Reading response to chapters 4-6 of The World is Flat:

Summary: “Always remember: The Indians and Chinese are not racing us to the bottom. They are racing us to the top- and that is a good thing” (pp.274) and it’s innovative people and companies that will save us.

I woke up this morning to see a motion graphic clip done for the Economist magazine on “media convergence” (The Economist, 2009) It is advertisement for an upcoming conference in New York focusing on the way computers, the internet, and social media are changing the face of the world. The digital revolution Friedman documents in The World is Flat is here. Convergence, singularity, and social media marketing are the catch phrases of the day.

Friedman does raises some important questions about the increasingly flat world. As the world becomes more flat and companies increasingly operate in more and more countries around the world, who are they responsible to? Drawing a contrast between Walmart and Costco gives a good starting point for this argument. Personally I side with Costco, social responsibility and ethical treatment of employees should always supersede profit margins. But when the employees may be working on the other side of the planet, how much easier is it for Wall Street to take an out of sight, out of mind approach? After all, most countries do not have the unionized labor or worker protection laws of the United States so safety can take a back seat to efficiency. But so long as no American lives are endangered in the production of a good, what does it matter? This is a debate largely relegated to the realm of human rights groups and academics not main street America.

Friedman also raises questions about ownership of ideas and patents. There are two important areas of globalization effected by patent law, pharmaceuticals and information technology. Pharmaceutical corporations use patents to protect their exclusive right to market a particular drug over a period of time without competition from cheaper generic alternatives. This period allows the company to make money back after investing millions or billions of dollars in research and development of that particular drug. However, this also means that many of the cutting edge treatments for diseases, specifically HIV/AIDS, are prohibitively expensive for use in the developing world. Countries like Brazil and Thailand (Associated Press, 2007) have even gone so far as to circumvent recognized patents and authorize labs in their countries to manufacture generic versions of medications when solutions could not be worked out with the pharmaceutical companies. Solutions need to be found that provide companies with the funding they need and developing countries with the drugs they need.

Friedman also states that the the way the middle class in the United States will continue to thrive in a flat world is by making themselves “untouchable” (pp 280). That is they will find niches in the local and global market only they can fill and be the primary driving force behind innovations at both large corporations and at small and medium sized businesses. However, for innovation to thrive, US patent law needs to be updated and rethought for the digital age. Similar to the economic protection provided to pharmaceutical companies by their patents, individuals can file patents for new technological inventions. This way they can protect their creation from being stolen and/or brought to market first by a competing force. For example a new computer company bringing a product to market and being protected against Dell or HP stealing the technology and using their production and distribution channels to bring an identical product to market at a cheaper price, thus capitalizing on the new market without the associated development costs. For this reason, technology patents have become extremely valuable. So much so that some corporations are simply holding companies who choose to license their patented technologies to other companies without ever producing a product of their own. It has also lead to companies, sometimes these same holding companies, to seek patents on already existing technologies or patents that are so broad as to cover technologies that should seem obvious. For example, applying for a patent on a method of connecting two computers over a network, and thus patenting the internet. Companies then use these broad or “obvious” patents to go out and sue existing or newly formed companies. So rather than protecting innovative individuals and small businesses, these patents are used as a deterrent to entering new markets for fear and risk of a lengthy and expensive legal battle.

Fortunately, the creative power is there. The will and ability to innovate are strong. But to maintain and promote innovation, we need laws that create a friendly environment. Larry Lessig (2007) explains the danger of writing laws that stifle creativity by saying, “…in many areas of our life, we live life constantly against the law. Ordinary people live life against the law… They live life knowing they live it against the law. That realization is extraordinarily corrosive, extraordinarily corrupting.” Friedman writes of the dangers of erecting walls to keep the flat world out, but just as dangerous is building internal walls the threaten the innovation that will keep the national and global economy growing.

References:
The Economist. (2009). Media Convergence. Retrieved September 21, 2009, from The Economist. Web Site: http://mediaconvergence.economist.com/

Associated Press. (2007, May 4). Brazil to break Merck AIDS drug patent. MSNBC. Retrieved from http://www.msnbc.com

Lessig, L. (2007, March). Laws that choke creativity [Video file]. Retrieved from http://www.ted.com

Filed under: life by Jonathan