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not sweatshops�察�they want brand names�察�not junk�察�they want to trade their motor 
scooters for cars and their pens and pencils for computers。 And the more they do that�察�
the higher they climb�察�the more room is created at the top´because the more they have�察�
the more they spend�察�the more diverse product markets become�察�and the more niches 
for specialization are created as well。 

Look at what is happening already�此�As American companies send knowledge work to India�察�
Indian companies are turning around and using their earnings and insights to start 
inventing new products that poorer Indians can use to lift themselves out of poverty 
into the middle class�察�where they will surely become consumers of American products。 
BusinessWeek cited the Tata Motors factory�察�near Pune�察�south of Mumbai�察 �where a group 
of young designers�察�technicians�察�and marketers pore over drawings and examine samples 
of steel and composite plastics。 By early next year�察�they plan to design a prototype 
for Tata Group's most ambitious project yet�此�a compact car that will sell for 2��200。 
The company hopes the car will beat out Suzuki's 5��000 Maruti compact to become 
India's cheapest car´and an export model for the rest of the developing world。 'This 
is the need of the day in India´a people's car��' says Ratan Tata�察�chairman of the 
12。5 billion Tata Group。 Indians are increasingly demanding better products and 
services at an affordable cost。 Strong economic growth this year will only enlarge 
that demand。 The phrase 'Made in India' may come to represent low´cost innovation 
in the new global economy; ��October 11�察�2004��。 
Raghuram Rajan�察�the director of research for the International Monetary Fund�察�sits 


on the board of a company that puts Indian students to work tutoring students in 
Singapore。 The students�察�from the Indian Institute of Technology in Madras�察�go online 
to help students in Singapore�察�from grades six to twelve�察�on their math homework。 
They also help teachers in Singapore develop lesson plans and prepare PowerPoint 
presentations or other jazzy ways for them to teach math。 The company�察�called 
Heymath。com�察�is paid for by the schools in Singapore。 Cambridge University in England 
is also part of this equation�察�providing the overall quality controls and certifying 
the lesson plans and teaching methods。 
;Everyone wins�察─�saysRajan。 ;The company is run by two Indians who worked for Citibank 
and CSFB in London and came back to India to start this business。 。 。 Cambridge 
University is making money from a company that has created a whole new niche。 The 
Indian students are making pocket money。 And the Singapore students are learning 
better。; Meanwhile�察�the underlying software is probably being provided by Microsoft 
and the chips by Intel�察�and the enriched Indian students are 

probably buying cheap personal computers from Apple�察�Dell�察�or HP。 But you can't really 
see any of this。 ;The pie grew�察�but no one saw it�察─�said Rajan。 
An essay in the McKinsey Quarterly�察 �Beyond Cheap Labor�此�Lessons for Developing 
Economies; ��January 2005���察�offers a nice example of this�此 �In northern Italy's textile 
and apparel industry 。 。 。 the majority of garment production has moved to lower´cost 
locations�察�but employment remains stable because companies have put more resources 
into tasks such as designing clothes and coordinating global production networks。; 
It is so easy to demonize free markets´and the freedom to outsource and 
offshore´because it is so much easier to see people being laid off than being hired。 
But occasionally a newspaper tries to dig deep into the issue。 My hometown paper�察�
the Minneapolis Star Tribune�察�did just that。 It looked at exactly how the Minnesota 
economy was being affected by the flattening of the world�察�actually daring to run 
an article on September 5�察�2004�察�headlined�察 �Offshore Jobs Bring Gains at Home。; The 
article�察�date´lined Wuxi�察�China�察�began like this�此 �Outside the air is dank�察�dusty 
and hot as tropical fever。 Inside�察�in an environment that's dry�察�spotless and cool�察�
hundreds of former farm laborers covered head to toe in suits looking like something 
out of NASA are performing work for Bloomington´based Donaldson Co。 Inc。。。。 In 
Donaldson's case�察�the company has twice as many workers in China´2��500´as the 1��100 
it has in Bloomington。 The Chinese operation not only has allowed Donaldson to keep 
making a product it no longer could make at a profit in the United States�察�it also 
has helped boost the company's Minnesota employment�察�up by 400 people since 1990。 
Donaldson's highly paid engineers�察�chemists and designers in Minnesota spend their 
days designing updated filters that the Chinese plant will make for use in computers�察�
MP3 players and digital video recorders。 The falling disk´drive prices made possible 
by Chinese production are feeding demand for the gadgets。 'If we didn't follow ��the 
trend�В察�we'd be out of business��' said David Timm�察�general manager of Donaldson's 
disk´drive and microelectronics unit。 In Minnesota�察�Global Insight estimates that 
1��854 jobs were created as a result of foreign outsourcing in 2003。 By 2008�察�the firm 
expects nearly 6��700 new jobs in Minnesota as a consequence of the trend。; 


Economists often compare China's and India's entry into the global economy to the 
moment when the railroad lines crossing America finally connected New Mexico to 
California�察�with its much larger population。 ;When the railroad comes to town�察─�noted 
Vivek Paul�察�the Wipro president�察 �the first thing you see is extra capacity�察�and all 
the people in New Mexico say those people´Californians´will wipe out all our factories 
along the line。 That will happen in some areas�察�and some companies along the line 
will go out of business。 But then capital will get reallocated。 In the end�察�everyone 
along the line will benefit。 Sure�察�there is fear�察�and that fear is good because that 
stimulates a willingness to change and explore and find more things to do better。; 
It happened when we connected New York�察�New Mexico�察�and California。 It happened when 
we connected Western Europe�察�America�察�and Japan。 And it will happen when we connect 
India and China with America�察�Europe�察�and Japan。 The way to succeed is not by stopping 
the railroad line from connecting you�察�but by upgrading your skills and making the 
investment in those practices that will enable you and your society to claim your 
slice of the bigger but more complex pie。 
�今今今今此�SIX 
The Untouchables 
So if the flattening of the world is largely ��but not entirely�� unstoppable�察�and holds 
out the potential to be as beneficial to American society as a whole as past market 
evolutions have been�察�how does an individual get the best out of it�拭�What do we tell 
our kids�拭�
There is only one message�此�You have to constantly upgrade your skills。 There will 
be plenty of good jobs out there in the flat world for people with the knowledge and 
ideas to seize them。 
I am not suggesting this will be simple。 It will not be。 There will be a lot of other 
people out there also trying to get smarter。 It was never good to be mediocre in your 
job�察�but in a world of walls�察�mediocrity could still earn you a decent wage。 In a 
flatter world�察�you really do not want to be mediocre。 You don't want to find yourself 
in the shoes of Willy Loman in Death of a Salesman�察�when his son Biff dispels his 
idea that the Loman family is special by declaring�察 �Pop� �I'm a dime a dozen�察�and 
so are you� ─�An angry Willy retorts�察 �I am not a dime a dozen� �I am Willy Loman�察�and 
you are Biff Loman� ─�
I don't care to have that conversation with my girls�察�so my advice to them in this 
flat world is very brief and very blunt�此 �Girls�察�when I was growing up�察�my parents 
used to say to me�察�'Tom�察�finish your dinner´people in China and India are starving。' 
My advice to you is�此�Girls�察�finishyour homework´people in China and India are starving 
for your jobs。; 
The way I like to think about this for our society as a whole is that every person 
should figure out how to make himself or herself into an untouchable。 That's right。 
When the world goes flat�察�the caste system 
2��8 
gets turned upside down。 In India untouchables may be the lowest social class�察�but 
in a flat world everyone should wantto be an untouchable。 Untouchables�察�in my lexicon�察�


are people whose jobs cannot be outsourced。 
So who are the untouchables�察�and how do you or your kids get to be one�拭�Untouchables 
come in four broad categories�此�workers who are ;special�察─�workers who are 
;specialized�察─�workers who are ;anchored�察─�and workers who are ;really adaptable。; 
Workers who are special are people like Michael Jordan�察�Bill Gates�察�and Barbra 
Streisand。 They have a global market for their goods and services and can command 
global´sized pay packages。 Their jobs can never be outsourced。 
If you can't be special´and only a few people can be´you want to be specialized�察�so 
that your work cannot be outsourced。 This applies to all sorts of knowledge 
workers´from specialized lawyers�察�accountants�察�and brain surgeons�察�to cutting´edge 
computer architects and software engineers�察�to advanced machine tool and robot 
operators。 These are skills that are always in high demand and are not fungible。 
�─�Fungible; is an important word to remember。 As Infosys CEO Nandan Nilekani likes 
to say�察�in a flat world there is ;fungible and nonfungible work。; Work that can be 
easily digitized and transferred to lower´wage locations is fungible。 Work that 
cannot be digitized or easily substituted is nonfungible。 Michael Jordan's jump shot 
is nonfungible。 A bypass surgeon's technique is nonfungible。 A television 
assembly´line worker's job is now fungible。 Basic accounting and tax preparation are 
now fungible。�� 
If you cannot be special or specialized�察�you want to be anchored。 That status applies 
to most Americans�察�everyone from my barber�察�to the waitress at lunch�察�to the chefs 
in the kitchen�察�to the plumber�察�to nurses�察�to many doctors�察�many lawyers�察�entertainers�察�
electricians�察�and cleaning ladies。 Their jobs are simply anchored and always will 
be�察�because they must be done in a specific location�察�involving face´to´face contact 
with a customer�察�client�察�patient�察�or audience。 These jobs generally cannot be 
digitized and are not fungible�察�and the market wage is set according to the local 
market conditions。 But be advised�此�There are fungible parts of even anchored jobs�察�
and they can and will be outsourced´either to 

India or to the past´for greater efficiency。 ��Yes�察�as David Rothkopf notes�察�more jobs 
are actually ;outsourced to the past�察─�thanks to new innovations�察�than are outsourced 
to India。�� For instance�察�you are not going to go to Bangalore to find an internist 
or a divorce lawyer�察�but your divorce lawyer may one day use a legal aide in Bangalore 
for basic research or to write up vanilla legal documents�察�and your internist may 
use a nighthawk radiologist in Bangalore to read your CAT scan。 
This is why if you cannot be special or specialized�察�you don't want to count on being 
anchored so you won't be outsourced。 You actually want to become really adaptable。 
You want constantly to acquire new skills�察�knowledge�察�and e

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