This is a nuanced book. It is not possible to "review" it without having actually read it, read it carefully, and then read it again. It was easily a five as I got into it, and then became a six as I appreciated just how magnificently the author has reframed all future discussion of this topic, and set the gold standard for data-driven discussion--not something they do in Bonn, London, Paris, or Washington.
This is not a book for data geeks. The author excells from the first page in emphasizing the importance of perception and understanding (however wrong they might be_, and the tangible relevance of convictions, history, and philosophy....these MATTER to business, and in this book I believe the author takes the intellectual and ethical level of any business discussion about globalization and about regulation up a notch.
In a nutshell, the author demonstrates conclusively that globalization is not happening to the extent it could and should, and that globalization should not occur without regulation--the free market fallacy, like the Enlightenment fallacy of open societies that George Soros has recently articulated, is rejected. The author is an advocate of dramatically increasing globalization in terms he defines, while also assuring that regulation keeps pace, not in the micro-sense, but in the macro-sense. His view is that social gains are achievable, if rooted in a solid appreciation of business perceptions.
Two books I would recommend to bracket this one, one focusing on the threats to be eradicated, ideally while making a profit, the other on the source of the wealth and entrepreneurship now untapped by predatory capitalism:
High Noon 20 Global Problems, 20 Years to Solve ThemThe Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition: Eradicating Poverty Through ProfitsA selection of my many notes:
+ Differences and differences do have tangible economic meaning, those that deny this are without factual foundation
+ New cosmopolitanism is NEITHER all national nor all global, but a nuanced integration of both--in other words, PANARCHY.
+ Question of trust is paramount to the evolution of commerce and society. I recollect a Nobel Prize was awarded to a person who gamed trust and demonstrated that trust lowers the cost of doing business (it also lowers the cost of good governance). Here I cannot help but recollect one of my heroes, Robert Garigue (RIP), whose early insights into security as a foundation for trust, NOT for control, are still priceless today (see his collection of graphics and works at Phi Beta Iota the Public Intelligence Blog).
+ World 0.0 was local and brutish
+ World 1.0 scaled up from local to national
+ World 2.0 in theory is globalization with deregulation, "imperialistic consolidation" BUT he emphasizes, with a great deal of factual evidence, that we are nowhere near World 2.0, and in fact could leap-frog past it to World 3.0.
+ World 3.0 is complex, nuanced, pervasive but transparent, diverse in its options but consistent in its regulation, and generally achieves a prosperous world at peace, generating profits for those who deliver the many contributing products and services that are consistent with what we can know about true cost, cultural needs, and so on.
+ Nationalism has been costly.
+ Population has grown five times but gross domestic product has grown fifty-five time. This is the delta that for me validates the "wealth of networks" literature and my own emphasis on empowering the five billion poor with connectivity and access to the Internet so that they can create infinite wealth.
The Wealth of Networks: How Social Production Transforms Markets and FreedomCollective Intelligence: Creating a Prosperous World at PeaceHis facts on how we are NOT globalized--nowhere near 50% and closer to 10-25%--are stunningly focused and support his view that belief systems and policy prescriptions are totally out of touch with reality. He considers Tom Friedman an especially negative influence and I note with amusement that the words "motley" and "rabid" appear in the context of his commentary on Friedman (I can't stand either Friedman or Zakaria, both are pimps for the "establishment" that just finished destroying the global economy and the US middle and blue collar classes for their own selfish gains).
+ 1% of all physical correspondence crosses national borders.
+ 17-18% of all Internet traffic crosses borders (2006-2008).
+ 15% of patents are "foreign-owned"
+ 5% of news is from foreign sources
+ 3% of the world's population are first-generation immigrants
+ 25-30% of GDP (China an exception at 50%) from exports
+ 15-20% of venture capital goes outside its home country
+ 5-10% of private charitable giving goes outside the home country
QUOTE (34): "Why are intelligent, informed, interested people so prone to globalony? It is important to answer this question because globalony is more than just a harmless way of calling more attention to the international domain. Globalony, even if it stops short of the exaggerations of World 2.0, can be hazardous to global welfare by creating complacency among globalizers and provoking paranoia among antiglobalizers (cf Lamy's point, cited earlier, about the effects of double-counting in trade statistics). The obvious reason for globalony is that much of the debate about globalization takes place in a data-free zone.
+ Technology does NOT abolish distance, eradicate frontiers, or neutralize culture.
+ Internet is now balkanizing, and key countries like India are demanding that the physical foundation for the "cloud" be physically located within their frontiers.
+ There are four barrier sets to constructive globalization: cultural, administrative, geographic, and economic. The "home bias" can be a distorting factor in the 15-150 times range.
+ Government regulations (e.g. differences between Canada's "5 mg" and USA's 5mg create enormous cost and logistics barriers to companies trying to distribute the same product to different micro-management perspectives.
+ The models now used to represent globalization are inadequate to the point of severe lack of professionalism. The standard estimates of potential gains from globalization focus on just the tip of the iceberg, and overlook six major related beneficial domains.
-- Add volume
-- Decrease costs
-- Differentiation
-- Intensifying competition
-- Normalizing risk
-- Generating and difusing knowledge
QUOTE (79): "The possible connections between openness and democracy rely particularly heavily on informational flows and include the freer exchange of ideas and increased political competition that results from openness, and the discouragement of autocracy by the transparency required to keep capital markets happy. ...the weight of evidence does suggest a positive relationship between trade and democracy."
He observes that globalization should NOT be equated with concentration.
QUOTE (109): "This emphasis on openness distinguishes World 3.0 from World 1.0, and the emphasis on regulation distinguishes it from World 2.0."
The author pays special attention to demolishing the claims of externalities beyond the borders of any given nation, pointing out that 74% of the environmental externalities in any given nation come directly from its domestic ground transportation.
He also takes care to contest the "race to the bottom" thesis, pointing out that Germany has become one of the greenest nations, and yet derives one third of its GDP from exports. [Other books, such as
The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business emphasize that waste is lost profit.]
QUOTE (135): "World 2.0 overlooks diversification opportunities because it misses cross-country differences, and World 1.0 doesn't even look to other countries as a source of safety, seeing integration only as a source of danger. In that sense, World 3.0 does explicitly identify risk-related (potential) gains from globalization that prior world views do not."
QUOTE (139): "Information asymmetries are just one information problem among many. Another factor contributing to volatility is the difficulty investors have figuring out what to do with all the information they do have. Few can conduct even rudimentary financial analyses, leading economists to peg them as possessing only 'bounded rationality."
I am reminded of Ben Gilad's observation in
Business Blindspots: Replacing Your Company's Entrenched and Outdated Myths, Beliefs and Assumptions With the Realities of Today's Markets, that "Top managers' information is invariably either biased, subjecive, filtered or late. . . . Using intelligence correctly requires a fundamental change in the way top executives make decisions.
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