DISTANCE IS DEAD
An all-important trend, driven largely by advancements in science and engineering, has been gradually engulfing the globe. It has been referred to by Frances Cairncross, of The Economist, as “the death of distance”—a phenomenon whereby in many circumstances parties to transactions no longer need to be physically close to one another. When first considered, that may seem rather mundane, but its consequences are already permeating the lives of almost all the citizens of this planet and are profound indeed.
For example, in the past, a consumer who sought to purchase a household item would visit perhaps two or three retail establishments within convenient walking or driving distance and acquire the desired item from the provider who offered the best overall promise of satisfaction. Increasingly, however, that consumer, rather than going to the garage and starting the engine of an automobile, goes to his or her desk and starts a search engine on a computer to see what supplier somewhere in the world offers the best overall deal. Similarly, an employer seeking workers welcomes applications on the Internet from around the planet. Corporations deciding where to locate new factories, offices, and research laboratories search the entire globe for promising venues. And most investors exploring financial opportunities do not limit their search to local concerns.
It is indicative of this pace of change that barely 100 years earlier the above consumer would have gone neither to a desk to start a computer nor to a garage to start an automobile, but to the barn to start a horse. My mother, who was born in Colorado in 1893 and lived to be 105 years old, knew people who had crossed the prairie in a covered wagon, and she had met astronauts who had walked on the moon. Project that change forward a century, substantially accelerate it, and one can only begin to imagine the magnitude of change that will have to be absorbed in the years ahead. Former Secretary of Education
Richard Riley estimates that the top 10 jobs of a handful of years from now don’t even exist today—a possibility that makes preparation particularly challenging and places a premium on the contributions of creative people with broad experience motivated to exploit opportunities.
Microsoft Chairman Bill Gates observed that “the Internet will be to the 21st century what aviation was to the 20th century.” Indeed, the airline terminal does have a new companion: the computer terminal. In the most recent century, it became practicable to move objects, including people, around the world at near the speed of sound and at moderate cost with previously unimagined safety. It is now feasible to move information in a similar fashion, but literally at the speed of light and almost without cost. Reflecting that, Americans now average 14 hours a week on line. The processing, storage, and transmission of information will soon become “virtually” free, thereby changing the entire paradigm for the handling of knowledge. In short, there is indeed no longer a “there” there. There is here. And it is here now.
The extent of the telecommunication revolution is suggested by the 35 trillion e-mails that are currently sent each year; or the growth of Wikipedia, in its 249 languages, from 100 million words at the beginning of 2004 to about 2 billion words less than 3 years later; or the increase in cell-phone users from 2 per 1,000 people in 1990 to over 400 today; or the increase in Internet users from about 2 million to over 1 billion in a little over 15 years.
Many examples of the death of distance are already to be found in our daily lives:
If a consumer places a telephone call to a service department to resolve a problem with a computer, bank account, golf reservation, or lost airline bag, there is a nontrivial likelihood that the consumer will speak with a person in Bangalore, Jamaica, or some other such place. One international call center is now being operated by the prisoners in Rome’s Rebibbia Prison. In India, courses are offered to teach students to speak with a midwestern accent to prepare them better for jobs in call centers.
In Washington, DC, visitors to an office building not far from the White House are greeted by a pleasant woman whose image appears on a flat-screen display in the lobby where she handles appointments, access, and other administrative matters. But she is not in Washington, DC—she is in Pakistan. At some time in the foreseeable future, when the impact of ever-advancing 3-D television research
becomes “reality,” there will be little apparent difference between being greeted by a virtual receptionist on another continent and by a real receptionist a few feet away.
Much of the commercial software now prevalent in the United States is constructed in India, where at the end of each day teams of workers transmit the results of their efforts to American integrators and testers who are just beginning their day, and the product of their efforts is transmitted back to India in time for the start of the next day’s work, thereby doubling the pace and cutting the cost with which software can be produced.
Many Americans’ income tax returns prepared by major accounting firms are processed in India.
US architectural firms are having drawings produced in Argentina.
J.P. Morgan conducts a significant part of its derivatives operations in Mumbai.
Nearly one in 20 Americans now works for a foreign-owned company.
The CAT scans of patients in a number of US hospitals are routinely read by radiologists in Australia or Bangalore.
When I spoke via teleconference with groups from Harvey Mudd College and Harvard University about the impact of an emerging China on global competitiveness, the first question asked of me came from—where else?—China, from a student listening in the middle of the night via webcast.
Recently suffering a GPS failure while seeking to locate a package-delivery firm’s warehouse in the Washington, DC, area, I called the firm’s “800” number on a cell phone and was given real-time driving instructions by the help service: “Turn right at the traffic light by the Exxon station,” and so on. The speaker was in India.
Americans are increasingly obtaining their health care overseas, where (according to The Washington Post) dentists, for example, “charge one-fifth to one-fourth of US prices.”
In 2001, a patient in Strasbourg, France, had his gallbladder removed by a surgeon in New York who was using a remotely controlled robot. (As an engineer, I hope there was a backup surgeon in the room!)
Indeed, candidates for many jobs traditionally in the United States are now just a mouse click away.
During my youth in Colorado, the locals used to take considerable pleasure in pointing out to visiting Texans that Colorado was actually bigger than Texas if you just flattened it out! Tom Friedman, writing in his extraordinarily insightful book The World is Flat, takes this notion to an entirely new level: not only is the world flat, but many heretofore relatively unknown parts are very significant indeed. He observes that globalization has “accidentally made Beijing, Bangalore, and Bethesda next door neighbors.”
Foremost among the consequences of the death of distance is that a large number of jobs, with the exception of those demanding proximity between the parties involved, will be opened to the global job market. And far fewer jobs are “safe” than many might imagine. Indeed, most Americans paid little attention to the job losses that initially were confined largely to assembly workers, but the phenomenon of “offshoring” soon migrated to writing software, back-office administrative work, and, more recently, professional pursuits. It has been said that a recession is when your neighbor is out of work, but a depression is when you are out of work. To many Americans who thought their jobs were safe, the competitiveness trend looks more and more like a depression.
Alan Blinder, the former vice chairman of the Federal Reserve Board, succinctly observed that janitors, taxi drivers, and crane operators are “probably” immune to foreign competition. It seems in retrospect that even that view was a bit optimistic, at least as far as taxi drivers and janitors are concerned. Early models of autonomous vehicles are already being tested on closed roadways, and a small robot vacuums the floor of my home—and does a remarkably good job, too. It figures out how large the room is and therefore how long to work, locates any concentration of dirt for extra attention, cleans under beds, and even knows not to fall down the stairs. When it needs energy, it plugs itself into its charging station. It always shows up for work and does not require the filling out of reams of Social Security, tax, immigration, liability, unemployment-compensation, and medical-coverage forms. It was, of course, made in China—no doubt by other robots, probably also made in China. In this spirit of internationalism, a portable DVD player that I recently purchased in suburban Washington, DC, was emblazoned with the words, “Hecho en China.”
Dr. Blinder estimates that about 50 million of our jobs (almost one-third of the total) are potentially capable of being exported. Others consider that estimate to be low. Indeed, as Clyde Prestowitz has pointed out, 3 billion new capitalists entered the global job market since the fall of traditional Communism and the events that followed. That alone is, at least in theoretical terms, about 20 candidates for every existing job in America. A number
of those candidates are not now qualified for the positions held by many Americans, but that too is changing. The magnitude of the revolution is suggested by the fact that 150 nations seek to participate in the global economy, compared with 87 just 25 years ago.
The question arises, “Will we all end up working at McDonald’s?” The answer is no, because those jobs aren’t safe either. McDonald’s, it seems, has been experimenting with a centralized order-taking system wherein drive-through customers speak their meal requests into a voice recorder that transmits them via a synchronous equatorial satellite orbiting some 23,000 miles above Earth to a central facility staffed by people who are expert in taking orders. The requests are then re-entered digitally and transmitted via satellite to the person who prepares hamburgers and fries—a communication trip equivalent to four transits around the earth. Using this process, McDonald’s has cut its error rate in half and increased its throughput by 30%. As it happens, the central ordering facility is, at present, in Colorado Springs, but it could just as easily be in Alice Springs, in the Outback of Australia.
Initially, many of the jobs threatened by the global employment revolution moved to Mexico, but those jobs are now moving out of Mexico, which by the new global standard is becoming high-priced albeit not nearly as high priced as the United States. Vietnam, India, Malaysia, Brazil, Indonesia, and China were among the immediate beneficiaries of the new wage disparity. However, as reported by Tom Friedman, firms in India are now beginning to outsource work to Uruguay.
Few Americans have been to Guandong, Zuzhou, Mumbai, or Bangalore, but if they went they would probably receive a rude awakening in the form of large numbers of highly motivated, well-trained workers, often surrounded by state-of-the art equipment. One who harbors any doubts about the latter need only visit Biopolis in Singapore, CERN in Switzerland, or the nuclear-fusion research facilities in China. In fact, five of the top 10 exporters of high-technology products are emerging economies, compared with just 2 two decades ago.
Fareed Zakaria, the editor of Newsweek, has noted that “of Wal-Mart’s 6,000 suppliers, 5,000—80%—are in one country … and it isn’t the United States.” The economic impact on both nations is evident: the city of Beijing alone is adding 30,000 cars each month. China already has more than twice as many mobile-phone users as the United States. A few years ago, the mayor of Shanghai told me that over one-third of the construction cranes in the world were in his city. Between now and 2015, half the construction on Earth is planned to take place in China. About 22 billion square feet of buildings, mostly commercial, are being added each year; the total existing US commercial infrastructure
amounts to about 60 billion square feet. Research centers are being built in China that rival entire US cities in size. China’s national bird is now said to be the construction crane.
What does all that mean to an American hoping to hang on to his or her job? What is clear is that attempting to build “walls,” in the form of economic barriers, around the United States will simply ensure that we are left in isolation and become increasingly irrelevant as the rest of the world moves rapidly forward. Ironically, China itself tried this in the 15th century and again in the 20th … with the predictable result both times. The Red Queen, speaking to Alice in Lewis Carroll’s Through the Looking Glass, offers better advice: “Here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”