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to stop the flow of Indian labor; you would have major software systems that would 
have nobody who knew what was going on。 It is unfortunate that many management 
positions in IT are filled with non…technical managers who may not be fully aware 
of their exposure 。 。 。 I'm an expert in information systems; not economics; but I 
know a high…paying job requires one be able to produce something of high value。 The 
economy is producing the jobs both at the high end and low end; but increasingly the
high…end jobs are out of reach of many。 Low education means low…paying jobs; plain 
and simple; and this is where more and more Americans are finding themselves。 Many 
Americans can't believe they aren't qualified for high…paying jobs。 I call this the 
〃American Idol problem。〃 If you've ever seen the reaction of contestants when Simon
Cowell tells them they have no talent; they look at him in total disbelief。 I'm just
hoping someday I'm not given such a rude awakening。
In the winter of 2004 I had tea in Tokyo with Richard C。 Koo; chief economist for
the Nomura Research Institute。 I tested out on Richard my 〃coefficient of flatness〃:
the notion that the flatter one's country is…that is; the fewer natural resources 
it has…the better off it will be in a flat world。 The ideal country in a flat world 
is the one with no natural resources; because countries with no natural resources 
tend to dig inside themselves。 They try to tap the energy; entrepreneurship;
creativity; and intelligence of their own people…men and women…rather than drill


an oil well。 Taiwan is a barren rock in a typhoon…laden sea; with virtually no natural 
resources…nothing but the energy; ambition; and talent of its own people…and today 
it has the third…largest financial reserves in the world。 The success of Hong Kong;
Japan; South Korea; and coastal China can all be traced to a similar flatness。
〃I am a Taiwanese…American with a father from Taiwan and with a Japanese mother;〃 
Koo told me。 〃I was bom in Japan and went to Japanese elementary school and then moved
to the States。 There is a saying in China that whatever you put in your head and your
stomach; no one can take away from you。 In this whole region; that is in the DNA。
You just have to study hard and move forward。 I was told relatively early by myteachers;
'We can never live like Americans and Canadians。 We have no resources。 We have to 
study hard; work hard; and export hard。'〃
A few weeks later I had breakfast in Washington with P。V。 Kannan; CEO of 24/7 Customer。 
When it comes to the flat world; said P。V。; he had just one question: 〃Is America
prepared? It is not。 。 。 You've gotten a little contented and slow; and the people
who came into the field with 'the triple convergence' are really hungry。 Immigrants
are always hungry…and they don't have a backup plan。〃
A short time later I read a column by Steven Pearlstein; The Washington Post's business 
columnist/reporter; under the headline 〃Europe's Capitalism Curtain。〃 From Wroclaw; 
Poland (July 23; 2004); Pearlstein wrote: 〃A curtain has descended across Europe。



On one side are hope; optimism; freedom and prospects for a better life。 On the other 
side; fear; pessimism; suffocating government regulations and a sense that the best 
times are in the past。〃 This new curtain; Pearlstein argued; demarks Eastern Europe; 
which is embracing capitalism; and Western Europe; which is wishing desperately that 
it would go away。 
〃This time; however; it is the East that is likely to prevail;〃 he continued。 〃The 
energy and sense of possibility are almost palpable here 。 。 。 Money and companies 
are pouring in…not just the prestige nameplates like Bombardier; Siemens; Whirlpool; 
Toyota and Volvo; but also the network of suppliers that inevitably follows them。 
At first; most of the new jobs were of the semi…skilled variety。 Now they have been 
followed by design and engineering work that aims to tap into the largest concen264 
tration of university students in Eastern Europe 。 。 。 The secret isn't just lower 
wages。 It's also the attitude of workers who take pride and are willing to do what 
is necessary to succeed; even if it means outsourcing parts production or working 
on weekends or altering vacation schedules… things that would almost certainly 
trigger months of acrimony and negotiation in Western Europe。 'The people back home; 
they haven't got any idea how much they need to change if they want to preserve what 
they have;' said Jose Ugarte 'a Basque who heads the appliance manufacturing 
operations of Mondragon; the giant Spanish industrial cooperative'。 'The danger to 
them is enormous。 They don't realize how fast this is happening 。 。 。' It's not the 
dream of riches that animates the people of Wroclaw so much as the determination to 
work hard; sacrifice what needs to be sacrificed and change what needs to be changed 
to close the gap with the West。 It is that pride and determination; says Wroclaw's 
mayor; Rafal Dutkiewicz; that explain why they are such a threat to the 'leisure…time 
society' on the other side of the curtain。〃 
I heard a similar refrain in a discussion with consular officials who oversee the 
granting of visas at the U。S。 embassy in Beijing。 As one of them put it to me; 〃I 
do think Americans are oblivious to the huge changes。 Every American who comes over 
to visit me 'in China' is just blown away 。 。 。 Your average kid in the U。S。 is growing 
up in a wealthy country with many opportunities; and many are the kids of advantaged 
educated people and have a sense of entitlement。 Well; the hard reality for that kid 
is that fifteen years from now Wu is going to be his boss and Zhou is going to be 
the doctor in town。 The competition is coming; and many of the kids are going to move 
into their twenties clueless about these rising forces。〃 
When I asked Bill Gates about the supposed American education advantage…an education 
that stresses creativity; not rote learning…he was utterly dismissive。 In his view; 
those who think that the more rote learning systems of China and Japan can't turn 
out innovators who can compete with Americans are sadly mistaken。 Said Gates; 〃I have 
never met the guy who doesn't know how to multiply who created software 。 。 。 Who 
has the most creative video games in the world? Japan! I never met 
265 
these 'rote people'。 。 。 Some of my best software developers are Japanese。 You need 
to understand things in order to invent beyond them。〃 


One cannot stress enough: Young Chinese; Indians; and Poles are not racing us to the 
bottom。 They are racing us to the top。 They do not want to work for us; they don't 
even want to be us。 They want to dominate us…in the sense that they want to be creating 
the companies of the future that people all over the world will admire and clamor 
to work for。 They are in no way content with where they have come so far。 I was talking 
to a Chinese…American who works for Microsoft and has accompanied Bill Gates on visits 
to China。 He said Gates is recognized everywhere he goes in China。 Young people there 
hang from the rafters and scalp tickets just to hear him speak。 Same with Jerry Yang; 
the founder of Yahoo! 
In China today; Bill Gates is Britney Spears。 In America today; Britney Spears is 
Britney Spears…and that is our problem。 
Dirty Little Secret #3: The Education Gap 
All of this helps to explain the third dirty little secret: A lot of the jobs that 
are starting to go abroad today are very high…end research jobs; because not only 
is the talent abroad cheaper; but a lot of it is as educated as American workers 
or even more so。 In China; where there are 1。3 billion people and the universities 
are just starting to crack the top ranks; the competition for top spots is ferocious。 
The math/science salmon that swims upstream in China and gets itself admitted to a 
top Chinese university or hired by a foreign company is one smart fish。 The folks 
at Microsoft have a saying about their research center in Beijing; which; for 
scientists and engineers; is one of the most sought…after places to work in all of 
China。 〃Remember; in China when you are one in a million…there are 1;30

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