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director of training at Siemens Business Services: "With flat or even smaller budgets

and fewer people, managers need to make the most of the people they have . . . They

can no longer see people as specialty tools. And their people need to become less

like specialty tools and more like Swiss Army knives. Those 'Swiss Army knives' are

the versatilists."

In addition to their own self-interest in making more of their own employees into

human Swiss Army knives, companies should be encouraged, with government subsidies

or tax incentives, to offer as wide an array as possible of in-house learning

opportunities. The menu of Internet-based worker-training programs today is

enormous-from online degree programs to in-house guided training for different

specializations. Not only is the menu enormous, but the cost to the company for

offering these educational options is very low. The more lifetime learning

opportunities that companies provide, the more they are both widening the skill base

of their own workforce and fulfilling a moral obligation to workers whose jobs are

outsourced to see to it that they leave more employable than they came. If there is

a new social contract implicit between employers and employees today, it should be

this: You give me your labor, and I will guarantee that as long as you work here,

I will give you every opportunity-through either career advancement or training- to

become more employable, more versatile.

While we need to redouble our efforts to build the muscles of each individual

American, we have to continue to import muscles from abroad as well. Most of the Indian,

Chinese, Russian, Japanese, Korean, Iranian, Arab, and Israeli engineers, physicists,

and scientists who come to work or study in the United States make great citizens.

They are family-oriented, educated, and hardworking, and most would jump at the chance

to become an American. They are exactly the type of people this country needs, and

we cannot let the FBI, CIA, and Homeland Security, in their zeal to keep out the next

Mohammed Atta, also keep out the next Sergey Brin, one of the cofounders of Google,

who was born in Russia. As a computer architect friend of mine says, "If a foreign-born

person is one day going to take my job, I'd prefer they be American citizens helping

pay for my retirement benefits."

I would favor an immigration policy that gives a five-year work visa to

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any foreign student who completes a Ph.D. at an accredited American university in

any subject. I don't care if it is Greek mythology or mathematics. If we can cream

off the first-round intellectual draft choices from around the world, it will always

end up a net plus for America. If the flat world is about connecting all the knowledge

pools together, we want our knowledge pool to be the biggest. Said Bill Brody, the

president of Johns Hopkins, "We are in a global talent search, so anything we can

do in America to get those top draft choices we should do, because one of them is

going to be Babe Ruth, and why should we let him or her go somewhere else?"

Good Fat Cushions Worth Keeping

While many of the old corporate and government safety nets will vanish under global

competition in the flat world, some fat still needs to be maintained, and even added.

As everyone who worries about his or her health knows, there is "good fat" and "bad

fat"-but everybody needs some fat. That is also true of every country in the flat

world. Social Security is good fat. We need to keep it. A welfare system that

discourages people from working is bad fat. The sort of good fat that actually needs

to be added for a flat world is wage insurance.

According to a study by Lori Kletzer, an economist at the University of California,

Santa Cruz,in the 1980s and '90s, two-thirds ofworkers who lost jobsin manufacturing

industries hit by overseas competition earned less on their next job. A quarter of

workers who lost their jobs and were reemployed saw their income fall 30 percent or

more. Losing a job for any reason is a trauma-for the worker and his or her family-but

particularly for older workers who are less able to adapt to new production techniques

or lack the education to move up into more skilled service jobs.

This idea of wage insurance was first proposed in 1986 by Harvard's Robert Lawrence

and Robert E. Litan of the Brookings Institution, in a

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book called Saving Free Trade. The idea languished for a while until it started to

catch fire again with an updated analysis by Kletzer and Litan in 2001. It got further

political clout from the bipartisan U.S. Trade Deficit Commission in 2001. This

commission couldn't agree on anything- including the causes of or what to do about

the trade deficit- other than the wisdom of wage insurance.

"Trade creates winners and losers, and what we were thinking about were mechanisms

by which the winners could compensate the losers, and particularly losers who were

enjoying high wages in a particular job and suddenly found their new employment at

much lower wages," said Lawrence. The way to think about this, he explained, is that

every worker has "general skills and specific skills" for which they are paid, and

when you switch jobs you quickly discover which is which. So you might have a college

and CPA degree, or you might have a high school degree and the ability to operate

a lathe. Both skills were reflected in your wages. But suppose one day your lathe

job gets moved to China or your basic accounting work is outsourced to India and you

have to go out and find a new job. Your new employer will not likely compensate you

much for your specific skills, because your knowledge as a machine tool operator or

a general accountant is probably of less use to him or her. You will be paid largely

for your general skills, your high school education or college degree. Wage insurance

would compensate you for your old specific skills, for a set period of time, while

you take a new job and learn new specific skills.

The standard state-run unemployment insurance program eases some of this pain for

workers, but it does not address their bigger concerns of declining wages in a new

job and the inability to pay for health insurance while they are unemployed and

searching. To qualify for wage insurance, workers seeking compensation for job loss

would have to meet three criteria. First, they would have to have lost their job

through some form of displacement-offshoring, outsourcing, downsizing, or factory

closure. Second, they would have to have held the job for at least two years. And

third, the wage insurance would not be paid until the workers found new jobs, which

would provide a strong incentive to look

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for work quickly and increase the chances that they would get on-the-job retraining.

On-the-job training is always the best way to learn new skills-instead of having to

sign up for some general government training program, with no promise of a job at

the other end, and go through that while remaining unemployed.

Workers who met those three conditions would then receive payments for two years,

covering half the drop in their income from their previous job (capped at $10,000

a year). Kletzer and Litan also proposed that the government pay half the health

insurance premiums for all "displaced" workers for up to six months. Wage insurance

seems to me a much better idea than relying only on the traditional unemployment

insurance offered by states, which usually covers only about 50 percent of most

workers' previous wages, is limited to six months, anddoes not help workers who suffer

a loss of earnings after they take a new job.

Moreover, as Kletzer and Litan noted, although all laid-off workers now have the right

to purchase unsubsidized health insurance from their former employer if health

coverage was offered when they were employed, many jobless workers do not have the

money to take advantage of this guarantee. Also, while unemployed workers can earn

an additional fifty-two weeks of unemployment insurance if they enroll in an approved

retraining program, workers have no guarantee that when they finish such a program

they will have a job.

For all these reasons, the Kletzer-Litan proposal makes a lot of sense to me as the

right benefit for cushioning workers in a flat world. Moreover, such a program would

be eminently affordable. Litan estimated that at an unemployment rate of 5 percent,

the wage insurance and health-care subsidy today would cost around $8 billion a year,

which is peanuts compared to the positive impact it could have on workers. This program

would not replace classic state-run unemployment insurance for workers who opt for

that, but if it worked as projected, it could actually reduce the cost of such programs

by moving people back to work quicker.

Some might ask, Why be compassionate at all? Why keep any fat, friction, or barriers?

Let me put it as bluntly as I can: If you are not a com296

passionate flatist-if you are just a let 'er rip free-market flatist-you are not only

cruel, you are a fool. You are courting a political backlash by those who can and

will get churned up by this flattening process, and that backlash could become

ferocious if we hit any kind of prolonged recession.

The transition to a flat world is going to stress many people. As Joshua S. Levine,

E*Trade 's chief technology officer, put it to me, 'You know how sometimes you go

through a harrowing experience and you need a respite, but the respite never seems

to come. Look at the airline workers. They go through this [terrible] event like 9/11,

and management and the airline unions all negotiate for four months and management

says, 'If the unions don't cut $2 billion in salary and benefits they will have to

shut the airline down.' And after these wrenching negotiations the unions agree. I

just have to laugh, because you know that in a few months management is going to come

right back . . . There is no end. No one has to ask me to cut my budget each year.

We all just know that each year we will be expected to do more with less. If you are

a revenue producer, you are expected to come up with more revenue every year, and

if you are an expense saver, you are expected to come up with more savings every year.

You never get a break from it."

If societies are unable to manage the strains that are produced by this flattening,

there will be a backlash, and political forces will attempt to reinsert some of the

frictions and protectionist barriers that the flattening forces have eliminated, but

they will do it in a crude way that will, in the name of protecting the weak, end

up lowering everyone's standard of living. Former Mexican president Ernesto Zedillo

is very sensitive to this problem, having had to manage Mexico's transition into NAFTA,

with all of the strains that put on Mexican society. Speakingof the flattening process,

he said to me, "It would be very hard to stop, but it can be stopped for a time. Maybe

you can't stop it totally, but you can slow it down. And it makes a difference whether

you get there in twenty-five years or fifty years. In between, two or three

generations-who could have benefited a lot from more trade and globalization-will

end up with crumbs."

Always remember, said Zedillo, that behind all this technology is a political

infrastructure that enables it to play out. "There have been a series of concrete

political decisions, taken over the last fifty years, that put the world where it

is right now," he said. "Therefore, there are political decisions that could screw

up the whole process too."

As the saying goes: If you want to live like a Republican, vote like a Democrat-take

good care of the losers and left-behinds. The only way to be a flatist is to be a

compassionate flatist.

Social Activism

One new area that is going to need sorting out is the relationship between global

corporations and their own moral consciences. Some may laugh at the notion that a

global corporation even has a moral conscience, or should ever be expected to develop

one. But some do and others are going to have to develop one, for one simple reason:

In the flat world, with lengthy global supply chains, the balance of power between

global companies and the individual communities in which they operate is tilting more

and more in favor of the companies, many of them American-based. As such, these

companies are going to command more power, not only to create value but also to

transmit values, than any transnational institutions on the planet. Social and

environmental activists and progressive companies can now collaborate in ways that

can make both the companies more profitable and the flat earth more livable.

Compassionate flatism very much seeks to promote this type of collaboration.

Let me illustrate this notion with a couple of examples. If you think about the forces

that are gobbling up biodiversity around the planet, none are more powerful than

farmers. It is not that they are intending to be harmful, it is just in the nature

of what they do. So how and where people farm and fish really matter to whether we

preserve naturalhabitats and species. Conservation International, one of thebiggest

environmental NGOs in the world, has as its main mission preserving

biodiversity. It is also a big believer in trying, when possible, to collaborate with

big business, because when you bring a major global player around, it can have a huge

impact on the environment. In 2002, McDonald's and Conservation International forged

a partnership to use the McDonald's global supply chain-a behemoth that sucks beef,

fish, chicken, pork, bread, lettuce, pickles, tomatoes, and potatoes from all four

corners of the flat world-to produce not just value but also different values about

the environment. "We and McDonald's looked at a set of environmental issues and said,

'Here are the things the food suppliers could do to reduce the environmental impact