.  They all faced stiff competition, but instead of sitting around feeling sorry for themselves they figured out how to do something no one else had figured out how to do yet.

Second, thanks to open sourcing, out sourcing, off shoring, supply chaining, in sourcing, and in-forming, a small business owner can do all the same basic things a large business owner can do.  A large business owner can do more of them, and can do them bigger, simply because they have more material resources on their side, but however they’re doing what they’re doing, they’re doing it by assembling all the same basic pieces of the puzzle that you have to work with.

Third, thanks to open sourcing, out sourcing, off shoring, supply chaining, in sourcing, and in-forming, a large business owner can do all the same basic things a small business owner can do.  Traditionally, an advantage a small business owner has had on his side is his ability to offer personalized, customized service.  But now that people all over the world can get hold of the same software and cheap labor, large business owners can get hold of all the same basic things a small business owner uses to do what he does.

Fourth, the most successful business people are those who are best at collaborating with others.  Know what your specialties are.  Whatever you need done that isn’t your specialty, it’s pretty well guaranteed to be somebody else’s specialty.  If it isn’t a specialized skill, someone in India can do it for you cheaper than you can do it yourself.  So as a business owner, your goal is not to create a product anymore, so much as it is to create the network that’s capable of creating the product.

Fifth, self-evaluate frequently.  Figure out where your strengths and your weaknesses lie, and then keep track of them.  Keep your strengths strong, and keep an eye out for additional strengths you can develop easily with the combination of strengths you already have.  Then sell that to your customers.

Sixth, the goal of outsourcing is to grow, not to shrink.  If you can hire someone in China or India to do the job of an American worker for 1/5 the price, that means you can either hire 5 people and get 5 times the work done, or you can hire one worker and save 80% of his cost, and then invest it back in your business.  Investing more money to build up your business will create more jobs, with the end result that you end up employing more people, not less.

Seventh, outsourcing doesn’t make you a traitor to your country.  Since you can’t stay in business by limiting yourself to only doing what Indians know how to do, expanding your business means doing more of something they can’t do yet.  That means finding people who can do those jobs to do them, and that means your own people.  Workers in your country knew enough about how to do the job in the first place that the Indians copied them, so that means they have more experience that they can build upon now to learn how to do something the Indians haven’t learned yet.

Based on everything I’ve said so far and everything you’ve seen in your own life, I’m sure you can see how all this is playing out in America.  So for a new perspective, here’s some examples Mr. Friedman gives of how these things are playing out in India:

Some American camera manufacturers found out about a little village in India that had a photo processing shop that wasn’t very reliable.  People needed photos for their identification cards, but whenever they got their photos taken, about 50% of the time their orders would get f*cked up.  These people would walk into town from wherever they lived only to find their photos hadn’t been developed yet or had been lost or something.

So these camera manufacturers invented a portable photo studio.  It was a digital camera with a solar-powered printer mounted in a backpack.  They gave these to five women in the village to see what would happen.  What happened was the women doubled their family incomes.  Because just like I said in the Introduction to the first volume of this book, everyone has the same natural attraction to material resources.  Now that photos were readily available in town, lots of people started getting photos taken.  About half the work the women got was the old identification photos.  The other half was people getting photos of themselves or their families or their children’s birthday parties or whatever.  Because Indians like photos for the same reasons Americans like photos.

I’ve talked a lot about how a billion Indians are rushing up behind us, trying to get the same things we have.  But so far, the total number of Indians working in the Globalization 3.0 economy either in factory or computer jobs is only 2% of their population.  The other 98% are still farmers.  That’s caused some turbulence in their adaptation to the Globalization 3.0 economy, because when 98% of people in the country seem to be getting the short end of the deal, it’s really easy for a politician to trick a majority of voters into voting for him by promising to solve the problem, even though he has no idea what the f*ck is going on.

In India’s 2004 elections, they just turned over control of the government from one party to another, pretty much like we did in America in 2006.  But evidently, the Indians have some people in their government who do know what the f*ck is going on, because the reason for the big turnover in India was because the voters wanted a better Globalization 3.0 strategy than what they had before.  They have a lot of corrupt local governments there, and that’s been a big obstacle to their local economies moving forward.  So the voters voted for the party that offered to do the most to fix the problem so they all can get more of Globalization 3.0.

(Meanwhile, what the f*ck did we get in the 2006 elections but a president who lied to start a war and a Democrat majority in congress who’s too chickensh*t to do anything about it?)

But consider this:  If you get on the internet and Google search for the impact that America is having on the global environment, you won’t have to look far to find one of many studies that show the Earth couldn’t physically support a second United States.  But if China, India, and Russia all build up to our material standard of living, there will be ten United States in the world.
A big question a lot of people in China are asking right now is:  Western Europe and the United States didn’t give a f*ck about the environment when they were building up to industrialized economies, so why should they?

Globalization 3.0 has had a big neutralizing effect on global politics because people everywhere would rather make money than fight wars.  But what would happen if the next president of China decided he wanted to build up to an American material standard of living and realized there was only room at the top for one, so he decided to fight us for what was left of the world’s oil supply?  Right now the Chinese are importing a lot of oil from Iran, and Americans are threatening to invade Iran.  There are a lot different ways this could turn out badly.

Earlier I talked about how Capitalists banding together to propagate their environmentally suicidal economic system could only lead to World War III in the form of a global civil war between Labor and Capital.  On the other hand, if Capitalists get so desperate to try to prop up their environmentally suicidal economy that they turn on each other, what’s that going to change?  Well the biggest thing it would change is: who would fight the war?  Capitalists don’t fight wars, they just start them.  The people who actually fight the wars are the same people who’ve always fought wars:  Labor.  The workers.   So this is yet another example of why the Capitalists must be stopped before we—specifically, the workers—get dragged into a war none of us can win.

Finally, on the bright side, Mr. Friedman tells a story in the last chapter of his book about an Indian who decided to go out to the countryside and build a school for “untouchable” children.  In India they have a caste system, which is some cultural tradition religious superstition bullsh*t that says that the fact that some people are born into the bottom-most level of their social hierarchy proves that they were bad people in their former lives, and now they have to pay for their sins.  Basically, it’s the American traditions of Manifest Destiny and slavery all rolled into one and committed upon their own people.  In America slavery was racialized, so it was really easy to tell who was supposed to be a slave and who wasn’t.  In India they use family names instead.  People who have certain family names belong to the Untouchables caste, and anyone who doesn’t have those names doesn’t belong to that caste.

So this guy moved to a village where Untouchable people lived, and set up a school for them.  And guess what:  They’re Homo sapiens  just like everybody else.  And now that they have an opportunity for a better life, they’re jumping at it.  If they can get enough education, they can get jobs in foreign countries and get out of India.  And once they do that, nobody they meet out there will have any idea what their family name is supposed to mean.  So they get to start with a clean f*cking slate.

India has the second largest population of Muslims in the world.  And you know how many Indian Muslims have been caught fighting for Al Queda?  None.  Not one.  We of the United States can’t even say that about ourselves.

And you know why that is?  Because people who have a lot of hope for the future don’t volunteer for suicide missions!  The Untouchables caste in India could be turned into someone’s revolutionary army easily enough, because traditionally they’ve been condemned to lifetimes of poverty and oppression from the moments of their births.  But now this guy was giving them educations and a chance for better lives.  So when Mr. Friedman visited the school and asked the kids what they wanted to be when they grew up, they all said things like, “a doctor”, “an astronaut”, “a poet”, whatever.  Not one of them said, “a terrorist”.

If it wasn’t for the Laws of Thermodynamics, the physical limitations of the Earth, or the effects of exponential growth being counterintuitive to our natural perception of the world (like, if you could fold a page of this book in half 51 times it would span 3/4 of the diameter of the Earth’s orbit around the sun, as I showed you in the last book), this solution for countries breaking themselves out of poverty would work perfectly.  But nowhere in his book does Mr. Friedman say anything about anyone doing anything to stop the global population explosion or moving to a cooperative organic agricultural economy.  Quite the contrary, in fact.  At one point in his book, he points to the fact that 150 years ago 90% of Americans worked in agriculture or related fields (no pun intended—okay, I’m lying, you know me better than that by now), compared to only 3 or 4 percent of Americans working in agriculture and related occupations now, and he calls that a sign of economic progress.  Nowhere in his book does he indicate that people are becoming less dependent on environmental energy as a result of Globalization 3.0, or that anyone intends Globalization 3.0 to be a stepping stone on the path to a global organic agricultural economy, or that anyone is taking any decisive action to educate the public to any of these problems.  No, every time he refers to people moving away from agrarian economies and into industrialized economies, he refers to it as an unconditional victory.

This is why I think Mr. Friedman makes such a good spokesperson for the Capitalists.  He means well, but he’s made such strong emotional attachments the to the idea that his economic system has prevailed over all others to this point proves that it’s the best economic system possible, that he’s diving head-first into the biggest sensory illusion in the world.  And then he assumes that anyone who doesn’t want to accompany him must not be as smart as he is.  So he continues to support his economic system, he continues to encourage everyone else to support it, and he continues to discourage anyone from opposing it.  He’s not doing this out of greed or malice, but out of blissful ignorance.  And in so doing, he’s creating a public image and cultural values that Capitalists who do act out of greed or malice can hide behind—just like greedy Capitalists took advantage of President Lincoln’s good intentions and supported liberating the slaves not because they cared about human rights but because they cared about getting 40% more labor out of the slaves.  Just like greedy Capitalists always take advantage of every opportunity that ever comes their way.

And that’s exactly what everyone in the anti-corporate, anti-Capitalist, anti-globalization movement has been saying all along.

Filed under: y: 42 Vol. III by Ezra
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