Good News - It's a Small World

Who cares where our cars, computers, or clothes are made? If December's "Battle of Seattle" is any indication, lots of people do. A book by two savvy journalists makes the case for globalization.

Book: A Future Perfect: The Challenge and Hidden Promise of Globalization
Authors: John Micklethwait and Adrian Wooldridge
Publisher: Crown Business
Price: $27.50

Who can doubt that globalization is upon us? Hell, it has engulfed us. It's not just that our fresh sea bass arrives daily from Chile, or that Leonardo DiCaprio has arrived everywhere. Globalization has become ingrained in our assumptions and in our behavior. Who knows where our cars, our computers, or our clothes are made? Brazil? Indonesia? Who cares? Capital flows to Asia in a heartbeat, and the Internet just as readily brings us a glut of international news, shopping, and pornography. An expatriate from India runs McKinsey & Co. An Australian of Lebanese descent heads Ford Motor Co. And a one-minute phone call to the UK costs 10 cents.

Whether all of this represents a good thing is a somewhat more contentious question. Last December's "Battle of Seattle" served as evidence, if we needed any, that a minority -- albeit a large, vocal, and potent one -- views globalization as a less-than-optimal phenomenon. That group's resentment has been echoed, with varying levels of volume and antagonism, by "slow food" protesters in Europe; striking autoworkers in Flint, Michigan; and terrorist bombers from Saudi Arabia.

Globalization, it turns out, is a trend sorely in need of some good PR. To the rescue comes "A Future Perfect: The Challenge and Hidden Promise of Globalization," written by John Micklethwait and Adrian Wooldridge, both of whom are correspondents for the Economist. That pedigree is worth noting: This is the work of two Brits working in America, published by a German-owned company, typed (as the authors note) on an IBM laptop made in Mexico, and most likely printed on Canadian paper with ink from who-knows-where. Readers can anticipate that "A Future Perfect" will not be one to knock global connectedness.

In fact, it doesn't. "Of course globalization makes sense," Micklethwait and Wooldridge aver at the start of their compelling, witty discourse. In the basest terms, "it leads to a more efficient use of resources." But they're smart enough to argue that globalization's benefits are more profound than simple economic efficiency -- and to admit that the trend is not all roses, all the time. "Globalization is often a brutal and chaotic process," the authors concede. "The list of perceived losers is a long one."

To explain how globalization works, and how it came to pass, Micklethwait and Wooldridge take us on an extended world tour -- from the slums of Sao Paulo to the executive suite at General Electric. We meet Jackson Thubela, 20, a phone-shop entrepreneur in Soweto, South Africa, who's operating out of "that quintessential symbol of globalization, an old shipping container"; Sergei Orelsky, a jaunty young manager navigating Russia's decline amid a global financial domino effect; and Greg Power and Victoria Lam, two foreign-born MBAs getting married in New York.

We enter Toytown, a gritty section of downtown Los Angeles that's packed with somewhere around 400 toy companies and wholesalers. The architect of this phenomenon is an immigrant from Hong Kong named Charlie Woo, who, more than 20 years ago, began buying moderately priced playthings from the Far East and selling them to Mexican retailers. Now Woo and his neighbors, many of whom are also immigrant entrepreneurs, make more than $1 billion in toy sales a year, with half of those sales occurring outside the United States.

At times, this impressively far-flung reporting (the frequent-flier miles that the authors accumulated along the way must be considerable) gets off the point. What does the proliferation of an underclass in the heart of Silicon Valley have to do with the global economy? (Answer: not much.) Ultimately, though, the cavalcade of exotic postcards brings life to what Micklethwait and Wooldridge call the "three engines" driving globalization today.

The first of those three engines is technology -- a messy marvel that's chaotic and unpredictable in its spread throughout the world and that's, in short, subversive. "Technology gives entrepreneurs ... the freedom to challenge giant companies and to break up concentrations of power," write Micklethwait and Wooldridge. "Technology gives people the power to weave connections all over the world."

Technology frees people from tyranny of place. Consumers, of course, can surf the Internet at any time for the best deals on the best products available anywhere. Thanks to global telecommunications networks, workers in India are accomplishing some surprising things: processing insurance forms, running Swissair's back office, talking to General Electric's American credit-card users, even viewing security pictures sent by satellite to "guard" office buildings in California. Television, of course, beams news and culture to the world's most remote living rooms.

Capital is the second engine. That restaurants in Seoul are now advertising "IMF menus" for their cheapest offerings attests to the power that money has to determine national identity. Financial markets "are not just wiring economies together and altering the structures of companies,... they're also changing entire political systems," observe Micklethwait and Wooldridge. Our ability to send money around the globe is not a new feat, but our ability to send massive amounts at the touch of a button -- now that's something truly revolutionary.

The third engine is management. "The internationalization of business practices now has its own momentum, and it is also accelerating," write the authors. Reengineering and economic-value added are concepts that are practiced by organizations as diverse as the British Treasury and Thai Farmers Bank PLC. Patrick Wang, the proprietor of Hong Kong's Johnson Electric, the world's second-largest maker of electric motors, reads the Harvard Business Review "religiously." International consultancies and business schools have helped to seed a global canon of management.

Those three forces haven't increased everyone's fortunes, of course. The "Asian Contagion" of 1998 did more than bring down governments; it destroyed lives. Thanks to globalization, some people have lost their jobs and their income, while others have merely been overlooked.

Take Dwight Bobo, 54, an electrician in Flint, Michigan, for instance. He was one of 3,400 General Motors employees who struck a stamping factory in the summer of 1998 over job security and productivity -- and, really, globalization. Basically, Bobo, who made $23 an hour, had become too expensive compared to the workers GM could hire in Mexico. "You can't just work hard and get ahead," Bobo says. "Your job could be shipped overseas."

Micklethwait and Wooldridge readily acknowledge the suffering that globalization has created. "The doctrine of competitive advantage is a wonderful one if you have advantages with which to be competitive," they write. "But what if you have a history of oppression, poor education, and malign government? Like many human things, globalization can often be just downright unfair or carelessly vicious."

But they also recognize that the negativism is overstated. Much of what is blamed on globalization is really the result of technological advances or, more often, of bad government (by Russian politicians, say) or bad management (by GM execs, for example). Indeed, they argue, the global dynamic typically serves to magnify the mistakes made by incapable bureaucrats.

And ultimately, the authors write, there are enough winners from globalization "to make it worth pressing forward." Globalization is helping to create an economy that is at once closer to the classic theoretical model of capitalism and to the model that liberal political theorists once imagined. It frees people to pursue their own interests in the light of perfect information and allows them, "within reasonable bounds, to pursue the good life wherever they find it."

So why does globalization face such vocal, and such damaging, criticism? In part, Micklethwait and Wooldridge explain, the reason is that its victims are more visible than its beneficiaries -- and its opponents are more effective campaigners than its supporters. Proponents of globalization, the authors argue, believe its benefits are so manifestly obvious that they require no elaboration.

But globalization is not inevitable. As Micklethwait and Wooldridge observe, the world is only now returning to the openness that it had achieved a century ago -- before nationalism and wrong-minded economic thinking drove in a wave of regulation and trade barriers. Even now, governments find it more politically expedient to appease vested local interests.

Politicians and businesspeople can ensure that globalization persists. More efficient government and less regulation, according to "A Future Perfect," will itself attract global commerce. But politicians also must invest in basic research and education to build the human capital on which the global economy feeds. And businesses must rediscover philanthropy, to fortify the local communities in which they operate -- and to mitigate the suffering of the relative few whom globalization leaves behind.

Those are pretty amorphous solutions -- and Micklethwait and Wooldridge appear to doubt their actual utility. Globalization will thrive on its own very considerable inertia -- or be slowed by those who act out of myopic self-interest. In the end, it is hard to imagine a strategy, public relations or other, that will interrupt that very human dynamic.

FC Recommends

Big Idea: "The Capitalist Philosophers: The Geniuses of Modern Business -- Their Lives, Times, and Ideas," by Andrea Gabor (Times Business, $25.95). A gifted writer offers some context for the new economy, with intellectual profiles of Chester Barnard, Peter Drucker, Frederick Winslow Taylor, and other business thinkers.

Best Practice: "Sex & Business," by Shere Hite (Financial Times Prentice Hall, $22.50). What could be more fascinating than a business book about IPO madness and Internet millionaires? A business book about sex! The infamous Shere Hite describes (ahem) best practices among men and women in corporate life.

Sleeper: "The Working Life: The Promise and Betrayal of Modern Work," by Joanne B. Ciulla (Times Business, $25). An academic (but still engaging) look at the allure and changing significance of work in an era when, more than ever, you are what you do.

Keeper: "Confessions of a Venture Capitalist: Inside the High-Stakes World of Start-Up Financing," by Ruthann Quindlen (Warner Books, $25.95). We know what you're thinking: Not another Silicon Valley tome! Well, Quindlen is an unusual breed of VC. She's a real player, and she can write. Read it on your next flight aboard the Nerd Bird.

Cheat Sheet

Are you too busy jetting around the world to think about globalization? John Micklethwait and Adrian Wooldridge have five myths that are worth reckoning with.

Myth #1: Size trumps all. It doesn't. National champions find it easier to spread globally, but they often encounter other giants when they do. In addition, technology and deregulation of capital markets have made it easier for small companies to upset bigger rivals.

Myth #2: Universal products triumph. "Most people have begun to realize that in marketing, just as in navigation, treating the world as if it is flat can have drawbacks." In fact, only a handful of global brands sell everywhere to everyone -- and even those brands are sold in different ways in different places.

Myth #3: Economics need to be rewritten. Yes, computers and globalization are having an impact on productivity -- allowing for fast growth with low inflation. But ultimately, cheap commodities, a strong dollar, and weak labor have more likely caused the long boom of the 1990s.

Myth #4: Globalization is a zero-sum game. Yes, there are losers. But overall, globalization creates jobs because it's more efficient. Adam Smith's division of labor still applies: Productivity improves when people specialize in what they do best.

Myth #5: Geography is disappearing. Geography still matters, because in a global economy, business clusters are important. Relationships also matter, as do shipping times.

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