Flat world? Hold on

I'm not a huge fan of Tom Friedman. Yes, I was amused by his Lexus and the Olive Tree, but after attending his talk one day in the University of Illinois, I decided I don't like him too much. But everybody is talking about his recent The World is Flat. So, I grabbed one in Changi, as my in-flight reading to and from Cambodia.

It's not too bad. But I think Friedman is far too excited, he sounds like a little boy who just discovered a new toy. We all know that globalization is rolling and no one can stop it (bite me!). But calling a mere reduction in transaction costs which is so natural, given harsh and healthy competition, as "flattening of the world" is too bombastic.

And misleading, too.

The whole idea of trade is a state of differences. I don't trade with you if there's nothing different between us. I'm interested in you because you have something I don't. Vice verse. Hence, the trade. We both gain from trade, and trade occurs because we are different. But Friedman, while I think he understand the gains from free trade adage, uses his journalistic way of telling: bombastic title, repeated as a mantra throughout the book. I don't think he realizes how bad the world is when it is ... well, "flat". It's alright had he made it clear that what he meant by "flat" was nothing else than "cost redux": in transportation, in communication, you name it. But he failed to do that. He confuses between costs' race to the bottom and the leveling of playing fields between economic actors.

Of course, Ed Leamer should point out the book's weakness far better than me (hat tip to Parinduri). I haven't read the review, though.

As I said, however, Friedman is a great teller. The book is nonetheless entertaining. For example, I still like his description of communism and capitalism (I think I have heard it somewhere, but anyway): "Communism is a system to make people equally poor and capitalism is a system to make people unequally rich". Indeed.

ps. Speaking of communism, the great author, Pramoedya Ananta Toer passed away on Sunday. To me, he is the best Indonesian author ever. Rest in peace, Pak Pram. Here's an account from BBC.
pps. Also left us is Harvard economist John Kenneth Galbraith. He's not my favourite economist, but he surely has stamped his name in the field, though not via academic journal papers, but more via his long time role as a "celebrity economist", as described by Paul Krugman. Or as Sisyphus, as Brad DeLong described him.

Globalization