Wednesday, March 23, 2011

The Reality That Is Globalization

I watched a video last night of Thomas Friedman giving a lecture to MIT students on his now ubiquitous book on globalization, "The World is Flat." Since its publication, many liberal and protectionist pundits have wailed against Friedman as a "free-trader." Many have claimed that the book supports shipping jobs overseas and taking away industry from America. Those who read such ideas into his thesis, I think, are missing the point Friedman was trying to make. At the end is his speech, he said something that really drove home what his view of globalization is really about. "When I was growing up, my parents used to tell me to finish my dinner because there are children in China who are starving. Now, as my children are growing, I tell them to finish their homework because there are children in China and India who are starving for their jobs."

There is far too much debate in the political sphere about the pros and cons of globalization. More talk needs to be initiated about the reality of globalization. For better or for worse, we live in a global world. We are all each others' next-door neighbors. Due primarily to recent explosions in Internet and telecommunications technology, there is no longer a spatial divide between human beings of differing cultures. Instantaneous communication is taken for granted. It is now more than it has ever been truly one world.

What does this reality mean to us as individuals? Well, whatever our line of work is, it means that we're going to have to do a lot more differentiating to be competitive. I believe we've been raised for generations in America to believe that we are entitled to our jobs. Most of probably never stop to think about the value our jobs create. We never consider the reason we are actually employed. We simply push buttons, sign papers, process transactions, and collect our paychecks. We think we are being paid for our activities. In reality, we are being paid for the outcome of our activities. The value we create for the person at the other end is why we are employed. We don't get paid because we made a latte; rather, we get paid because a consumer found the value of our latte to be better than that of the next guy's.

What is my point? There are lattes being made by more people than ever before. There are more people capable of doing your job better than you while requiring less compensation. And I'm not just talking about manufacturing. Even the 'service jobs' we pride ourselves on as Americans are being off-shored. Does the term 'call center' ring a bell? I know, I know. I can hear the objection already. 'But it's not my fault that my job is being outsourced. It's the greedy corporations trying to save money.' Of course there is truth to this. Think of it from the corporation's (or CEO's) perspective. What is really fair? Subsidizing you because you're an American or giving the job to the other guy who is willing and able to do more for less? Isn't it fair to give the job to the one who will create the most value?

But don't throw your hands up in defeat just yet. Though workers from emerging markets may be able to undercut you on price, they do not necessarily have to beat you on value creation. How do you hold your own against foreign competition? Well, you could lobby your politicians for more entitlements because you are an American, or you can simply be more valuable than your foreign competitor. If you don't want your job taken, be better at it--so good in fact that your employer cannot afford to lose you. Corporations are in business not merely to save money but also to make money. How much you cost to your employer can always be offset by how much value you create for him. Globalization is here. It is a reality. The question is, 'are you ready for it?'

Website: http://www.howdoesthatmakeyoubuy.blogspot.com

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