Monday, June 18, 2007

The World is not Flat

I've been listening to the "World is Flat" by Friedman. There are some interesting anecdotes in the text, but the whole metaphor really bothers me. He does such a build up for it and then repeats it over and over again, but it never really makes sense. Perhaps I am just being overly literal?

In any case, the point is really that location is not as important as it used to be. Many things can be made anywhere. It always boggled my mind that it was cheaper to make something overseas and ship it here than to make it here, simply because of cheaper labor. The new outsourcing, where "knowledge work" can be done anywhere, actually seems to make much more sense, as knowledge can be shipped for a very low cost...culture appears to be shipped easily as well, as "Creative Destruction: Globalization Changing Cultures" by Tyler Cowen points out. There is definitely a trend for individuals to belong to global cultural movements and less to local/regional movements.

So why is labor cheaper elsewhere? Supply and demand is the obvious cause, more supply elsewhere. Cost of living is a big factor as well though, as is standard of living. It's clear that a person considered poor in the US is generally satisfied at the basic level, with shelter, running water and food. The more surprising part is that they also often have electricity, appliances, and televisions. It is clear that poverty is merely a relative term. Would an unemployed person be better off moving to a country with a lower cost of living? Probably yes from a raw numbers perspective and from a perspective of increasing their relative status.

So given all of this, wouldn't it be best to move somewhere cheap and live a rich life? Apparently not, as this survey points out:
"A luxury two-bedroom in Moscow now rents for $4,000 a month; a CD costs $24.83, and an international newspaper, $6.30, according to Mercer. By comparison, a fast food meal with a burger is a steal at $4.80."
There is still a lot of local culture and the experience of place to soak up.

Some places are better than others...I want to be location independent, but where would I go? Everywhere better than "here" costs even more, and location independent work goes to the lowest cost of living places with adequate labor supply. A conundrum.

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