Tom Friedman’s Dirty Little Secrets

22 Nov ’05

As I race to the close of The World is Flat, my local library badgering me to return a long-overdue book (there are only so many hours in the day), I’ve reached the book’s strongest chapter. Friedman brings his analysis home by looking at what America needs to do to respond to the many challenges that the Flat World will bring, and shake itself out of its complacency and off the sofa. His starting point in this is an analogy to the stereotype of what happens in the wealthy American family:

The member of the first generation are nose-to-the-grindstone innovators; the second generation holds it all together; then their kids come along and get fat, dumb and lazy and slowly squander it all.

Having set the stage, he then explains why he believes we’re fat, dumb and lazy – one of his “dirty little secrets” about outsourcing:

The second dirty little secret, which several prominent American CEOs told me only in a whisper, goes like this: When they send jobs abroad, they not only save 75 percent on wages, they get a 100 percent increase in productivity.

“The dirty little secret is that not only is [outsourcing] cheaper and efficient,” the American CEO of a London-headquartered multinational told me, “but the quality and productivity [boost] is huge.” In addition to the wage compression, he said, one Bangalore Indian retrained will do the work of two or three Europeans, and the Bangalore employees don’t take six weeks of holidays. “When you think it’s only about wages,” he added, “you can still hold your dignity, but the fact that they work better is awful.”

I heard a similar refrain in a discussion with consular officials who oversee the granting of visas at the U.S. embassy in Beijing. As one of them put it to me, “I do think Americans are oblivious to the huge changes. Every American who comes over to visit me [in China] is just blown away . . . Your average kid in the U.S. is growing up in a wealthy country with many opportunities, and many are the kids of advantaged educated people and have a sense of entitlement. Well, the hard reality for that kid is that fifteen years from now Wu is going to be his boss and Zhou is going to be the doctor in town. The competition is coming, and many of the kids are going to move into their twenties clueless about these rising forces.”

As I noted recently in a post on the same topic, we have grown far too satisfied with ourselves (weren’t we recently lectured by David Dingwall on being “entitled to entitlements”?), and are in for a very rude awakening unless we quickly get some religion on this issue.

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