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with how we keep track of who owns which piece of any innovation in a flat world; 
where some is generated for free and others build on it for profit。 Will Chinese 
programmers really respect the rules of the Free Software Foundation? Who will govern 
all this? 
〃Once you start to socialize the global population on the idea that software or any 
other innovation is supposed to be free; a lot of people will not distinguish between 
free software; free pharmaceuticals; free music; or free patents on car designs;〃 
argued Mundie。 There is some truth to this。 I work for a newspaper; that is where 
my paycheck comes from。 But I believe that all online newspapers should be free; and 
on principle I refuse to pay for an online subscription to The Wall Street Journal。 
I have not read the paper copy of The New York Times regularly for two years。 I read 
it only online。 But what if my daughters' generation; which is being raised to think 
that newspapers are something to be accessed online for free; grows up and refuses 
to pay for the paper editions? Hmmm。 I loved Amazon。com until it started providing 
a global platform that wasn't selling only my new books but also used versions。 And 
I am still not sure how I feel about Amazon offering sections of this book to be browsed 
online for free Mundie noted that a major American auto company recently discovered 
that some Chinese firms were using new digital…scanning technology to scan an entire 
car and churn out computer…aided design models of every part within a very short period 
of time。 They can then feed those designs to industrial robots and in short order 
produce a perfect copy of a GM car…without having to spend any money on R & D。 American 
automakers never thought they had anything to worry about from wholesale cloning of 
their cars; but in the flat world; given the technologies that are out there; that 
is no longer the case。 
My bottom line is this: Open…source is an important flattener because it makes 
available for free many tools; from software to encyclopedias; that millions of people 
around the world would have had to buy in order to use; and because open…source network 
associations…with their 
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open borders and come…one…come…all approach…can challenge hierarchical structures 
with a horizontal model of innovation that is clearly working in a growing number 
of areas。 Apache and Linux have each helped to drive down costs of computing and 
Internet usage in ways that are profoundly flattening。 This movement is not going 
away。 Indeed; it may just be getting started…with a huge; growing appetite that could 
apply to many industries。 As The Economist mused (June 10; 2004); 〃some zealots even 
argue that the open…source approach represents a new; post…capitalist model of 
production。〃 
That may prove true。 But if it does; then we have some huge global governance issues 


to sort out over who owns what and how individuals and companies will profit from 
their creations。 

Flattener #5 
Outsourcing 
Y2K 
India has had its ups and down since it achieved independence on August 15; 1947; 
but in some ways it might be remembered as the luckiest country in the history of 
the late twentieth century。 
Until recently; India was what is known in the banking world as 〃the second buyer。〃 
You always want to be the second buyer in business…the person who buys the hotel or 
the golf course or the shopping mall after the first owner has gone bankrupt and its 
assets are being sold by the bank at ten cents on the dollar。 Well; the first buyers 
of all the cable laid by all those fiber…optic cable companies…which thought they 
were going to get endlessly rich in an endlessly expanding digital universe…were their 
American shareholders。 When the bubble burst; they were left holding either worthless 
or much diminished stock。 The Indians; in effect; got to be the second buyers of the 
fiber…optics companies。 
They didn't actually purchase the shares; they just benefited from the 

overcapacity in fiber optics; which meant that they and their American clients got 
to use all that cable practically for free。 This was a huge stroke of luck for India 
(and to a lesser degree for China; the former Soviet Union; and Eastern Europe); 
because what is the history of modern India? In short; India is a country with 
virtually no natural resources that got very good at doing one thing…mining the brains 
of its own people by educating a relatively large slice of its elites in the sciences; 
engineering; and medicine。 In 1951; to his enduring credit; Jawaharlal Nehru; India's 
first prime minister; set up the first of India's seven Indian Institutes of 
Technology (IIT) in the eastern city of Kharagpur。 In the fifty years since then; 
hundreds of thousands of Indians have competed to gain entry and then graduate from 
these IITs and their private…sector equivalents (as well as the six Indian Institutes 
of Management; which teach business administration)。 Given India's 1 billion…plus 
population; this competition produces a phenomenal knowledge meritocracy。 It's like 
a factory; churning out and exporting some of the most gifted engineering; computer 
science; and software talent on the globe。 
This; alas; was one of the few things India did right。 Because its often dysfunctional 
political system; coupled with Nehru's preference for pro…Soviet; Socialist 
economics; ensured that up until the mid…1990s India could not provide good jobs for 
most of those talented engineers。 So America got to be the second buyer of India's 
brainpower! If you were a smart; educated Indian; the only way you could fulfill your 
potential was by leaving the country and; ideally; going to America; where some 
twenty…five thousand graduates of India's top engineering schools have settled since 
1953; greatly enriching America's knowledge pool thanks to their education; which 
was subsidized by Indian taxpayers。 


〃The IITs became islands of excellence by not allowing the general debasement of the 
Indian system to lower their exactingstandards;〃 noted The Wall StreetJournal (April 
16; 2003)。 〃You couldn't bribe your way to get into an IIT 。 。 。 Candidates are accepted 
only if they pass a grueling entrance exam。 The government does not interfere with 
the curriculum; and the workload is demanding。 。 。 Arguably; it is harder to get into 
an IIT than into Harvard or the Massachusetts Institute of Technology。 。 。 IIT alumnus 
Vinod Khosla; who co…founded Sun 
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Microsystems; said: 'When I finished IIT Delhi and went to Carnegie Mellon for my 
Masters; I thought I was cruising all the way because it was so easy relative to the 
education I got at IIT。'〃 
For most of their first fifty years; these IITs were one of the greatest bargains 
America ever had。 It was as if someone installed a brain drain that filled up in New 
Delhi and emptied in Palo Alto。 
And then along came Netscape; the 1996 telecom deregulation; and Global Crossing and 
its fiber…optic friends。 The world got flattened and that whole deal got turned on 
its head。 〃India had no resources and no infrastructure;〃 said Dinakar Singh; one 
of the most respected young hedge fund managers on Wall Street; whose parents 
graduated from an IIT and then immigrated to America; where he was born。 〃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 fiberoptic 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 'as I did。'〃 
India could never have afforded to pay for the bandwidth to connect brainy India with 
high…tech America; so American shareholders paid for it。 Sure; 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;〃 said Singh。 In the case of the digital railroads; 〃it was 
the foreigners who ben

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