The World Is Flat: A Brief History of the Twenty-first Century
New York Launch

Thomas L. Friedman
Columnist, The New York Times
Three-time Pulitzer Prize winner (1983, 1988 and 2002

New York, April 4, 2005

RICHARD HOLBROOKE: My name is Richard Holbrooke, and I am the Chairman, and I am just thrilled to see all of you here tonight. We have a great, great honor tonight. Tom Friedman, whom you obviously know or you wouldn’t be here, one of America’s greatest journalists, the only person who has ever won the Pulitzer Prize three times, is going to unveil for us, one day ahead of the official unveiling - sort of like a soft opening in a hotel - [LAUGHTER] his extraordinary new book, The World is Flat, which is sure to be a tremendous best-seller. And then, afterwards, we will have comments by Joe Stiglitz and Shashi Tharoor. I want to welcome you, especially Mr. Secretary General and men, for joining us on short notice. The Secretary General is here under one condition, he doesn’t have to say anything. [LAUGHTER] He is just here to hear Tom’s thesis, which is of such great importance. We owe this evening to Lynn de Rothschild, my dear friend for many years, and one of the Asia Society’s most important supporters, who conceived of this project, talked Tom into doing his pre-opening, first-ever discussion of the book with us tonight. And I want to ask Lynn to come up here, and introduce the speakers. Thank you very much for coming. [APPLAUSE]

LYNN de ROTHSCHILD: Thank you, Richard. I am really very thrilled to be able to have helped with this event. I think the world of the Asia Society. And in reading The World is Flat, I decided to go to the Internet and see what the Asia Society says about itself. And it defines its mandate very simply, as “to build bridges of understanding between Americans and Asians.” Well, when you read Tom’s book, you will see that we are in the sweet spot of what this organization is all about. And I also feel that we are really very fortunate to be here tonight, because in a way this is the first official debate of the “new” debate that Tom is creating in The World is Flat. Tom puts international relations and international development in a new context, not defined by nations and institutions, but by individuals and technology. And because this world is gonna pivot so much on America and Asia, this is really the place to start the debate. And I regret to say that, although Dr. Amartya Sen deeply wanted to be here, his mother is ill in India, so he had to stay with her. And he sends his regrets, and we send him our prayers. Not as a replacement per se, but more as a reflection of this rich city we live in, we are honored to have Joe and Shashi as discussants for Tom’s book tonight. Our agenda is that Tom will speak, then Shashi and Joe will respond. Tom will then answer their comments, and open everything up to questions. And Richard Holbrooke will close us. You have all been given bios of all the speakers. So all I did, was I went to the Internet to see what else is there, in the spirit of The World is Flat. [LAUGHTER] In the case of just [LAUGHTER] Joe Stiglitz, I pulled up his CV. And I want you to know, it is 51 pages. [LAUGHTER] 42 pages, in small print, a list of articles and papers. Two full pages of books. So, if you ever wonder why you didn’t win a Nobel Prize - [LAUGHTER] read what Joe [LAUGHTER] has done. And in the case of Shashi, I went to the Internet, and found that he has a Web site named after himself. [LAUGHTER] So he is a great policy wonk, historian, biographer of Nehru, author of eight books. And since 1978, a U.N. diplomat. Most currently, the Undersecretary General, for Communications and Public Information. And most important for tonight, there is no one more knowledgeable and thoughtful about the politics, culture and future of India, which is so important, and relevant to the thesis of The World is Flat. When it comes to Tom, when you go to the Internet, and you “Google” in “Thomas Friedman of The New York Times,” there are 874,000 [LAUGHTER] pages. And The New York Times advertisement. But with three best-sellers and three Pulitzer Prizes, we really don’t need the Internet to tell us about Tom. His writing has been so persuasive for so many years, that Tom is really a kind of icon in America and abroad. What Tom writes really does matter, and he has earned that stature through hard work, integrity, and most incredible modesty that allows him to listen. From the Internet, I will freshly read you a section of the Book Review from The Washington Post. It says, “Like its predecessor, The Lexus in the Olive Tree, this book showcases Friedman’s gift for lucid dissections of obtuse economic phenomenon. His teacher’s head, his preacher’s heart, his genius for trend spotting, with no real idea how the 21st century’s history will unfold, but this terrifically stimulating book will certainly inspire readers to start thinking it all through.” We are honored to be the first participants in the official debate he started. And I invite Tom to the podium. [APPLAUSE]

THOMAS L. FRIEDMAN: Thank you very much. Thank you. Lynn, thank you so much for that very generous introduction. And Richard, thank you. Secretary General and Ms. Annan, I am honored that you are here this evening. We were sorry that Dr. Sen couldn’t be here when Lynn informed me that he couldn’t, because of the illness of his mother, I informed Lynn “that I don’t speak without an Indian Nobel Prize winner on the stage.” [LAUGHTER] And she said, “No problem. We’ll get Shashi Stiglitz.” [LAUGHTER] And so, I really just want to thank Joe and Shashi for coming here, because I am very eager to get their feedback on this. Let me dive right in and tell you simply how this book emerged, and a basic scheme of the argument. As those of you who have read my column know, that I have been The New York Times foreign affairs columnist since 1995. And my columns, you know, basically revolve between Lexus and the Olive Tree. I had an interest in globalization and technology, and obviously the issues of the Middle East. And I was really focused around those issues, weaving back and forth between the two, until September 11th, 2001. And on the morning of September 12th, I dropped the whole issue of globalization, and went off and covered the 9/11 wars for three years. I did one story about globalization in those three years. I went out to Silicon Valley on one trip in 2002, I believe it was. Some friends of mine were involved in the start-up. A little company called “Google.” They said it could be really interesting. I went out, I did one story about Google, and went back to Kabul, basically. And that was kind of the mindset I was in, until 13 months ago, when in February of 2004, I had been doing documentaries for the Discovery Channel and Discovery Times Channel, and we had done on “the Wall in Israel,” one on “the roots of 9/11.” And we were thinking what to do the third one on. And this was, as I say, right in the heart of the primary season. And the thought we had was, well, this issue of people’s perceptions of America and the world were very hot. And I thought, “Wouldn’t it be fun if we went around the world to call centers, and interviewed young people who spent their days imitating Americans, on what they thought of America?” And as we were costing that out and budgeting out that idea, suddenly Senator Kerry issues his famous blast against “Benedict Arnold executives,” and the whole issue of outsourcing just exploded. And I said, “You know, I would really like to take a break from the 9/11 wars. Why don’t we go to Bangaloree? We’ll just go to one place. And we’ll look at the world. And we’ll look at this outsourcing story, entirely from the Indian perspective.” And we called the documentary, The Other Side of Outsourcing. I had been to Bangaloree once before, and I had friends there. And so I was looking forward to going back. We went out to Bangaloree on February 15th of 2004. We did 60 hours of interviews in two weeks. And as I, you know, said in the book, I was just blown away. And with each interview and with each passing day I was in Bangaloree, frankly I got sicker and sicker. And it was not the food. It was a sense I had, as a journalist, that while I had been sleeping, while I had been off covering the 9/11 wars, something really big had happened in this globalization drama. And I had really missed it. And it all really came to a head the last day we were in Bangaloree. The last interview we did was with Nandan Nilekani, the CEO of Infosys. And we were sitting outside Nandan’s office. And the crew was setting up. And Nandan and I were talking on his couch. And Nandan said, “Tom, I have got to tell you. The playing field is being leveled. And you Americans are not ready.” Well, I wrote that down in my notebook, and I thought about that a lot. We did the interview. And then, on the ride back to my hotel, as I bounded along in our minibus with my Indian driver driving barefoot, I kept looking at my notebook, “the playing field is being leveled.” And I thought about that, all the way back to the hotel. “And what was Nandan telling me? It seemed to me he was telling me,” I thought to myself, “that the playing field is being flattened. Oh my God, he is telling me, the world is flat.” And he is citing this, as a huge advance for civilization. Well, I went back to the hotel, I called my wife, I said, “I gotta go on leave immediately. I have got to write a book, called The World is Flat.” She thought I was nuts. I came back and called the publisher of The New York Times, Mr. Sulzberger, and told him the same thing. Because I had a deep, deep sense that the framework that I had been using to think about globalization and world affairs badly needed updating. And that is really the context of this book. Let me quickly go through the high points of the argument. The first chapter of the book is called While You Were Sleeping. And it’s really autobiographical. It begins as, “As noted in the Times yesterday with me noting that Christopher Columbus set sail in 1492, looking for a shorter route to India. That’s where Columbus was going. He went west. He had the Nina, the Pinta, the Santa Maria. He never did find India, but he called the people he met ‘Indians,’ and we still call them that, to this day. And he came home and reported to his wife, ‘Honey, I have accidentally discovered, the world is round.’ I set off for India, 512 years later. I went east. I knew just which direction I was going. I had Lufthansa business class, and GPS satellite that popped up in my seat. And I came home and reported to my wife, ‘Honey, I have accidentally discovered, the world is flat.’ ” And what the first chapter really does, is I start at India, but then keep moving east; from India to Japan, from Japan to Delhi in China, which is becoming the outsourcing capital of China, where you have thousands of Japanese speaking Chinese, doing the backroom operations now for most of the major global multinationals. And then, across the United States, where there was the McDonald’s. I don’t know how many of you know, but there are many McDonald’s now, where you go to the drive-in window, you order your three hamburgers and four milkshakes and three fries for your kids. You are actually speaking to someone in Colorado. And they are taking down your order. Actually, also taking your picture. And zapping your order and your picture, to the person inside that McDonald’s, where they will fill that order for you. McDonald’s discovered they save 30 seconds on each order by doing this, and their error rate is radically reduced. Or you call Jet Blue to make a reservation. You may get Betty on the phone. I got Betty. And after I tried to make my reservation, I said, “Betty, where are you?” And Betty said, that she was up in her bedroom in her slippers and nightgown, because Jet Blue, as you may know, has a home reservation system. They have no reservationists, other than a group of basically retired employees and housewives, in Salt Lake City. The founder of Jet Blue is David Neeleman, who is a Mormon. And he has basically installed this in bedrooms, throughout Salt Lake City. So I kinda go through all of my “flattening” experiences right up to my own home in Bethesda. The argument I am making at the end of the first chapter, is the following. That I would argue, there have been three great era of globalization. The first, I would simply call “Globalization 1.0.” It lasted from 1492 ‘til about 1825. That was really the beginning of “global arbitrage.” And I would argue that era metaphorically shrunk the world from a “size large” to a “size medium.” But I would argue that the dynamic force striving globalization in that era tended to be governments and countries - whether it was Spain exploring the new world, or Britain taking over India, the Portuguese in East Asia. You went global through your country, in “Globalization 1.0.” I would argue “Globalization 2.0,” from the early 1800s ‘til 2000, shrunk the world from “size medium” to “size small.” And that era was spearheaded by companies globalizing for markets and labor. And the essential argument of this book is that, while I was sleeping, I don’t know about you, we actually entered “Globalization 3.0.” And it came together around the year 2000. And it is shrinking the world, from a “size small” to a “size tiny,” and “flattening the competitive playing field” at the same time. But what is unique about this era of globalization is that, the “new” new dynamic of this era, is that this year of globalization is not built around countries, and not built entirely around companies. That the dynamic element of this era of globalization is individuals and small groups. And be advised - it ain’t gonna be a bunch of White Western individuals. It’s gonna be individuals of every color of the rainbow, who will be able to “plug and play” on this “flat playing field.” Now, the second chapter of the book, which is a third of the book, and really preoccupied so much of my time, ‘cause it required me to go back to school, is basically called The Ten Days that Flattened the World. And it’s about the ten forces, political events and technologies that converged, I would argue, around the year 2000, to give us this “level playing field,” this “flattened playing field.” The first, I’ll go through them quickly, is 11/9. Not 9/11, but 11/9. In a wonderful Kabalistic accident of dates, you may know the Berlin Wall came down on 11/9, November 9th, 1989. And the fall of the Berlin Wall is my first - I call these The 10 Flatteners. It’s the “first flattener,” because as long as the Berlin Wall was up - . I have never done a Lexis/Nexis search of this. But I would dare say, before 1989, very few people used the word “globalization.” I am sure it was used, but not in the way we do it today. Because there was literally a wall in the way. There was a wall in the way physically, in terms of trade and commerce. But there was a wall also in the way, perceptually. And the fall of the Wall was hugely important. Before when the Wall was there, you could have an “Eastern policy,” or a “Western policy.” But once the Wall was gone - and this is something actually Amartya talks about in the book - we could begin to think of the world, as a “single space,” not only economically, but politically. This “flattener,” this “first flattener,” is called When the Walls Went Down, and the Windows Went Up. Because in a wonderful accident, on top of accidents, the Windows operating system shipped six months after the fall of the Berlin Wall, giving us not only a “flat playing field,” but a single “graphical user interface,” to look at the world through. That’s the “first flattener.” The “second flattener” is 8/9/95, I consider to be one of the most important days in our lifetime. 8/9/95 is the day Netscape went public. It’s the day of the Netscape IPO. And Netscape going public, did three hugely important things. The first thing it did, was give us the Internet, because it was really the Internet browser, which allowed us to actually display words and music and data, to render what was in all those “ww, you know, Web sites,” and display it on a screen, which really brought the Internet alive for Grandma and for other grandchild. And so the “Netscape browser” really gave us the “Internet,” in the popular way we have it today. The second thing that Netscape did was, Netscape commercialized - . This gets a little more technical. But a set of “open standards,” “transmission protocols,” which ensured that “no company would dominate the Internet.” Now, this was very, very important. You may recall, before Netscape, your wife was on Compuserve, you were on AOL. Very difficult to communicate. You could do it, but it was a real pain. What Netscape did, was basically commercialized a set of “open standards” that truly made the Internet interoperable. The third thing the Netscape IPO did, of course, was give us the “dot-com boom,” which gave us the “dot-com bubble,” which gave us the accidental overinvestment of a trillion dollars of fiber-optic cable - in a space of five years. What that “trillion dollars of fiber-optic cable” accidentally did, without anyone realizing it, was make Bangaloree and Beijing and the Bronx next door neighbors. Thanks to overinvestment and wild speculation by companies by the name of Lucent and Global Crossing, we basically accidentally wired the whole world, driving down the cost of transmitting data and voice to basically free. That was what the Netscape moment represented. In sum, what the Netscape moment did, was bring people to people, conductivity, to a whole new level. Suddenly, people could connect with people, from more different places, in more different ways, on more different days, than ever before, in the history of this planet. And that just happened, at the end of the 1990s. Remember when Bill Clinton was president, no one you knew had e-mail. The third date, the third event, is something I simply summarize as “work flow,” “work flow software.” And “work flow” is really, all the stuff and standards, that connected all those PCs with all that bandwidth, basically; all that fiber-optic cable. And the reason “work flow” was so important, is again, go back to the early 1990s. Hey, it was great that the Asia Society had computers, and people became more productive when they had computers. But what we all forget is that, Asia Society’s purchasing department, it ran on Novell. And its inventory department, it ran on Microsoft Windows. And they couldn’t communicate. So people were much more productive within their departments, thanks to computers and software. But what really needed to happen, for people to become really productive, was for applications to connect with applications. That any one software, run on anyone’s computer, anywhere in the world, be able to seamlessly and virtually connect, with anyone else’s computer and software, anywhere else in the world. Applications, had to connect, with applications. And again, that just reached a critical mass, at the end of the 1990s. Suddenly, my application, no matter what I was doing, whether it was home banking, or home investment, or home film developing and sending you the pictures, all of my applications - thanks to all of these new protocols and digital pipes and things like middleware - could connect with your applications. What I argue basically, is that when you put the Netscape moment, with the 11/9 moment, with the “work flow” moment. When suddenly people, can connect with other people, like never before. And applications, can connect with applications, like never before. That was the genesis moment, of “the flat world.” Because what that did, was give us a global platform, for collaboration. Because when I can communicate with anyone anywhere, and I can have applications that connect with their applications anywhere, suddenly more people can collaborate, on more different kinds of projects, in more different kinds of ways, on more different kinds of days, than ever before, in the history of this planet. And that was the platform, for “the flattening of the world.” Now, that’s just the first three. What the next six “flatteners” are, are the new forms of collaboration, that sprung off this platform. The first, of course, is the one most notorious, is “outsourcing.” Because when “people to people” and “application to application” can connect, I can “source” any function in my company, whether it’s looking for lost luggage, or writing new software, I can source it anywhere from North Dakota, to Bangaloree, India, to Beijing, China. So “outsourcing” basically is the first new form of “collaboration.” I go into much greater detail in all of these in the book, but I’ll go through them quickly. The second new form of “collaboration,” is “open sourcing.” Suddenly, a bunch of geeks sitting at home - working in basically “open forum chat rooms,” for a lack of a better way to describe it - are writing the next great operating system, called Linux - or have written the world’s main Web server, the one I profiled in my book, Apache. Apache was the Web server that brings you to your Web sites - that if you go into Amazon, that Amazon is built on - is Apache. Apache was the product of a group of geeks sitting at home - for the pure science of it - writing in Web server for free. Now, how would you like to be Bill Gates? And your whole business model all these years, was “anybody who challenges you, you are gonna undercut them on price.” Suddenly your main competitor - Linux now is 15 percent of the operating system market - your main competitor is selling your product for free. This is a very different business model. A whole new form of “collaboration” made possible by this platform. The third new form of “collaboration” - this is really new, but I would argue it’s reaching a new stage - is simply “offshoring.” Now, I take my factory, from Canton, Ohio, and I move it to Canton, China. We are all familiar with this. I build that section around China joining the World Trade Organization, which I would argue took “offshoring” to a whole new level. The fourth new form of “collaboration” I call “supply chaining.” This is built around Walmart. Um. As you all know, if Walmart were a country, it would be America’s eighth largest trading partner today. And basically, what Sam Walton did was, bring “supply chaining,” down to the last atom of efficiency. Where, if you take an item off the shelf in Bentonville, Arkansas, another one is made immediately in Shenzen, China. “Supply chaining.” The fifth new form of “collaboration” I call “in-sourcing.” This is built around UPS. Now, we are all familiar with the UPS trucks, the funny brown trucks with the funny little people in the funny brown shorts, delivering funny brown packages. If you think that’s what UPS is doing, you are not paying attention. UPS does something called “in-sourcing.” What they do, is come into your company, and take over your entire basically logistical operation, right up to the neck of your company. So you have a Toshiba laptop. Your Toshiba laptop breaks. You look at the warranty. It says, “Call 1-800-HELP-TOSHIBA.” You call 1-800-HELP-TOSHIBA, they tell you, “Take your machine to the UPS Store, and send it to us here at Toshiba.” What you don’t know, is your machine, when you deliver it to the UPS Store, goes from the UPS Store, to UPS’ global hub, which is in Louisville, Kentucky, at Louisville Airport. And your Toshiba laptop is now repaired by a UPS employee, at a hangar, in Louisville Airport, in a clean room and a white smock. It never touches Toshiba. You want to get your kids a new pair of sneakers. You go on Nike.com. UPS picks up the phone. UPS responds to you. UPS picks and packs the shoes. UPS delivers them, bills them, and basically hands the money over to Nike. See the Papa John’s pizza truck going by? Don’t check who is driving. It’s someone in “funny brown shorts, and funny brown pants.” This is “in-sourcing.” It’s a whole new business. It’s being done by UPS, and FedEx. It’s an incredible “flattener,” for what it does in terms of streamlining basically the logistics globally. That’s the fifth. The sixth flattener I simply call “informing.” “Informing” is my name for Google, Yahoo, Microsoft search. Because I can now “collaborate” and mine my own data - as Lynn did, in preparing this talk. I don’t need to go to the library. I don’t have a research assistant. I had no research assistant for this book. My “research assistant” was a person called “Google.” And basically, I call this form of “collaboration” “informing.” So now we have the first three that create the platform for “collaboration.” We have the six new forms of “collaboration” - “outsourcing,” “open sourcing,” “offshoring,” “supply chaining,” “in-sourcing,” and “informing.” That’s nine. The tenth flattener, I simply call, the “steroids.” And “steroids” are Voice Over IP, and Wireless. And what these “steroids” are doing, basically, is turbo-charging all six of these new forms of “collaboration,” so I can now do them, from anywhere, with anyone, with any device. That is the second chapter of the book. As I say, it’s about a third of the book. The third chapter - and I’ll close, you know, shortly after this - is really the core thesis of the book. And it’s called The Triple Convergence. And the basic argument I am making, is that sometime around the turn of the millennium, right around the year 2000, all ten of these “flatteners” started to converge. And in economic terms, the “complementarities” between them, all started to really work together, at a tipping point. The “outsourcing,” drove the “supply chaining.” The “informing” drove the “open sourcing.” And they all basically “converged.” And, I would argue, that is “the flattening of the world” - that we are just at the beginning of now. But that first convergence - the convergence of all ten of these “flatteners,” which are now used in multiple ways, by individuals and companies - is really “the flattening of the world.” It has created a Web-enabled platform, for multiple forms of “sharing of knowledge and work,” that is irrespective of distance, of time, and increasingly, even language. That is “the flattening of the world.” But that’s just the first convergence. The second convergence is that we are all having to learn - and I think we are at, again, just at the beginning of this - to what I would call “horizontalize” ourselves. That just as, you know, Paul David wrote about “electricification.” Why, after electricity was first invented, we didn’t really get the productivity gains from electricity. It was because people had to really adjust the architecture of buildings, the architecture of factories, and their own habits, to get the best out of this new technology. The same is going on today. We are all having to learn, how to “horizontalize” ourselves, and go from a world where value is created, in vertical silos primarily, by “command and control” - to a world where value will increasingly be created, by “connect and collaborate.” Now, the example I give in the book, is a true life example. Shashi and my kids both, I am proud to say, go to Yale. Only I live in Bethesda, and he lives in New York City. And the problem from getting from Bethesda to New Haven, is a complete pain in the behind. [LAUGHTER] OK? You have to go to BWI Airport in Baltimore, fly Southwest Airlines to Hartford, and then drive from Hartford to New Haven. Now, last spring I was going to visit my daughter. I had two bags of spring clothes to take to her. I wanted to, you know, basically get in and out, you know, as quickly as I could. And I don’t know if any of you have flown Southwest Airlines, but as you know - you don’t look like a Southwest crowd. But [LAUGHTER] as you know, on Southwest Airlines, you don’t have assigned seats, you just get a ticket that says “A,” “B,” or “C.” You do not want to be a “C” on Southwest Airlines. You do not want to be a “B.” And if you are carrying a bunch of stuff for your daughter, and you want room above the seat, and not be stuck in the middle. I am a hip guy. I did the “E ticket” thing. I had my secretary get an “E ticket.” I got to BWI Airport 95 minutes before the flight. Stuck my credit card into the Southwest machine. And out came my ticket. And it said, “B.” I said, “Son of a - . [CLAPS] This thing is fixed. This is rigged. [CLAPS] This is worse than Las Vegas. [CLAPS] I am here 95 minutes before this flight. [CLAPS] There is no way I am a ‘B.’ ” [LAUGHTER] I went and got my Cinnabon, and stewed in the back of the “B” line. [LAUGHTER] Well, an hour later, they called the flight, and then I saw it. All the “A’s” were getting on, carrying what looked to me like - plain old white home printer paper. Where it looked to me like, they had actually printed out, their boarding passes, and the bar code. And they were getting on the plane, with those. Well, of course, what I didn’t know was, Southwest Airlines, using a combination of the Internet and “work flow,” had completely “flattened” itself, so that its customers, at 12:01 A.M. the night before, could go online, download, not just their reservation, but their whole boarding pass, and bar code, print it out at home, and show up at the airport. Oh, I looked at that, and I said, “Friedman, you are so 20th century. [LAUGHTER] You are so Globalization 2.0.” [LAUGHTER] You know, Globalization 1.0, there was a ticket agent. In Globalization 2.0, there was an “E ticket” machine. We thought that was really cool. And while you were sleeping, you became the gate agent. [LAUGHTER] That’s what the “convergence” allowed. It allowed Southwest Airlines to make you their employee. And if you value your time, you are paying Southwest Airlines, to be their employee. That was the second “convergence.” It is, that we are all starting to learn - and we are just at the beginning of this - to “horizontalize” ourselves. The final convergence - I said, this is a “triple convergence” - is that this “flattening,” which all came together, I would argue, in the late ‘90s - happened to coincide with three billion people, who are out of the game, walking onto the playing field. And when do they walk out onto the playing field - just when it’s been “flattened.” When they can “connect and collaborate,” “plug and play,” with your kids in mind, more equally, than ever before, in the history of this planet. Oh, I have no illusions. Maybe only five percent of them have the access the skills - today - to “plug and play.” Of course, that’s 150 million people - that’s exactly the size of our work force. And a lot of ‘em, are gonna “plug and play” really fast, ‘cause they are not stuck with Legacy systems like we are. They are going right after - and collaborating with - the latest technology. The simple thesis of this book, is that this “triple convergence” of these technologies, creating this “flat field,” with these new business processes of “horizontalization,” with these three billion new people walking onto the field, is going to basically define - or has defined at least - the brief history of the 21st century. Now, another thing happened that converge, while this convergence was happening. And I argue in the book, this really masked what was going on. It was a political “perfect storm.” And this political “perfect storm” was called Enron, 9/11, and the dot-com bust. I think one of the huge analytical mistakes that some people made at the end of the dot-com boom, was to think that the “dot-com bust,” meant the end of globalization. It has actually meant exactly the opposite. What happened was, everyone’s sources of capital shrunk - particularly venture capitalists. And so what every venture capitalist has done, is say, “Let’s see. We only have 50 million to invest, instead of 5 million. Do you remember Rajib and Sonya who were here, doing the boom? That they went back to Chennai? Do you think somebody could get them on the phone?” Basically, what the “flat world” allowed, right when the “dot-com bust” happened, was globalization became turbo-charged - as every company and every innovator, looked to take advantage of this new platform, in order to drive down cost, and drive up innovation. And that’s really what happened. The second thing I said, is Enron. What Enron did, was make all business executives “radioactive,” or “guilty until proven innocent.” And as a result, even the Bush administration - this slavishly, you know, pro-business administration or pro, you know, tax-cutting administration - doesn’t want to talk about business, or be seen with business people, or talk about competition. It’s quite amazing. I talked to people in Silicon Valley, about the Bush administration, and business and competition. And of course, 9/11 made us all focus - mostly myself - on something other than this globalization story. As a result, basically - right when we have reached what I would argue is a really - . It’s an overused word, but I think it’s appropriate here. An incredibly important inflection point. One I make a very big claim for. One that is gonna move the world, from increasingly “vertical” to increasingly “horizontal.” And that’s gonna change everything. Right when we reached that point - nobody wants to tell the kids. Nobody is talking about it. We had just had an election campaign, where the Democrats were debating whether NAFTA was a good idea. And the Republicans, put duct tape over Greg Mancew’s mouth, the chief White House economist, when he said, “Outsourcing actually could make a lot of sense.” And they stashed him, in Dick Cheney’s basement. [LAUGHTER] OK? So right when we have reached, I would argue, an incredibly important inflection point, which I call “the flattening” - nobody is basically talking about it. Well, here I agree with the late lamented Carly Fiorina and what Carly has been saying, for the last couple of years - is that, “Everything we called the IT revolution, these last 20 years? Sorry. Just the warm-up act. That was just the creation, forging and sharpening of the tools of collaboration. What you are not about to see, ladies and gentlemen, is the real IT revolution. Because the world, is flat.” Now, let me simply make three very quick closing comments, before I turn it over to Joe and Shashi. Be advised, I have a chapter. Well, the next whole section of the book, is about What This Means for America. And the brief argument there is that, I believe the challenge of “flatism,” over time, will be as big and important and ready to challenge our society, as the challenge of Communism. The chapter, the whole section is called, This is Not a Test. And if we don’t have as comprehensive a response to that, then I think we are in serious trouble. Then I go on basically, to look at how this affects companies, countries and individuals. I do have a chapter that’s very important to me. It’s called The Unflat World, in which I make very clear, “Don’t worry. I know the world is not flat. Don’t worry. And not only do I know that it’s not flat, I know that the vast, vast majority of people on the planet, are still yet to be able to ‘connect and collaborate.’ ” And I basically, in that chapter, go through what I think are the main communities, who are not able to “play” in this world. I still think, it’s the job of the analyst to define when he sees a critical mass of new trends coming together, to define those trends. And that’s why I have used this term, The World is Flat. I use it obviously, with great literary license. I think it is gonna be the biggest and most important trend shaping economics and geopolitics coming forward. But don’t worry. I understand that the world is not flat. And that millions and billions of people, are not able yet to “connect and collaborate.” I break that chapter up into four groups. The first I call the “too sick,” which obviously are all those communities around the world, in the grips of HIV/AIDS, malaria, tuberculosis and other disease, who are simply “too sick” to take part. And I talk about basically, “collaboration” as it applies to them. The second group I call the “too disabled.” These are, in many cases, I like to think of rural India, rural China. These are people who are more “half flat,” in the sense that they have been to Bangaloree, they have been to _____ . They have actually seen some of the “upside” of this world. They want it, but they do not have the tools. They do not have the tools of governance, the economics - the simple tools, to basically enable them to take part. And I basically talk about, what that means, and how we can think about getting them these tools. The third group I call the “too frustrated.” And that is the Arab Muslim world. One of the things that happens when the world goes “flat,” is you get your humiliation fiber-optically. You get it at 56K, right in the face. You see just where the caravan is, and just where you are. And you cannot understand 9/11, without understanding the role of humiliation, and the degree to which it was intensified, by the “flattening of the world.” The fourth basically sort of “unflattener” which is what the chapter is about, is simply called “too many Toyotas.” When three billion people walk onto the “flat world,” and the Indian dream and the Chinese dream is the same as the American dream, where it’s a house, a car, a toaster and a microwave. If we don’t find an alternative source of energy, we are either gonna burn up this planet, or we are gonna find ourselves in a war with China and India, over natural resources. The last chapter of the book is simply called 11/9 or 9/11. And the simple argument I make here is that, when the world goes “flat,” all the tools of “collaboration” are increasingly going to be commoditized. There is only one thing that doesn’t get commoditized, and that’s imagination. It’s what people do with those tools. I note in this chapter, that in February of 1999, by another accident of history, two people started airlines - from scratch. One was David Neeleman. He started Jet Blue. Raised the capital, raised the venture capital. Outsourced the pilot training, to schools around America. Outsourced the reservation system, to housewives in Salt Lake City. Then the exact same month, we know from the 9/11 Report, someone else started an airline. His name was Osama bin Laden. He outsourced the pilot training, to schools, flight schools, in Florida. He outsourced the planning, to Khalid Sheik Muhammad. He outsourced the financing, to a banker in the United Arab Emirates. Both airlines were designed to fly into New York City - one into JFK, the other into Lower Manhattan. 11/9 and 9/11 to me represent the two competing forms of imagination in the world today. After all, on November 9th, 1989, or in that November ’89 period, someone in Hungary, said “Imagine. Imagine if we let all these East Germans coming into Hungary, go out through Austria. We could bring down, the whole Berlin Wall.” Somebody had, that conversation. And in Kandahar, in February 1999, someone had a different conversation.” They said, “Imagine, if we could hit the Twin Towers, between the 94th and 98th floor. We could bring them down.” So how people imagine, is gonna become a hugely important strategic issue in the “flat world.” When so many people have access to the tools of “collaboration and connectivity.” And what the last chapter is really about, is my own sort of way of thinking about - “How do we get more people, to have the opportunity, and the inspiration, to have a positive imagination?” Thank you very much. [APPLAUSE]

SHASHI THAROOR: That was magisterial, Tom. And, as always, a delight to listen to. I had the privilege of hearing a dry run in Beijing a year ago, when Tom was beginning his work on this book. And I actually spent Sunday with his book, so I can tell you it’s terrific. It’s written with the same clarity, wit and lyrical lucidity and passion that we have come to expect from you, from your columns in The New York Times. So thank you, Tom. And I will not spend too much of your time this evening, focusing on where I agree with Tom. And the basic thesis, as you all heard, is pretty compelling anyway. A new key issue for me this evening, is where Tom can be challenged. In particular, where perhaps in parts his argument seems to me overstated. And whether, despite the “flatness of his world,” he might have lost sight of a couple of inconvenient hillocks. Now, Tom wrote some years ago, in one of his famous “Friedmanisms,” that “we had moved from a world, dominated by superpowers, to one dominated by supermarkets.” That including, of course, “super stock markets.” The idea was that geopolitics had seated place, to the primacy of globalized economics. And those on that perception, to argue that the era of “state domination,” has given way, as you heard this evening, to a “world flattened by networked global trade.” And my fear is that this analysis overlooks, at least three fundamental realities, and perhaps a couple of others I’ll get to, that most of the world’s people still wake up to. And the first is that, the state is still indispensible to most people. It provides - or it should provide - physical security, law and order, economic infrastructure, and basic services. For most people in the world, the real problem is that their state is not strong enough, to deliver on those basic requirements. You wax lyrical as I have, having been there, about the Infosys campus in Bangalore. This is the big new IT firm in Bangalore. But they have to organize their own electricity. They get their stuff in, through their own transportation networks. They run their own health club, because basically these things aren’t available. They can’t work, in Bangalore, and take those things for granted. The second problem - and you acknowledge it very briefly this evening, and I think as briefly in the book - is indeed the widespread prevalence of poverty, disease, malnutrition. You speak of three billion people, entering this new “flat world.” But a lot of those three billion, are living under two dollars a day, Tom. And the threat of the combination of poverty, drought, famine, and HIV/AIDS in sub-Sahara in Africa, doesn’t figure anywhere in your book. The third problem - I know it’s a cliché, but it’s still true - the “digital divide.” And Tom’s book suggests - and he said so this evening - that “the Internet is a democratizing tool.” And in the West, perhaps it has become one, since information is now far more accessible to anyone, anywhere. But that is not yet true, in the developing world, except for a tiny minority of the empowered. The stark reality of the world today, is you can actually tell the rich from the poor, by their Internet connections. The gap between the technological “have’s” and the “have not’s” is widening, both between countries, and within them. And the “information revolution,” rather unlike the French revolution, is one with lots of “liberty,” you know, some “fraternity,” and no “egality.” So the “poverty line” is not the only line about which we have got to think. There is also, the “high-speed digital line,” the “fiber-optic line,” and all the lines that Tom is so excited about - but that exclude those who are literally not “plugged in” to the possibilities of this “flat new world.” And I am afraid those who don’t have the computer keyboard, don’t have the key to this world of yours, Tom. They are marginalized. And they are still a _____world, with them at the bottom. Now, as an Indian, I am obviously thrilled about the sections about India, which are extensive in this book. And we are at the Asia Society. So let me say that I am obviously delighted by the rising standards of living of so many of my compatriots, working at call centers and looking for lost luggage, and making airline reservations, [LAUGHTER] fixing credit card payments, transcribing medical notes, reading CAT scans for Americans. I mean, all of this, is there in Tom’s book. And it’s great. But one could ask, as an Indian, is this sort of new form of “coolie labor”; taking on jobs with low wages and low prestige - here, which can be down - there. Now, I agree that’s better than many of the alternatives. So it’s not entirely a bad thing. But we should be clear, what we are celebrating here. Tom actually writes in the book, “You can innovate now, without having to emigrate.” Good insight. But at least in the old days, if you wanted to tap into the best brains trained in India, you had to offer them American salaries, and American lifestyles. You had to let them into your neighborhoods and your schools. Now you can leave them to their potholed roads, and their posh uptowns and their water shortages. And so, I have to ask the question. Is what Tom is celebrating here, something that risks giving us little enclaves of globalized prosperity - the 21st century equivalent, of the “gated communities” of Manila or Johannesburg, which house the privileged, while outside then, the poor fester in the slums. But Tom’s analysis, of course, leads to the sort of running conclusion, that “trade and IT are the most important driving forces in the world. Walls are falling, and networks are being met.” And I don’t think I am being unfair in saying, that the book certainly leaves you with the sense, that to Tom, 11/9, the day the Berlin Wall fell, counts much more in the 21st century, than 9/11. The problem is, that the forces behind 9/11, can easily disrupt, the world made possible, by 11/9. In fact, just last week, the Indian Police police arrested a terrorist cell in Delhi, affiliated with the jehadi LeT, which actually had plans to bomb India’s leading IT companies. Now, one might think therefore, that in a “flat world,” geography is history. But history has a habit of haunting some parts of the world. And if you are in them, geography still matters. And one thing you didn’t get to this evening from your book, which I was delighted to read, was Tom’s “Dell theory” of “conflict prevention,” which is basically, looking at the “supply chain of his Dell laptop.” He says, basically, “There will never be a war, between two countries that are part of the same supply chain.” Now this actually reminds me [LAUGHTER] of Tom’s earlier “Golden Arches” theory of “conflict prevention,” when he argued “that no two countries, with a McDonald’s, would go a war” - which of course was published, just before NATO bombs came raining down on Belgrade - uh, right near [LAUGHTER] the McDonald’s in the city center. Now I know, Tom is scribbling quickly his objection. And there were other factors. [LAUGHTER] Dick Holbrooke is sitting here. We know. We know what happened there. But the point I am trying to make, is that being part of a global “supply chain,” is sadly not enough, to prevent war. I mean, I would argue that much of conflict, is actually fueled by emotions - not always by rational calculations. China, for example, is pretty serious and similar, about going to war, if Taiwan secedes, or declares independence. Even if every economist would argue, that that makes no sense, given the increasing interdependence of Taiwan and the Chinese mainland. And of course, the horrific economic consequences of any disruption - the amount of billions invested in both sides. But I really want to conclude with the point - and the reason I raise this - is that economics can’t explain everything. As Francis Fukuyama has discovered, “It’s not yet time for the end of history.” And culture, religion, and national pride, all continue to play their part. So I should say something different to Tom, from what he said at the Southwest Terminal. “Friedman, you are so 21st century.” [LAUGHTER] Thank you. [APPLAUSE]

JOSEPH STIGLITZ: Well, let me say, I enjoyed Tom’s presentation, and the comment. I was in Bangalore, just a month before Tom was there. And I think that no one can visit Bangalore without having some of the same enthusiasm. You go to Infosys, and you see a campus that is more modern than anything in Silicon Valley. And you can’t hope but be a little bit worried. One of the things that he didn’t mention - and I’ll come back to this a little bit later - is that as they talked about what contributed to his success, is the fact that, in many ways, what Infosys was doing, was “de-coupled” from the rest of India. And this is really the story that was just mentioning. If you travel - . I spend most of my time, traveling around, not just in Bangalore, but in the area around it. And you see, people living 2,000 years earlier. You see people farming with oxen. Not touched by the 19th century. Not touched by the 18th. Not touched by any of the episodes of globalization, directly - although it has some indirect effects. And that, of course, raises the issue - and a fundamental one. How long will it take, and how profound a change, are the changes which Tom describes? Now I happen to share his view, that these are very big events, that will represent very large challenges, both for the United States and for the whole world. The big challenge, is the fact that he pointed out, that there is a sense in which, three billion people, who have been “excluded,” in one way or another, excluded from the “global economy.” We talked about it. But they weren’t really included. And in fact, during the colonial era, there were actually actions to try to make sure that they remained “excluded.” That’s changed. And the end of colonialism was a big event. They were “officially” on their own. But now, there are technology is, that is being brought to play, has really facilitated their integration, into the global economy. At the same time, I wanted to emphasize that there are, as I listen to him, several factors going on, which are going exactly the opposite direction. The “de-flatteners,” [LAUGHTER] that are making the world less flat. The first was the one that was just referred to. The huge inequality. This inequality has been growing, with globalization. And it’s been getting larger, not smaller. And the fact is, as it was just pointed out, that while those who have “access” to these technologies - particularly in India and China - there will be a “convergence,” between them and the advanced industrial countries. But in Africa, in parts of India where there is not access, there will be “divergence.” And it will take a long time, before these inequality to be reversed. So the patterns that we are seeing, of a world in which there is increasing inequality, I think in some ways is being reinforced. And at least some groups, are being left behind, no matter how hard we try. The second story is that, it talks about rhapsodically, some of the things that Windows has done. But the other aspect that we have all learned about, is how Microsoft, has used its monopoly powers, all around the world. The EU, the United States, have found Microsoft guilty. This is not news. The only debate, is what to do about it. And the fact that it is so difficult to do anything about it, is indicative that we don’t know how to “flatten” the power of Microsoft. Now there is this “open source” movement that’s going on, that may eventually prove a check. But certainly, the kinds of remedies that would normally have been talked about by economists - separation into different units - are ones that present enormous problems. In fact, it was interesting he talked about the “enormous benefits” that Netscape brought. But Microsoft basically squashed Netscape, by using its “competitive” - its monopoly powers. And if we are in that kind of a world, it’s not a “flat world.” [LAUGHTER] And in fact now, Microsoft is trying to do that, in other areas, at the current time. The economics underlying this, is the economics of “network extranalities” - some of the very forces, that Tom has highlighted. These “network extranalities,” have increased the potentialities for market domination. And unfortunately, regulators - at least in the United States - have not responded in the appropriate way. A third area of “non-leveler” entails research. We live in - as Tom mentioned. You know, the real scarcity today, is imagination, innovation. But research is expensive. Countries like the United States, or EU, who have the resources to invest and research, have a potential advantage, over small countries; over poor countries. They can’t compete, in this race for research. It is not a “level” playing field. And there is no way one can describe this as a “level playing field.” But what makes it even worse - it’s becoming a less level playing field, the more important we move into this information research area. But we have made it even worse, by the rules that we put into place. The “intellectual property” framework that was part of the WTO, that all the way around, of 1994, it strengthened “intellectual property” in ways that make it more difficult for developing countries to have access to “intellectual property.” Now some of the things that Tom referred to, show the conflict, between the official rhetoric that, “Oh, intellectual property is at the core of successful economy” - and what the reality is. And Netscape, if I remember correctly, was based on Mosaic - which was a government, basically financed, development. The Internet - was government financed. It’s a basic research, underlying this. And an awful lot of the “innovations,” are not based on “intellectual property” - but are funded by the government. And this echoes the point, that it is “two weak governments,” not “two strong governments.” But the smaller countries, really cannot finance the kind of research, that puts them, at a competitive, in a level playing field. An “intellectual property” regime, makes this playing field, even more “unlevel.” So that there will be enormous flows of money, coming from the developing world - to the developed world - to compensate them, for “access.” It is not a “level playing field.” And this last phenomena, illustrates a broader problem, which I have written about before, which is - we live in a world where the rules of the game, of “international commerce,” are being written, basically by the advanced industrial countries, for the advanced industrial countries. It is not a level playing field. And we are trying to make it - less level. We are doing everything we can. One of the reasons why Cancun broke down, is that developing countries said, “You cannot make it - more unlevel - than it was in the past.” And some of the things that we have tried to put into the Singapore route, and we have tried to put into the new Singapore issues, would have made it more “unlevel.” So the “power,” the asymmetries of these “power,” are still very evident. One doesn’t have to comment on the news of this week, of the choice that they had of the World Bank. Without comment, without noting, that it is not a level playing field, where the developing countries, have an “equal say” in the “rules of the game” that are going to affect them. So as I look at this, as I look at this, I don’t see a level playing field. I see a lot of areas, where not only it’s not level, but it is becoming - less level. And I think, I worry about people being told, “It’s all a level playing field, at the current time.” The final thing, is something where I agree very strongly with Tom. It is a very big challenge - to America. And I don’t think the United States has fully woken up to the nature of the challenge. When you look at the statistics, at the number of Americans studying science and technology - and you recognize that, what we have been talking about, the “flatteners,” have all been based on science, or mostly have been based on science and technology. Some have been based, on business models. But a lot of them have been based on science and technology. And you compare the numbers that the United States is graduating, and the numbers that are graduating out of India and China - and you have to be a little bit worried about how our students, how our young people, are going to compete, in this coming world. One also has to worry about the nature of what, to the extent that it is a “flatter world,” what would the nature of the world be like? There is a theorem in economics, that depicts what a world would be like, if it were truly “flat.” That is to say, knowledge was shared equally across the world, capital flowed, goods flowed. And that theorem says, that the wages of unskilled labor - all over the world - would be the same. American “unskilled labor” would get the same wage as unskilled labor, in China and India. “Skilled labor,” would also get the same wages. It may not happen overnight, but even if we start moving in that direction, it will require a lot of adjustments. The reason, I think, that the “outsourcing,” and the stories of Banglore have been, in many ways, traumatic - or should have been traumatic - in the United States, was that, during the ‘90s - in what Tom describes as “Globalization 2.0” - we said, “Don’t worry about outsourcing. Don’t worry about the loss of American jobs to Mexico, or other places. We don’t want those ‘unskilled jobs.’ We want ‘high-skill jobs,’ ‘high-quality jobs.’ ” And in the ‘90s, we were able to create a large number of jobs, and NAFTA did not lead to more unemployment. In fact, during the ‘90s, the unemployment rate continued to go down. But Bangor shows that, many high-tech jobs, can move abroad, as well. Perhaps not as many as Tom enthusiastically says. But even if a significant number moves, it will have pressures, on America’s labor market. Now, if Americans can’t compete in the areas of engineering, in the areas of, you know, we - . If we are losing jobs for people with Master’s degrees, we aren’t going to say, “Well, the task is for everybody to get a Ph.D. degree.” And when we all get Ph.D.’s, to say, “Well, you have to get a better Ph.D. degree.” That’s not, obviously, the solution. And so, I think that the question that Tom leaves us at the end - and I’d like to hear some comments - is how do we need to respond? It’s more than just, “more education.” It has to something to do with the quality of education. But I think it needs a broader response to the challenges. One of the things that is very clear, I mentioned, which is that, globalization is increasing inequality, both in the United States and abroad. The appropriate response, is not to reduce the progressivity of our income tax and other public programs. Thank you. [APPLAUSE]

RICHARD HOLBROOKE: I think it’s a mark of Tom Friedman’s extraordinary achievement as a journalist, that after his own brilliant presentation - which you all responded to appropriately - he invited Shashi and Joe to attack it. [LAUGHTER] And listened carefully. So, since we are running quite late, and we are going to skip the Q&A part of this session, I am sorry. And I am going to give the remainder of our time to Tom, in any way he sees fit, to answer some of the very provocative comments that Shashi Stiglitz has raised just now. [LAUGHTER] Tom?

THOMAS L. FRIEDMAN: All right. Well, now, this is really an author’s dream, frankly, to be able to present your book to this audience, and have people like Joe and Shashi respond. And let me try to hit the high points, if I can. And if we have time, maybe we will take a couple of questions for any of us, if we still have some time. Let me make a general point first on the thrust of Shashi’s criticism. And then, I take it, you know, in exactly the right spirit. This is sort of an analytical point, as a journalist or an author, and it’s - when are you entitled to sort of say something is “new”? And focus on trying to explain that you think something is “new,” and it’s the beginning of something really important. And sort of marshall all your energy and wits to defining it - without ignoring the other, but without giving the same attention, to the other factors. And that’s why I did try to include a chapter, called The Unflat World, and I really could. And I knew I would be criticized, even if I put that in. [LAUGHTER] But I did feel that there is a role for defining ‘the new thing.” If you think there is something really “new,” and focusing your energy on that, and not saying, “This other stuff isn’t important,” but saying, “I know it’s there. It’s been dealt so well by people like Joe Stiglitz and Jeff Sachs and Shashi, that I really - . If I just focused on that - I am not gonna push out the boundaries of knowledge.” So that would be kind of a general analytical framework. And I sort of wrestle with this. One of my problems is - I am an enthusiastic person. And I love ideas. [LAUGHTER] And sometimes [LAUGHTER] I get enthusiastic about my ideas. And people mistake that, frankly, for kind of - . I have become the “prophet of globalization,” and all that. I am just really excited about, connecting dots, frankly. [LAUGHTER] And sometimes that probably gets me in trouble, but there you go. Shashi, one point that I would disagree with you. And I think you were raising this more to be provocative, and don’t really fully believe it, that this is about coolie labor. Because, you know, it’s very interesting. In doing the book, I went back to the statistics. The IT companies in Bangalore, founded by - as part of this process - have already filed a thousand patents, with the U.S. Patent Office. And I would say this, in same to your point, Joe. One of the things that really is actually - to connect your last point - it’s actually really scary. The most scary thing is - you know, doing this book, really was like being in a science fiction movie, ‘cause I went around and interviewed all these CEO’s. And that’s, you know, where I learned what was going on. And they know what’s going on. And they are doing it like crazy. And one reason they are doing it, is because, they are actually going for the absolute research, high-end brains. I mean, what’s coming out of Bangalore today, is absolutely - not just Bangalore; China, as well - is absolutely “the” cutting-edge of research. So I would argue - . I think your point is very valid. Certainly, the smaller the country gets, the less able. But I would also argue, that we may be surprised. Because what the “flattening” is doing, is connecting all the knowledge pools in the world together. The next great breakthrough in bioscience, could come from a 15-year-old in Romania, who downloads the human genome. And so, I think the opportunities for research - even for the lesser countries - but certainly for the bigger companies. Again, I connect that your last point - what’s really scary about America today - is that companies are not just going abroad for wage arbitrage. They are going abroad, for brains. In fact, one interesting thing that’s going out to IFC is, which really used to - was in the business you know, Joe, of funding American companies to basically set up in the developing world - their whole business. Well, not their whole. A big part of their business now, is funding start-up companies in the developed world, who want IFC and World Bank people to sit on their boards and get them dressed up. I interviewed Padamsree Warrior, who is my favorite name in the book. She is the “chief technology officer” of Motorola. And she describes her job today, as “basically going around the world, and creaming off the best start-ups, now from China and India.” Well now, before John Chambers of Cisco gets them. So, you know, the real scary thing, I think - and again, yeah, I think you raised a very important point, which I also tried to focus on - is that China and India, are not racing us to the bottom, or not only. They are racing us to the top. And we are not ready. And another point I would say, Shashi, on yours, about “the only way Indians could basically ‘thrive,’ say in the ‘50s or ‘60s, was if they came here, and we paid them our wages.” And that’s true. But I would argue that, one of the great things about “the flattening of the world,” is the fact that, “As an Indian now, I can innovate, without having to emigrate. I may not make the salary I make here, but I can live in my extended family. I can remain in my culture. I can dress in my native costume. I can eat my native food. And I don’t have to drive a cab in Brooklyn. I can be an Indian - and play. And I may not be paid the same wage in New York, but I’ll live - as you know, as many of them do - very, very well.” So I think this has a real potential to be a “preserver of culture.” You know, one of the companies we profiled in our documentary was a cartoon company, animation company, in Bangalore, where the sons and daughters, are all sons and daughters of temple artists. And they have a room, in the company, that is devoted entirely to traditional art, for them to keep up their traditional skills - while, yes, they are drawing Bugs Bunny in the other room. But what this company is also doing, is a 24-part series, on the life of Krishna, you know, using these prophets, to drive their local culture. So on that one, I would disagree. I would say, on the states thing, here is - . This was very important for me. You know, Lexus and the Olive Tree, and in this book. In focusing on the individuals - I am not, in any way, saying states are not important. I am simply saying what’s “new” here, is the increasing power of individuals and small groups. But as I said in Lexus - and I believe that fundamentally here - states matter more. I have never been in that kind of school, that said “the state is gonna wither away.” Just the opposite. To me, the state is the plug with which you plug into the global system. If it’s corroded and corrupted, those wires - boy, the flow between you and the global system is gonna be corroded and corrupted. And that’s why, in that “unflat world” chapter - and I am interested, and Joan and I were talking about this a little before. What I basically argue is that, all the energy of what was the “anti-globalization movement,” I would actually like to see transferred, from issues of trade, to issues of governance. To apply their energy to “transparency” - good governance, local governance. Because look what’s happened. As you know, with India. In 1991, India had 100 million dollars in the bank. Today, it has 120 billion dollars. That’s the good news - because of adopted this globalizing approach. The bad news though, as you know, Shashi, is that, when 100 million rupies is appropriated from New Delhi, to that village outside of Bangalore - by the time it gets to the school in the road there, it’s five million rupies. And I believe the role of the “anti-globalization movement,” is exactly what both of you are arguing, is to make states more accountable, more transparent, and stronger, so they can deliver the tools, the stepstool that these communities need, to get into the “flat world.” Joe, I want to say. One thing about Microsoft. Well, let me just finish up this one other point with Shashi. I have a chapter that comes after the chapter on the “triple convergence.” It’s called The Great Starting Up. Because basically, what I argue is, we are on the cusp of - . Well, as we move from “vertical” to “horizontal” - everything is gonna have to be sorted out. And this chapter was triggered by a conversation with a friend of mine, who I am teaching a course on “globalization” this semester at Harvard, with Larry Summers and Michael Sandell. And we talk about Joe all the time. [LAUGHTER] Michael, Larry, you know, more critically. [LAUGHTER] But this chapter was triggered, because in preparation for the course, I was - . Thank you so much for coming, Secretary. Thank you. It is. Thank you. Thank you so much. [APPLAUSE] Michael really raised Shashi’s point. He said, “Tom, what you call ‘collaboration.’ Really, isn’t that just another name, for Bill Gates, exploiting cheap Indian labor?” And I said - . And this triggered a whole chapter in the book. Because I said, “Michael.” We were having lunch in Cambridge. This was seven months ago. I said, “That’s a really interesting question. And let me tell you a story.” In 2002, the state of Indiana. You can’t make this up, folks. The state of Indiana, decided to outsource the processing, of the state’s unemployment checks. OK? [LAUGHTER] And they put it out, to bid. They got three bids, ‘cause this was a big job. No Indiana companies bid on it. Three companies bid. OK? Deloitte Touche. Excensior. And Tata Consulting Services, from India, whose bid came in 8.1 million dollars less, than the two American companies. And the state of Indiana, awarded them the bid. The governor at the time, was a Democrat. And he tragically died, about six months after, this began. Tata came over. They moved people to Indiana. They hired people locally. And they began to revamp the whole unemployment system. The governor dies. And they have to have a runoff election. And the Republican candidate, makes a huge issue, of the Democrat, having outsourced the state of Indiana’s unemployment checks to India. And in response to that, the Democratic governor, cancels the contract. And they pay off Tata a million dollars severance fee. And that’s the end of the story. So I ask you, friends. Who is exploiting who, in this story? [LAUGHTER] Well, was the state of Indiana - which was paying these guys a very good global wage - exploiting the engineers of India - who for 50 years, whose skills really rotted on the docks of India. Unless they made that move to America, they really couldn’t “connect and collaborate” and take advantage of it. Was the state of Indiana exploiting them - or were the Indian engineers, from Tata - who were ready to do this work for 8.1 million dollars less - were saving the state of Indiana money for roads, for hospitals, for schools. Were they exploiting, the people of Indiana? See, when the world is “vertical,” you can see who is on top and who is on the bottom. But when we move to more “horizontal,” who is on the left and who is on the right, is going to get very interesting. And I guess, you know, I’ll end here. And this is what I would say, to your point, Joe. In doing this book, I had a chance to present it, at the Alan Conference. And Bill Gates was in the audience. And he came up afterwards and said, “It’s really interesting. I’d like to talk to you though, you know, a little bit, about you. You are almost there, OK?,” [LAUGHTER] he said. And he saved time for me the next day. And I was honored. And it was a fascinating conversation. But the one point he made was, “Open sourcing. It’s not - . It doesn’t belong in the book, OK?” [LAUGHTER] And what I see of, you know? Because what’s interesting about Linux - and the reason I think it really is a “flattener,” and it’s a fundamental threat to Microsoft - as you know, is that all of Microsoft’s competitors, are now funding. IBM has 500 engineers, in Beaver, in Oregon, funding the Linux operation. And so, they are gonna “flatten” Microsoft with this. That’s their hope. But more importantly, something really interesting happened, we all know, three months ago. Out of nowhere, the errors of Mosaic, and the Mozilla browser, came up with a new browser - to compete with Microsoft Explorer - called “Firefox.” Now, if you have kids in college, believe me, Firefox was downloaded 10 million times, in the first month. It now has about 7 percent of Microsoft’s browser market. It went from zero to seven, in one month. And where did Firefox come from? A 19-year-old sophomore at Stanford, collaborating with a 24-year-old computer geek in New Zealand. They never met face to face. And Wired has a wonderful story about this, in the previous issue. So I think you raised a good point. And I wouldn’t get carried away, on my side. “Microsoft? Ahhh, they are finished.” No, I don’t think that. What I think - and I’ll just end here - is that - . And this is why I can’t answer, really, a lot of your questions. I think we are at the beginning of something, really new. And I don’t know how it’s gonna come out, you know? But what I tried to do here is basically - . You know, Tom Wicker, the former New York Times columnist, when I started as a columnist ten years ago, he sent me a postcard. And it just had one sentence on it. And it said, “Don’t be afraid to be wrong, otherwise you’ll never be right.” OK? [LAUGHTER] So, if you don’t take a few chances and swing for the fences every once in a while, you never drive things forward. So that’s what I have tried to do tonight. Lynn, Richard, thank you so much for having me here. Shashi, Joe, if you want to rebut anything to the rebuttal, you are more than welcome. But thank you so much, for taking the time to do this. I really appreciate it. Thank you all for coming. Thank you. [APPLAUSE]

RICHARD HOLBROOKE: Well, what an extraordinary evening. This is what Asia Society is about, at its best. I thank you for joining us, those of you who are members. Those of you who aren’t, I hope you will join our widening circle. Thank you Lynn, for conceiving this evening, and putting it together. Thank you Shashi and Joe, for being so provocative. And Tom, above all, thank you for honoring us by opening what your worldwide tour on The World is Flat, which I guarantee all of you is going to be a tremendous best-seller. Thank you again. We’ll meet you all upstairs. And Tom will sign books for those of you who wish. Thank you. [APPLAUSE]