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Author: Thomas L. Friedman

Published: 2005

Although The World is Flat was first published in 2005, Thomas Friedman’s description of the way the world was changing due to globalization has proved to be “dead on.” Friedman’s discussion ranges from foreign policy, to economics, to the effects of globalization. It is the discussion of globalization that first warrants the purchase and reading of this book. While reading this book several years ago, I was at first concerned most of all for my children. I was initially concerned about their economic opportunities when they got older and started their own careers and families. Then I came to the conclusion that forewarned is forearmed. High paying manufacturing jobs, with permanent employment and a fat, defined benefit pension are essentially a thing of the past. Increasingly in the world in which we live you have to continually retool your individual set of skills and continually refine your expertise. Over the last 30 years “experts” at various things have had to get more specialized in order to keep up with change.

The World is Flat creates a framework we can all use to understand what is happening in an increasingly “flat” and very inner-connected world. Just because we may want a job with some security for our children does not mean one will be created out of thin air.

The first 170 or so pages of the book outline why the world is already essentially “flat.” We no longer see the sign overhead at Walmart and Target declaring how many American jobs are being saved in some town in Wisconsin. In an effort to drive prices down and increase efficiency, Walmart buys most -- but not all -- of its merchandise from other countries. The second reason this book is important, and why we have included in the reviews at Crispymoney.com is that there’s a call toaction. Since the world is already flat and getting flatter each year, what can I do about it personally? The answer is to deal with the world on its terms and not on yours.

How do we all make lemonade out of lemons? More importantly, how do we teach our kids to makelemonade? The answers start in Chapter Four, titled “The Great Sorting Out.” To me answer begins with his simple statement that many Americans “will have to upgrade their education and upgrade their knowledge skills so that they can occupy one of these new jobs sure to be created in the much expanded United States-China market.” If you do not believe this is already the case, take a look at the income differential between different levels of education in theUnited States currently (See our article titled “Financial Benefits of an Education.” Click here for a link).

One of the most important principles of personal financial planning is to live on less than you make and save something for eventual retirement. The key here is that you have to make enough to live on for the whole equation to actually work. So, how do we do this as individuals?

Friedman makes a case for how we prepare for this flat world individually: we become “untouchable,” a term has re-defined as “people whose jobs cannot be outsourced.” He describes four categories that cannot become outsourced:

  1. Special
    – think Major league baseball players, celebrities, ultra wealthy
    (Michael Jordan, Warren Buffet, Donald Trump). There are actually
    very few of these. So unless you have some really unusual genes or
    unique talent, almost all of us do not fit here.
  2. Specialized
    workers

    -- Those occupations that are specialized with significant
    knowledge, like lawyers, accountants, brain surgeons, computer
    architects, software engineers, advanced machine tool operators or
    robot operators. The problem he notes, which I have seen with
    several formerly highly paid clients, is that the work becomes
    outsourced to an increasingly higher skilled worker in a foreign
    company.
  3. Anchored
    worker jobs

    -- jobs that must be done in “ a specific location, involving
    face-to-face contact with a customer, client, patient, or
    audience.” Some of the occupations he lists are electrician,
    plumber, carpenter, chef, waitress, some lawyers, entertainers,
    some doctors, and cleaning ladies.” There are many more jobs, but
    there is a subsidiary of a large United States investment bank that
    does the tax returns for many of its wealthy clients in India.
    This is disclosed in its contract, but on the back of the eights
    page in small print on the bottom left corner. Most of its clients
    do not even realize this is happening. So, do not count on being
    “anchored” as a permanent solution to your employment concerns.
    The final category of worker Friedman describes is “really
    adaptable.”
  4. Really
    adaptable

    workers constantly acquire new skills so that they will always be
    able to create/do something that adds value. This skill of
    “learning how to learn” is the key. How you learn, adapt, and
    then put the skills, experience, and knowledge to use is the way
    you will always have a well paying job. As Friedman says, “What
    you don’t want to be is a not very special, not very specialized,
    not very anchored, or not very adaptable person in a fungible job.”
    If you are, you are at risk of having your job outsourced or your
    wages depressed. This makes personal financial planning a
    priority. If your job will always be evolving, you must be even
    more self-reliant for your retirement and personal financial
    security.
In order to navigate our changing world and the opportunities and challenges that really exist for each of us and our children of we have them, buy and read and really think about what is inside The World Is Flat by Thomas L. Friedman. Your kids will thank you.