Sonic Boom: Globalization at the Speed of Sound

Thank you Gregg Easterbrook. Because of you, my Colorado College diploma just increased in value by a measure of 5% to 10% this year.

Mr. Easterbrook and I are both alumni of Colorado College. He graduated 22 years before I did, but actually sequestered himself inside the bubble of academia south of Uintah and north of Cache la Poudre over the last two years to write parts of his recent and stunning work on global macro economics, Sonic Boom. He went back to his roots to write a book that is possibly the most comprehensive and visionary business book written in the last decade.

To say that it makes sense of globalization is to miss Mr. Easterbrook's thesis; here is an except, in all it's chaos-theory glory:

MANUFACTURING WILL BE OBSOLETE
The factory-based economy is nearly over, because of technological improvements. Fifteen years ago, Boeing took 22 days to build a 737 airliner; today, it takes 12 days. Such changes mean fewer factory jobs, even as production rises. China is losing factory jobs much faster than the United States, as efficiency improves. Soon there won't be any nation with a factory-based economy, and that would have happened regardless of whether there was trade liberalization. Higher productivity, in turn, generates the social wealth that creates more jobs for teachers, health-care providers, and other essential needs. The world is actually better off with declining factory employment, which is no consolation if you lost a job.

My friend Andy Fletcher introduced me to chaos theory right at the time the first pangs of the global economic contractions appeared. I became familiar with the physics and chemistry of chaos, and saw how readily this applied to the present economic climate. I predicted at our annual company retreat in October 2007 that we had not seen anything yet in terms of what was about to happen. Presto... something indeed happened. The Great Recession. Can I make sense of it? Can anyone? No. Easterbrook is one of the smartest minds in America writing about this and how does he conclude the startling assessment that GLOBAL manufacturing is over (not American manufacturing... GLOBAL manufacturing)? Higher productivity, in turn, generates the social wealth that creates more jobs for teachers, health-care providers, and other essential needs. The world is actually better off with declining factory employment, which is no consolation if you lost a job.

Let's challenge for a moment our American assumptions about the rest of the world, and take a look for a moment at the Olympics. Last night. Shen Xue and Zhao Hongbo came out of retirement to end a half century of Soviet and Russian domination in pairs figure skating last night. It was China's first gold medal in skating. Afterwards, they were asked about their future: Their hope might as well have sprung from the mouths of victorious Americans,the pair, who are married, planned to have a child. It was now time for them to live a life on the drumbeat of their own personal autonomy, an elective choice of the individual(s) will for their own future. Yes, these two are the aristocracy of China, part of the enormous Chinese athletic machine, sequestered into dormitories before their tweens, groomed for a triumphant Olympic moment in a way that no other country either can compete with or chooses to. The liberties they represent do not represent the liberties expressed by the 1.3 billion other citizens of their country; they have rights, privileges and options that other citizenry do not. Yet their choice was fundamentally progressive, autonomous and recognized as a global value. These are not athletic cyborgs: these are two people with goals and hopes as familiar as any American. The inter-connectedness of globalization sometimes is disorienting in it's sonic effects (think Lehman Brothers, the world's largest cruise ships, the sand islands of the world in Dubai slowly sinking into the sea); and sometimes they are disorienting for the pan-familiarity such as the goal of two world class people to live a quiet, autonomous and somewhat private life like a couple of Midwesterners.

Easterbrook challenges our assumptions on the world so consistently, and instead of taking a Thomas Friedman approach (this is right; this is wrong), he takes what I like to call, the Platonic Technique: This is. Just as most Americans assume our trade with China is one-way (we buy what they manufacture), the number one country China buys from is... The United States. Is this good? In some ways: the American influence on China has profoundly liberalized their economy and with it, their culture. Instead of being the two largest super powers on the planet and adversaries, we are two, somewhat mutually cooperating super powers thanks to trade. Is it bad? Well yes, China is a huge consumer of the world's resources, one of the leading culprits at debilitating human welfare, and as American's we should all be worried by the amount of our country's treasuries they are holding. Is it what it is? Yes. Do we want to return to early 20th century industrial fabrication for the masses? Not really. Are we more financially well-off then anytime previously? Even post-recession-effects, essentially, we are. Are we more scared and confused and perplexed and clinging to assumptions that are made out-dated at ridiculous speed? Yes, we are.

The big is focused on the big picture. Those who see it as a treatise on modern airliner manufacturing, Shenzhen's harbor, how to venture capitalize, or USC football are really, seriously, missing the point.

Another example (from this week's Newsweek):

Many of these developments will have far-reaching positive consequences. But they will all add to our uncertainty. One reason our economic anxiety soared during the recent crisis is that it seems like no one is in charge of the U.S. economy. In fact, there is no one in charge. The president doesn't "run" the economy—no one does. In a way, this is a source of stability. There is no one person who can make a fatal economic blunder. Think of all the crazed, conflicting statements about the economy that were made by government officials, Democratic and Republican alike, in the fall of 2008, as economic grand plans and emergency theories changed daily. Imagine if any one of them had actually been in charge of the economy—surely he or she would have made the situation considerably worse.

Because no one runs the economy, no one knows where the economy is headed

Many of the commentators on Amazon love tearing apart facts that support specific examples. This is not a formulaic book. The citations are well-documented. There may be studies that contradict the studies Easterbrook uses, but then again, that's part of Easterbrook's fundamental assertion: there are studies upon studies upon studies of the same subject and the same effects as to what is happening in the global economy all with the idea of explaining where this loose caboose is heading and where it will end up. At the end of the day, the global economy... is. Friedman took the Infosys example of a level playing field to proclaim it flat. Easterbrook says it is moving in a direction, but sonic shockwaves masking what it is really doing. Here are somethings that are going on, and knowing this, what course of action do you choose as an autonomous citizen of (likely) The United States? The economy will move with it's own caprice, like it or not. When individual data points are examined from a 1000 foot elevation, they tend to make nice, neat patterns that are easily understood. But when a giant collection of data and diverse fields, countries and viewpoints are brought into the light together, and seen from 30,000 feet, the overall pattern is very different. Climate is changing, but pollution is down. China holds much of our debt, but can't afford to attack us because it would destroy their economy. Brazil probably built that plane for your trip to Dallas, because Boeing was just fine with the 737 as the world's most popular airliner, even though it is about 30% too big for the job. Nice and neat and tidy answers this book will not provide. Does it over simplify things? Maybe if your desire is for a specific book on a specific subject. There has been nothing like the global economy and as Easterbrook contends, it is just getting started. To even begin to describe that requires anecdotal evidence, and the resistance of easy solutions and answers.

Most economic consumers approach life with the desire for ridiculously specific certainty: the Gazette now publishes our present temperature to the tenth of a degree. I was thinking it was 31.4, but it is really 31.0. With our traditional schooling in conventional wisdom, we cling to select data points to explain everything under the context of that one study or that one experience. But like a plane breaking the sound barrier, the ripple waves are disconcerting, loud, boisterous, and how something that small can make such a huge impact on everything else, well that doesn't make easy sense. To which Easterbrook might say: correct. It is.