Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Thursday, April 7, 2005: Friends
who know, claim many hedge funds will be devastated this year by the predicted
volatility of this year's stockmarkets. The world economy is slowing. The housing
boom is ebbing. Oil prices are high, hurting the profitability of most companies.
In short, things will be difficult. Hedge funds will chase returns in all the
strangest places. A whim here A whim there. Some will screw up badly. Luck will
work, not genius. Luck is in short supply, however. Which is why I keep harping
on "Cash is King."
My big "luck" remains Whole Foods (WFMI) which continues to do
well. The wife and I notice hefty recent price increases at our local Whole Foods
store -- but no reduction in the throngs of customers. I continue to like JetBlue
(JBLU). It's also been raising its prices and still flying full planes. The
company topped in a recent survey of customer service -- though admittedly the
competition from the likes of American, United, Delta, etc. was abysmal. Stryker
(SYK) and Zimmer Holdings (ZMH) are bouncing back and probably still
represent good buys here, despite the Justice Department investigation.
With the market's volatility, you have segregate your few stock purchases into
-- short-term speculations and longer-term investments. Whole Foods and JetBlue
are long-term investments. Stryker and Zimmer are short-term speculations. Grab
a couple of points here or there. But don't be around to find out what happens
with the Justice Department's investigations into their relationships with the
doctors who specify their artificial joint products.
you buy or sell stocks or bonds do you get the best prices? The answer
today is "It all depends, but probably no." When you buy a
stock through your friendly broker, you could end buying it from your friendly
broker at a price that ten minutes later will be lower. The New York Stock Exchange
is egregious in its rip-offs. It has "specialists" who specialize
in profiting from your buys and sells.
The SEC, to its credit, is trying to do something about the rip-offs. Yesterday,
the SEC voted 3-2 to require that investor orders to buy or sell stock be filled
at the best price, (what a quaint idea!) as long as the order can be
executed immediately. The regulation, known as the order-protection rule, will
apply to all marketplaces -- including Nasdaq -- and force markets to get investors
the best price, even if that means going to a competing market to fill the order.
According to the
New York Times, "The SEC's move is seen as a win for the New York
Stock Exchange, which had feared a more-aggressive proposal floated by the SEC
late last year. The NYSE had lobbied the SEC and Mr. Donaldson -- who once headed
the Big Board -- to kill that proposal, which would have guaranteed price protection
on every stock order. That iteration was seen as a potentially fatal blow to
the NYSE because it would have eliminated the need for floor brokers and diminished
the role of the specialists who oversee the Big Board's stock auctions. The
vote is viewed as a loss for some electronic marketplaces such as Nasdaq that
had lobbied the SEC to let investors trade on whichever market they want, regardless
of whether it offered the best price."
And you thought
stockmarkets were set up for investors, i.e. you and me. Wrong!
Stanley, not recommended: I'm rooting for their
ails, not for the company. They've never been one of my favorites. Their merger
with Dean Witter destroyed them. Sad.
Mozilla Firefox has one great feature Internet Explorer doesn't have:
It's called called tabs. You can have a zillion web pages open and jump from
one to the other by simply clicking on each tab. Here you can see some tabs
I have opened this morning. Firefox is a safer browser than Internet Explorer.
Pick up your own free copy of Firefox, click
Great Broadway show:
Saw it last night. Loved it. Pick up tickets. Click
It's a flat world, after all. I raved about
Friedman's new book yesterday. At 8 PM tonight he's on Discovery Channel with
a program about whether the Europeans hate us. A few days ago, he wrote the
following piece in the New York Times. It will give you a flavor for
"In 1492 Christopher Columbus set sail for India, going west. He had
the Nina, the Pinta and the Santa Maria. He never did find India, but he called
the people he met ''Indians'' and came home and reported to his king and queen:
''The world is round.'' I set off for India 512 years later. I knew just which
direction I was going. I went east. I had Lufthansa business class, and I came
home and reported only to my wife and only in a whisper: ''The world is flat.''
lies a tale of technology and geoeconomics that is fundamentally reshaping our
lives -- much, much more quickly than many people realize. It all happened while
we were sleeping, or rather while we were focused on 9/11, the dot-com bust
and Enron -- which even prompted some to wonder whether globalization was over.
Actually, just the opposite was true, which is why it's time to wake up and
prepare ourselves for this flat world, because others already are, and there
is no time to waste.
I wish I could
say I saw it all coming. Alas, I encountered the flattening of the world quite
by accident. It was in late February of last year, and I was visiting the Indian
high-tech capital, Bangalore,
a documentary for the Discovery Times channel about outsourcing. In short order,
I interviewed Indian entrepreneurs who wanted to prepare my taxes from Bangalore,
read my X-rays from Bangalore, trace my lost luggage from Bangalore and write
my new software from Bangalore. The longer I was there, the more upset I became
-- upset at the realization that while I had been off covering the 9/11 wars,
globalization had entered a whole new phase, and I had missed it. I guess the
eureka moment came on a visit to the campus of Infosys Technologies, one of
the crown jewels of the Indian outsourcing and software industry. Nandan Nilekani,
the Infosys C.E.O., was showing me his global video-conference room, pointing
with pride to a wall-size flat-screen TV, which he said was the biggest in Asia.
Infosys, he explained, could hold a virtual meeting of the key players from
its entire global supply chain for any project at any time on that supersize
screen. So its American designers could be on the screen speaking with their
Indian software writers and their Asian manufacturers all at once. That's what
globalization is all about today, Nilekani said. Above the screen there were
eight clocks that pretty well summed up the Infosys workday: 24/7/365. The clocks
were labeled U.S. West, U.S. East, G.M.T., India, Singapore, Hong Kong, Japan,
is just one dimension of a much more fundamental thing happening today in the
world,'' Nilekani explained. ''What happened over the last years is that there
was a massive investment in technology, especially in the bubble era, when hundreds
of millions of dollars were invested in putting broadband connectivity around
the world, undersea cables, all those things.'' At the same time, he added,
computers became cheaper and dispersed all over the world, and there was an
explosion of e-mail software, search engines like Google and proprietary software
that can chop up any piece of work and send one part to Boston, one part to
Bangalore and one part to Beijing, making it easy for anyone to do remote development.
When all of these things suddenly came together around 2000, Nilekani said,
they ''created a platform where intellectual work, intellectual capital, could
be delivered from anywhere. It could be disaggregated, delivered, distributed,
produced and put back together again -- and this gave a whole new degree of
freedom to the way we do work, especially work of an intellectual nature. And
what you are seeing in Bangalore today is really the culmination of all these
things coming together.''
At one point,
summing up the implications of all this, Nilekani uttered a phrase that rang
in my ear. He said to me, ''Tom, the playing field is being leveled.'' He meant
that countries like India were now able to compete equally for global knowledge
work as never before -- and that America had better get ready for this. As I
left the Infosys campus that evening and bounced along the potholed road back
to Bangalore, I kept chewing on that phrase: ''The playing field is being leveled.''
is saying,'' I thought, ''is that the playing field is being flattened. Flattened?
Flattened? My God, he's telling me the world is flat!''
Here I was
in Bangalore -- more than 500 years after Columbus sailed over the horizon,
looking for a shorter route to India using the rudimentary navigational technologies
of his day, and returned safely to prove definitively that the world was round
-- and one of India's smartest engineers, trained at his country's top technical
institute and backed by the most modern technologies of his day, was telling
me that the world was flat, as flat as that screen on which he can host a meeting
of his whole global supply chain. Even more interesting, he was citing this
development as a new milestone in human progress and a great opportunity for
India and the world -- the fact that we had made our world flat!
This has been
building for a long time. Globalization 1.0 (1492 to 1800) shrank the world
from a size large to a size medium, and the dynamic force in that era was countries
globalizing for resources and imperial conquest. Globalization 2.0 (1800 to
2000) shrank the world from a size medium to a size small, and it was spearheaded
by companies globalizing for markets and labor. Globalization 3.0 (which started
around 2000) is shrinking the world from a size small to a size tiny and flattening
the playing field at the same time. And while the dynamic force in Globalization
1.0 was countries globalizing and the dynamic force in Globalization 2.0 was
companies globalizing, the dynamic force in Globalization 3.0 -- the thing that
gives it its unique character -- is individuals and small groups globalizing.
Individuals must, and can, now ask: where do I fit into the global competition
and opportunities of the day, and how can I, on my own, collaborate with others
globally? But Globalization 3.0 not only differs from the previous eras in how
it is shrinking and flattening the world and in how it is empowering individuals.
It is also different in that Globalization 1.0 and 2.0 were driven primarily
by European and American companies and countries. But going forward, this will
be less and less true. Globalization 3.0 is not only going to be driven more
by individuals but also by a much more diverse -- non-Western, nonwhite -- group
of individuals. In Globalization 3.0, you are going to see every color of the
human rainbow take part.
most profound thing to me is the fact that a 14-year-old in Romania or Bangalore
or the Soviet Union or Vietnam has all the information, all the tools, all the
software easily available to apply knowledge however they want,'' said Marc
Andreessen, a co-founder of Netscape and creator of the first commercial Internet
browser. ''That is why I am sure the next Napster is going to come out of left
field. As bioscience becomes more computational and less about wet labs and
as all the genomic data becomes easily available on the Internet, at some point
you will be able to design vaccines on your laptop.''
is touching on the most exciting part of Globalization 3.0 and the flattening
of the world: the fact that we are now in the process of connecting all the
knowledge pools in the world together. We've tasted some of the downsides of
that in the way that Osama bin Laden has connected terrorist knowledge pools
together through his Qaeda network, not to mention the work of teenage hackers
spinning off more and more lethal computer viruses that affect us all. But the
upside is that by connecting all these knowledge pools we are on the cusp of
an incredible new era of innovation, an era that will be driven from left field
and right field, from West and East and from North and South. Only 30 years
ago, if you had a choice of being born a B student in Boston or a genius in
Bangalore or Beijing, you probably would have chosen Boston, because a genius
in Beijing or Bangalore could not really take advantage of his or her talent.
They could not plug and play globally. Not anymore. Not when the world is flat,
and anyone with smarts, access to Google and a cheap wireless laptop can join
the innovation fray.
When the world
is flat, you can innovate without having to emigrate. This is going to get interesting.
We are about to see creative destruction on steroids.
How did the
world get flattened, and how did it happen so fast?
It was a result
of 10 events and forces that all came together during the 1990's and converged
right around the year 2000. Let me go through them briefly. The first event
was 11/9. That's right -- not 9/11, but 11/9. Nov. 9, 1989, is the day the Berlin
Wall came down, which was critically important because it allowed us to think
of the world as a single space. ''The Berlin Wall was not only a symbol of keeping
people inside Germany; it was a way of preventing a kind of global view of our
future,'' the Nobel Prize-winning economist Amartya Sen said. And the wall went
down just as the windows went up -- the breakthrough Microsoft Windows 3.0 operating
system, which helped to flatten the playing field even more by creating a global
computer interface, shipped six months after the wall fell.
key date was 8/9. Aug. 9, 1995, is the day Netscape went public, which did two
important things. First, it brought the Internet alive by giving us the browser
to display images and data stored on Web sites. Second, the Netscape stock offering
triggered the dot-com boom, which triggered the dot-com bubble, which triggered
the massive overinvestment of billions of dollars in fiber-optic telecommunications
cable. That overinvestment, by companies like Global Crossing, resulted in the
willy-nilly creation of a global undersea-underground fiber network, which in
turn drove down the cost of transmitting voices, data and images to practically
zero, which in turn accidentally made Boston, Bangalore and Beijing next-door
neighbors overnight. In sum, what the Netscape revolution did was bring people-to-people
connectivity to a whole new level. Suddenly more people could connect with more
other people from more different places in more different ways than ever before.
accidentally benefited more from the Netscape moment than India. ''India had
no resources and no infrastructure,'' said Dinakar Singh, one of the most respected
hedge-fund managers on Wall Street, whose parents earned doctoral degrees in
biochemistry from the University of Delhi before emigrating to America. ''It
produced people with quality and by quantity. But many of them rotted on the
docks of India like vegetables. Only a relative few could get on ships and get
out. Not anymore, because we built this ocean crosser, called fiber-optic cable.
For decades you had to leave India to be a professional. Now you can plug into
the world from India. You don't have to go to Yale and go to work for Goldman
Sachs.'' India could never have afforded to pay for the bandwidth to connect
brainy India with high-tech America, so American shareholders paid for it. Yes,
crazy overinvestment can be good. The overinvestment in railroads turned out
to be a great boon for the American economy. ''But the railroad overinvestment
was confined to your own country and so, too, were the benefits,'' Singh said.
In the case of the digital railroads, ''it was the foreigners who benefited.''
India got a free ride.
The first time
this became apparent was when thousands of Indian engineers were enlisted to
fix the Y2K -- the year 2000 -- computer bugs for companies from all over the
world. (Y2K should be a national holiday in India. Call it ''Indian Interdependence
Day,'' says Michael Mandelbaum, a foreign-policy analyst at Johns Hopkins.)
The fact that the Y2K work could be outsourced to Indians was made possible
by the first two flatteners, along with a third, which I call ''workflow.''
Workflow is shorthand for all the software applications, standards and electronic
transmission pipes, like middleware, that connected all those computers and
fiber-optic cable. To put it another way, if the Netscape moment connected people
to people like never before, what the workflow revolution did was connect applications
to applications so that people all over the world could work together in manipulating
and shaping words, data and images on computers like never before.
breakthrough in people-to-people and application-to-application connectivity
produced, in short order, six more flatteners -- six new ways in which individuals
and companies could collaborate on work and share knowledge. One was ''outsourcing.''
When my software applications could connect seamlessly with all of your applications,
it meant that all kinds of work -- from accounting to software-writing -- could
be digitized, disaggregated and shifted to any place in the world where it could
be done better and cheaper. The second was ''offshoring.'' I send my whole factory
from Canton, Ohio, to Canton, China. The third was ''open-sourcing.'' I write
the next operating system, Linux, using engineers collaborating together online
and working for free. The fourth was ''insourcing.'' I let a company like UPS
come inside my company and take over my whole logistics operation -- everything
from filling my orders online to delivering my goods to repairing them for customers
when they break. (People have no idea what UPS really does today. You'd be amazed!).
The fifth was ''supply-chaining.'' This is Wal-Mart's specialty. I create a
global supply chain down to the last atom of efficiency so that if I sell an
item in Arkansas, another is immediately made in China. (If Wal-Mart were a
country, it would be China's eighth-largest trading partner.) The last new form
of collaboration I call ''informing'' -- this is Google, Yahoo and MSN Search,
which now allow anyone to collaborate with, and mine, unlimited data all by
So the first
three flatteners created the new platform for collaboration, and the next six
are the new forms of collaboration that flattened the world even more. The 10th
flattener I call ''the steroids,'' and these are wireless access and voice over
Internet protocol (VoIP). What the steroids do is turbocharge all these new
forms of collaboration, so you can now do any one of them, from anywhere, with
The world got
flat when all 10 of these flatteners converged around the year 2000. This created
a global, Web-enabled playing field that allows for multiple forms of collaboration
on research and work in real time, without regard to geography, distance or,
in the near future, even language. ''It is the creation of this platform, with
these unique attributes, that is the truly important sustainable breakthrough
that made what you call the flattening of the world possible,'' said Craig Mundie,
the chief technical officer of Microsoft.
No, not everyone
has access yet to this platform, but it is open now to more people in more places
on more days in more ways than anything like it in history. Wherever you look
today -- whether it is the world of journalism, with bloggers bringing down
Dan Rather; the world of software, with the Linux code writers working in online
forums for free to challenge Microsoft; or the world of business, where Indian
and Chinese innovators are competing against and working with some of the most
advanced Western multinationals -- hierarchies are being flattened and value
is being created less and less within vertical silos and more and more through
horizontal collaboration within companies, between companies and among individuals.
Do you recall
''the IT revolution'' that the business press has been pushing for the last
20 years? Sorry to tell you this, but that was just the prologue. The last 20
years were about forging, sharpening and distributing all the new tools to collaborate
and connect. Now the real information revolution is about to begin as all the
complementarities among these collaborative tools start to converge. One of
those who first called this moment by its real name was Carly Fiorina, the former
Hewlett-Packard C.E.O., who in 2004 began to declare in her public speeches
that the dot-com boom and bust were just ''the end of the beginning.'' The last
25 years in technology, Fiorina said, have just been ''the warm-up act.'' Now
we are going into the main event, she said, ''and by the main event, I mean
an era in which technology will truly transform every aspect of business, of
government, of society, of life.''
As if this
flattening wasn't enough, another convergence coincidentally occurred during
the 1990's that was equally important. Some three billion people who were out
of the game walked, and often ran, onto the playing field. I am talking about
the people of China, India, Russia, Eastern Europe, Latin America and Central
Asia. Their economies and political systems all opened up during the course
of the 1990's so that their people were increasingly free to join the free market.
And when did these three billion people converge with the new playing field
and the new business processes? Right when it was being flattened, right when
millions of them could compete and collaborate more equally, more horizontally
and with cheaper and more readily available tools. Indeed, thanks to the flattening
of the world, many of these new entrants didn't even have to leave home to participate.
Thanks to the 10 flatteners, the playing field came to them!
It is this
convergence -- of new players, on a new playing field, developing new processes
for horizontal collaboration -- that I believe is the most important force shaping
global economics and politics in the early 21st century. Sure, not all three
billion can collaborate and compete. In fact, for most people the world is not
yet flat at all. But even if we're talking about only 10 percent, that's 300
million people -- about twice the size of the American work force. And be advised:
the Indians and Chinese are not racing us to the bottom. They are racing us
to the top. What China's leaders really want is that the next generation of
underwear and airplane wings not just be ''made in China'' but also be ''designed
in China.'' And that is where things are heading. So in 30 years we will have
gone from ''sold in China'' to ''made in China'' to ''designed in China'' to
''dreamed up in China'' -- or from China as collaborator with the worldwide
manufacturers on nothing to China as a low-cost, high-quality, hyperefficient
collaborator with worldwide manufacturers on everything. Ditto India. Said Craig
Barrett, the C.E.O. of Intel, ''You don't bring three billion people into the
world economy overnight without huge consequences, especially from three societies''
-- like India, China and Russia -- ''with rich educational heritages.''
That is why
there is nothing that guarantees that Americans or Western Europeans will continue
leading the way. These new players are stepping onto the playing field legacy
free, meaning that many of them were so far behind that they can leap right
into the new technologies without having to worry about all the sunken costs
of old systems. It means that they can move very fast to adopt new, state-of-the-art
technologies, which is why there are already more cellphones in use in China
today than there are people in America.
If you want
to appreciate the sort of challenge we are facing, let me share with you two
conversations. One was with some of the Microsoft officials who were involved
in setting up Microsoft's research center in Beijing, Microsoft Research Asia,
which opened in 1998 -- after Microsoft sent teams to Chinese universities to
administer I.Q. tests in order to recruit the best brains from China's 1.3 billion
people. Out of the 2,000 top Chinese engineering and science students tested,
Microsoft hired 20. They have a saying at Microsoft about their Asia center,
which captures the intensity of competition it takes to win a job there and
explains why it is already the most productive research team at Microsoft: ''Remember,
in China, when you are one in a million, there are 1,300 other people just like
The other is
a conversation I had with Rajesh Rao, a young Indian entrepreneur who started
an electronic-game company from Bangalore, which today owns the rights to Charlie
Chaplin's image for mobile computer games. ''We can't relax,'' Rao said. ''I
think in the case of the United States that is what happened a bit. Please look
at me: I am from India. We have been at a very different level before in terms
of technology and business. But once we saw we had an infrastructure that made
the world a small place, we promptly tried to make the best use of it. We saw
there were so many things we could do. We went ahead, and today what we are
seeing is a result of that. There is no time to rest. That is gone. There are
dozens of people who are doing the same thing you are doing, and they are trying
to do it better. It is like water in a tray: you shake it, and it will find
the path of least resistance. That is what is going to happen to so many jobs
-- they will go to that corner of the world where there is the least resistance
and the most opportunity. If there is a skilled person in Timbuktu, he will
get work if he knows how to access the rest of the world, which is quite easy
today. You can make a Web site and have an e-mail address and you are up and
running. And if you are able to demonstrate your work, using the same infrastructure,
and if people are comfortable giving work to you and if you are diligent and
clean in your transactions, then you are in business.''
complaining about outsourcing, Rao said, Americans and Western Europeans would
''be better off thinking about how you can raise your bar and raise yourselves
into doing something better. Americans have consistently led in innovation over
the last century. Americans whining -- we have never seen that before.''
Rao is right.
And it is time we got focused. As a person who grew up during the cold war,
I'll always remember driving down the highway and listening to the radio, when
suddenly the music would stop and a grim-voiced announcer would come on the
air and say: ''This is a test. This station is conducting a test of the Emergency
Broadcast System.'' And then there would be a 20-second high-pitched siren sound.
Fortunately, we never had to live through a moment in the cold war when the
announcer came on and said, ''This is a not a test.''
is exactly what I want to say here: ''This is not a test.''
opportunities and challenges that the flattening of the world puts before the
United States are profound. Therefore, our ability to get by doing things the
way we've been doing them -- which is to say not always enriching our secret
sauce -- will not suffice any more. ''For a country as wealthy we are, it is
amazing how little we are doing to enhance our natural competitiveness,'' says
Dinakar Singh, the Indian-American hedge-fund manager. ''We are in a world that
has a system that now allows convergence among many billions of people, and
we had better step back and figure out what it means. It would be a nice coincidence
if all the things that were true before were still true now, but there are quite
a few things you actually need to do differently. You need to have a much more
thoughtful national discussion.''
If this moment
has any parallel in recent American history, it is the height of the cold war,
around 1957, when the Soviet Union leapt ahead of America in the space race
by putting up the Sputnik satellite. The main challenge then came from those
who wanted to put up walls; the main challenge to America today comes from the
fact that all the walls are being taken down and many other people can now compete
and collaborate with us much more directly. The main challenge in that world
was from those practicing extreme Communism, namely Russia, China and North
Korea. The main challenge to America today is from those practicing extreme
capitalism, namely China, India and South Korea. The main objective in that
era was building a strong state, and the main objective in this era is building
challenges of flatism requires as comprehensive, energetic and focused a response
as did meeting the challenge of Communism. It requires a president who can summon
the nation to work harder, get smarter, attract more young women and men to
science and engineering and build the broadband infrastructure, portable pensions
and health care that will help every American become more employable in an age
in which no one can guarantee you lifetime employment.
We have been
slow to rise to the challenge of flatism, in contrast to Communism, maybe because
flatism doesn't involve ICBM missiles aimed at our cities. Indeed, the hot line,
which used to connect the Kremlin with the White House, has been replaced by
the help line, which connects everyone in America to call centers in Bangalore.
While the other end of the hot line might have had Leonid Brezhnev threatening
nuclear war, the other end of the help line just has a soft voice eager to help
you sort out your AOL bill or collaborate with you on a new piece of software.
No, that voice has none of the menace of Nikita Khrushchev pounding a shoe on
the table at the United Nations, and it has none of the sinister snarl of the
bad guys in ''From Russia With Love.'' No, that voice on the help line just
has a friendly Indian lilt that masks any sense of threat or challenge. It simply
says: ''Hello, my name is Rajiv. Can I help you?''
actually you can't. When it comes to responding to the challenges of the flat
world, there is no help line we can call. We have to dig into ourselves. We
in America have all the basic economic and educational tools to do that. But
we have not been improving those tools as much as we should. That is why we
are in what Shirley Ann Jackson, the 2004 president of the American Association
for the Advancement of Science and president of Rensselaer Polytechnic Institute,
calls a ''quiet crisis'' -- one that is slowly eating away at America's scientific
and engineering base.
''If left unchecked,''
said Jackson, the first African-American woman to earn a Ph.D. in physics from
M.I.T., ''this could challenge our pre-eminence and capacity to innovate.''
And it is our ability to constantly innovate new products, services and companies
that has been the source of America's horn of plenty and steadily widening middle
class for the last two centuries. This quiet crisis is a product of three gaps
now plaguing American society. The first is an ''ambition gap.'' Compared with
the young, energetic Indians and Chinese, too many Americans have gotten too
lazy. As David Rothkopf, a former official in the Clinton Commerce Department,
puts it, ''The real entitlement we need to get rid of is our sense of entitlement.''
Second, we have a serious numbers gap building. We are not producing enough
engineers and scientists. We used to make up for that by importing them from
India and China, but in a flat world, where people can now stay home and compete
with us, and in a post-9/11 world, where we are insanely keeping out many of
the first-round intellectual draft choices in the world for exaggerated security
reasons, we can no longer cover the gap. That's a key reason companies are looking
abroad. The numbers are not here. And finally we are developing an education
gap. Here is the dirty little secret that no C.E.O. wants to tell you: they
are not just outsourcing to save on salary. They are doing it because they can
often get better-skilled and more productive people than their American workers.
These are some
of the reasons that Bill Gates, the Microsoft chairman, warned the governors'
conference in a Feb. 26 speech that American high-school education is ''obsolete.''
As Gates put it: ''When I compare our high schools to what I see when I'm traveling
abroad, I am terrified for our work force of tomorrow. In math and science,
our fourth graders are among the top students in the world. By eighth grade,
they're in the middle of the pack. By 12th grade, U.S. students are scoring
near the bottom of all industrialized nations. . . . The percentage of a population
with a college degree is important, but so are sheer numbers. In 2001, India
graduated almost a million more students from college than the United States
did. China graduates twice as many students with bachelor's degrees as the U.S.,
and they have six times as many graduates majoring in engineering. In the international
competition to have the biggest and best supply of knowledge workers, America
is falling behind.''
We need to
get going immediately. It takes 15 years to train a good engineer, because,
ladies and gentlemen, this really is rocket science. So parents, throw away
the Game Boy, turn off the television and get your kids to work. There is no
sugar-coating this: in a flat world, every individual is going to have to run
a little faster if he or she wants to advance his or her standard of living.
When I was growing up, my parents used to say to me, ''Tom, finish your dinner
-- people in China are starving.'' But after sailing to the edges of the flat
world for a year, I am now telling my own daughters, ''Girls, finish your homework
-- people in China and India are starving for your jobs.''
I repeat, this
is not a test. This is the beginning of a crisis that won't remain quiet for
long. And as the Stanford economist Paul Romer so rightly says, ''A crisis is
a terrible thing to waste.''
currency crisis is real
An Asian man was trying to exchange yen for dollars and asked the
American bank teller, "Why it change? Yestoday I get two hunat dollar fo
yen but today I get hunat eighty.
The bank teller
The Asian man replies, "Fluc you white guys too!"
American in France
is having breakfast one morning (coffee, croissants, bread, butter and jam)
when a Frenchman, chewing bubble-gum, sits down next to him. The American ignores
the Frenchman who, nevertheless, starts a conversation.
American folk eat the whole bread??"
American (in a
bad mood): "Of course."
blowing a huge bubble) "We don't. In France, we only eat what's inside.
The crusts we collect in a container, recycle it, transform them into croissants
and sell them to the states." The Frenchman has a smirk on
The American listens
persists: "Do you eat jelly with the bread??"
his bubble-gum between his teeth and chuckling).
In France we eat fresh fruit for breakfast, then we put all the peels, seeds,
and leftovers in containers, recycle them, transform them into jam and sell
the jam to the states."
After a moment
of silence, The American then asks: "Do you have sex in France?"
of course we do", he says with a big smirk.
what do you do with the condoms once you've used them?"
throw them away, of course."
don't. In America, we put them in a container, recycle them, melt them down
into bubble-gum and sell them to France."
This column is about my personal search for the perfect investment. I don't
give investment advice. For that you have to be registered with regulatory authorities,
which I am not. I am a reporter and an investor. I make my daily column -- Monday
through Friday -- freely available for three reasons: Writing is good for sorting
things out in my brain. Second, the column is research for a book I'm writing
called "In Search of the Perfect Investment." Third, I encourage
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