The World is Flat

There is a book out there called "The World is Flat". I am about half way through it and hope to finish it but I can't help but be distracted by what seems to me some serious oversights thus far in the authors thinking. First off if you didn't guess the flat aspect he is refering to is the new reality of economics. The driving force behind outsourcing and off shoring manufacturing is what he is reffering to as the new "Flat" earth. And he is right. At least in how he has chosen to approach the subject matter. Advancing communications technology and hyper efficient long haul supply chains have opened up a far more competitive world economy than has ever existed before.

The thing is... I think he is wrong to say the world is flat in this manner. Indian outsourcing due to cheap digital connections has very little to do with a flat playing field and everything to do with absurdly disadvantageous currency exchange rates for the US worker. On a flat playing field two players of equal talent would have essentially the same chance at a job. This is not the case. Take equally educated and experienced programers, one in the US and one in India and there is no contest. Due to exchange rates you can hire the equal services of the Indian programmer for a fraction of the cost of the US programmer. Even if the US worker is more skilled you can afford more than one Indian programmer for the cost of a single US programmer. In fact at current rates you can hire about 5 of them. In the general scheme of things 5 programmers will net you more results than 1.

That isn't Flat. Thats Rigged. We ought to be trying to sign other nations up to the Dollar... similar to the way the Euro has enveloped continental Europe. Hell lets adopt the Euro and force the UK in with us... and Canada and Mexico and India and China and Russia. Lets put the world on the same currency. Then with a world wide 1-1 currency we will see just how flat the playing field is after all. Right now the world is flat in the way a horse race is flattened. The stronger racers are weighted down to give the others a fighting chance. The stronger your currency, the stronger your handicap.

I don't mind competing with Indian IT workers. I don't mind competing with Chinese Labor. I do not even mind if these folks can undercut me and offer to do things for less. After all thats the bread and butter of the invisible hand and capitalism. However... thats not what is happening. Indian programers are not undercutting western programmers. In fact the money they are paid gives them more purchasing power in their economy than the rates their western counterparts are paid. They are not undercutting. They are benifiting from currency inequalities. The US worker has no means by which to compete with this. Again that means that it is not... I repeat NOT a level playing field.

IMHO A "FLAT" world economy, that is to say a level playing field, is one in which equally skilled workers have equal opportunity at being hired for a job. That most certainly is not the current state of affairs. To Friedman's credit he is not suggesting such a state exists. He simply says that we should cede any such jobs as can be done adequately via long supply lines and digital communications to countries with favorable exchange rates generating 'cheap' labor. I find that horribly short sighted. For one these are the bulk employers. They are the tasks which have created the ever so important American middle class. We should not give them up lightly or under such anti competitive circumstances. And yes... exchange rates like those that exist between the US and Asia/India constitute anti competitive circumstances. So by all means bring on this Flat world. Lets level the playing field... for the US worker as well as the Indian, Asian and Russian. But lets not kid ourselves and suggest that such a situation exists at the moment. So long as such absurd inequalities exist in the various currencies involved then the playing field will never be Level.