No one has expressed what is needed better than Abdel Rahman al-Rashed, the general manager of the London-based al-Arabiya news channel. One of the best-known and most respected Arab journalists working today, he wrote the following, in Al-Sharq Al-Awsat (September 6, 2004), after a series of violent incidents involving Muslim extremist groups from Chechnya to Saudi Arabia to Iraq: “Self-cure starts with self-realization and confession. We should then run after our terrorist sons, in the full knowledge that they are the sour grapes of a deformed culture . . . The mosque used to be a haven, and the voice of religion used to be that of peace and reconciliation. Religious sermons were warm behests for a moral order and an ethical life. Then came the neo-Muslims. An innocent and benevolent religion, whose verses prohibit the felling of trees in the absence of urgent necessity, that calls murder the most heinous of crimes, that says explicitly that if you kill one person you have killed humanity as a whole, has been turned into a global message of hate and a universal war cry . . . We cannot clear our names unless we own up to the shameful fact that terrorism has become an Islamic enterprise; an almost exclusive monopoly, implemented by Muslim men and women. We cannot redeem our extremist youth, who commit all these heinous crimes, without confronting the Sheikhs who thought it ennobling to reinvent themselves as revolutionary ideologues, sending other people’s sons and daughters to certain death, while sending their own children to European and American schools and colleges.”
Too Many Toyotas
p. 407 The problems of the too sick, the too disempowered, and the too humiliated are all in their own ways keeping the world from becoming entirely flat. They may do so even more in the future, if they are not properly addressed. But another barrier to the flattening of the world is emerging, one that is not a human constraint but a natural resource constraint. If millions of people from India, China, Latin America, and the former Soviet Empire who were living largely outside the flat world all start to walk onto the flat world playing field at once—and all come with their own dream of owning a car, a house, a refrigerator, a microwave, and a toaster—we are going to experience either a serious energy shortage or, worse, wars over energy that would have a profoundly unflattening effect on the world.
As I mentioned earlier, I visited Beijing in the summer of 2004 with my wife and teenage daughter, Natalie. Before we left, I said to Natalie, “You’re really going to like this city. They have these big bicycle lanes on all the main roads. Maybe when we get there we can rent bikes and just ride around Beijing. I did that last time I was there, and it was a lot of fun.”
Silly Tom. I hadn’t been to Beijing in three years, and just in that brief period of time the explosive growth there had wiped out many of those charming bicycle lanes. They had been either shrunken or eliminated to add another lane for automobiles and buses. The only biking I did there was on the stationary exercise bike in our hotel, which was a good antidote for having to spend so much time sitting in cars stuck in Beijing traffic jams. I was in Beijing to attend an international business conference, and while there I discovered why all the bikes had disappeared. According to one speaker at the conference, some thirty thousand new cars were being added to the roads in Beijing every month—one thousand new cars a day! I found that statistic so unbelievable that I asked Michael Zhao, a young researcher in the Times’s Beijing bureau, to double-check it, and he wrote me back the following e-mail:
Hi Tom, Hope this email finds you well. On your question about how many cars are added each day in Beijing, I did some research p. 408 on the Internet and found that . . . car sales in [Beijing] for April 2004 were 43,000—24.1% more than same period last year. So that is 1,433 cars added [daily] to Beijing, but including secondhand car sales. New car sales this month were 30,000, or 1,000 cars each day added to the city. The total car sales from Jan. to April 2004 were 165,000, that is about 1,375 cars added each day to Beijing over this period. This data is from the Beijing Municipal Bureau of Commerce. The city’s bureau of statistics has it that the total car sales in 2003 were 407,649, or 1,117 cars each day added. The new car sales last year were 292,858, or 802 new cars each day . . . The total number of cars in Beijing is 2.1 million . . . But the recent months seem to have witnessed surging sales. Also noteworthy is last year’s SARS outbreak, during which period a lot of families bought cars, due to panic about public contact and a sort of doomsday-stimulated enjoy-life mentality. And many new car owners did enjoy their time driving, as the traffic in the city so much improved with a lot of people voluntarily caged at home, without daring to go out. Since then, coupled with dropping car prices due to China’s commitment to reduce tariffs after joining the WTO, a large number of families have advanced their timetable of buying a car, although some others decided to wait for further drops of prices. All the best, Michael.
As Michael’s note indicated, you can see China’s middle class rising right before your eyes, and it is going to have enormous energy and environmental spillover. The Great Chinese Dream, like the Great Indian Dream, the Great Russian Dream, and the Great American Dream, is built around a high-energy, high-electricity, high-bent-metal lifestyle. To put it another way, the thirty thousand new cars a month in Beijing, and the cloud of haze that envelops the city on so many days, and the fact that the city’s official Web site actually keeps track of “blue sky” days all testify to the environmental destruction that could arise from the triple convergence—if clean alternative renewable energies are not developed soon. Already, according to the World Bank, sixteen of the twenty most polluted cities in the world are in China, and that pollution and environp. 409mental degradation together cost China $170 billion a year (The Economist, August 21, 2004).
And we have not seen anything yet. China, with its own oil and gas reserves, was once a net exporter. Not anymore. In 2003 China surged ahead of Japan as the second largest importer of oil in the world, after the United States. Right now about 700 to 800 million of China’s 1.3 billion people live in the countryside, but they are heading for the flat world, and roughly half are expected to try to migrate to the cities over the next two decades, if they can find work. This will spur a huge surge in demand for cars, houses, steel beams, power plants, school buildings, sewage plants, electricity grids—the energy implications of which are unprecedented in the history of Planet Earth, round or flat.
At the business conference I was attending in Beijing, I kept hearing references to the Strait of Malacca—the narrow passage between Malaysia and Indonesia that is patrolled by the U.S. Navy and controls all the oil tanker traffic from the Middle East to China and Japan. I hadn’t heard anyone talking about the Strait of Malacca since the 1970s oil crises. But evidently Chinese strategic planners have begun to grow increasingly concerned that the United States could choke off China’s economy at any time by just closing the Strait of Malacca, and this threat is now being increasingly and openly discussed in Chinese military circles. It is just a small hint of the potential struggle for power—energy power—that could ensue if the Great American Dream and the Great Chinese Dream and the Great Indian Dream and the Great Russian Dream come to be seen as mutually exclusive in energy terms.
China’s foreign policy today consists of two things: preventing Taiwan from becoming independent and searching for oil. China is now obsessed with acquiring secure oil supplies from countries that would not retaliate against China if it invaded Taiwan, and this is driving China to get cozy with some of the worst regimes in the world. The Islamic fundamentalist government in Sudan now supplies China with 7 percent of its oil supplies and China has invested $3 billion in oil drilling infrastructure there.
In September 2004, China threatened to veto a move by the United Nations to impose sanctions on Sudan for the genocide that it is perpetratp. 410ing in its Darfur province. China followed by opposing any move to refer Iran’s obvious attempts to develop nuclear-weapons-grade fuel to the United Nations Security Council. Iran supplies 13 percent of China’s oil supplies. Meanwhile, as the Daily Telegraph
reported (November 19, 2004), China has begun drilling for gas in the East China Sea, just west of the line that Japan regards as its border: “Japan protested, to no avail, that the project should be a joint one. The two are also set to clash over Russia’s oil wealth. China is furious that Japan has outbid it in their battle to determine the route of the pipeline that Russia intends to build to the Far East.” At the same time it was reported that a Chinese nuclear submarine had accidentally strayed into Japanese territorial waters. The Chinese government apologized for the “technical error.” If you believe that, I have an oil well in Hawaii I would like to sell you . . .
In 2004, China began competing with the United States for oil exploration opportunities in Canada and Venezuela. If China has its way, it will stick a straw into Canada and Venezuela and suck out every drop of oil, which will have the side effect of making America more dependent on Saudi Arabia.
I interviewed the Japanese manager of a major U.S. multinational that was headquartered in Dalian, in northeastern China. “China is following the path of Japan and Korea,” said the executive, on the condition that he and his company not be quoted by name, “and the big question is, Can the world afford to have 1.3 billion people following that path and driving the same cars and using the same amount of energy? So I see the flattening, but the challenge of the twenty-first century is, Are we going to hit another oil crisis? The oil crisis in the 1970s coincided with Japan and Europe rising. [There was a time] when the U.S. was the only big consumer of oil, but when Japan and Europe came in, OPEC got the power. But when China and India come into being the consumers, it will be a huge challenge that is an order of magnitude different. It is megapolitics. The limits of growth in the 1970s were overcome with technology. We got smarter than before, equipment became more efficient, and energy consumption per head was lower. But now [with China, India, and Russia all coming on strong] it is multiplied by a factor of ten. There is something p. 411 we really need to be serious about. We cannot restrict China, [Russia,] and India. They will grow and they must grow.”
One thing we will not be able to do is tell young Indians, Russians, Poles, or Chinese that just when they are arriving on the leveled playing field, they have to hold back and consume less for the greater global good. While giving a talk to students at the Beijing College of Foreign Affairs, I spoke about the most important issues that could threaten global stability, including the competition for oil and other energy resources that would naturally occur as China, India, and the former Soviet Union began to consume more oil. No sooner did I finish than a young Chinese woman student shot up her hand and asked basically the following question: “Why should China have to restrain its energy consumption and worry about the environment, when America and Europe got to consume all the energy they wanted when they were developing?” I did not have a good answer. China is a high-pride country. Telling China, India, and Russia to consume less could have the same geopolitical impact that the world’s inability to accommodate a rising Japan and Germany had after World War I.
If current trends hold, China will go from importing 7 million barrels of oil today to 14 million a day by 2012. For the world to accommodate that increase it would have to find another Saudi Arabia. That is not likely, which doesn’t leave many good options. “For geopolitical reasons, we cannot tell them no, we cannot tell China and India, it is not your turn,” said Philip K. Verleger Jr., a leading oil economist. “And for moral reasons, we have lost the ability to lecture anyone.” But if we do nothing, several things will likely result. First, gasoline prices will continue to trend higher and higher. Second, we will be strengthening the very worst political systems in the world—like Sudan, Iran, and Saudi Arabia. And third, the environment will be damaged more and more. Already, the newspaper headlines in China every day are about energy shortages, blackouts, and brownouts. U.S. officials estimate that twenty-four out of China’s thirty-one provinces are now experiencing power shortages.
We are all stewards of the planet, and the test for our generation is whether we will pass on a planet in as good or better shape than we found p. 412 it. The flattening process is going to challenge that responsibility. “Aldo Leopold, the father of wildlife ecology, once said: ‘The first rule of intelligent tinkering is save all the pieces,’ ” remarked Glenn Prickett, senior vice president of Conservation International. “What if we don’t? What if the 3 billion new entrants start gobbling up all the resources? Species and ecosystems can’t adapt that fast, and we will lose a major portion of the earth’s remaining biological diversity.” Already, noted Prickett, if you look at what is happening in the Congo Basin, the Amazon, the rain forest of Indonesia—the last great wilderness areas—you find that they are being devoured by China’s rising appetite. More and more palm oil is being extracted from Indonesia and Malaysia, soybeans out of Brazil, timber out of central Africa, and natural gas out of all of the above to serve China—and, as a result, threatening all sorts of natural habitats. If these trends go on unchecked, with all the natural habitats being converted to farmland and urban areas, and the globe getting warmer, many of the currently threatened species will be condemned to extinction.
The move to sharply reduce energy consumption has to come from within China, as the Chinese confront what the need for fuel is doing to their own environment and growth aspirations. The only thing—and the best thing—we in the United States and Western Europe can do to nudge China toward that understanding is set an example by changing our own consumption patterns. That would give us some credibility to lecture others. “Restoring our moral standing on energy is now a vital national security and environmental issue,” said Verleger. That requires doing everything more seriously—more serious government funding for alternatives, a real push by the federal government to promote conservation, a gasoline tax that will drive more consumers to buy hybrid vehicles and smaller cars, legislation to force Detroit to make more fuel-efficient vehicles, and yes, more domestic exploration. Together, added Verleger, that could help stabilize the price at around $25 a barrel, “which seems to be the ideal range for sustainable global growth.”
In sum, we in the West have a fundamental interest in keeping the American dream alive in Beijing and Boise and Bangalore. But we have to stop fooling ourselves that it can be done in a flat world with 3 billion potential new consumers—if we don’t find a radical new approach to enp. 413ergy usage and conservation. If we fail to do so, we will be courting both an environmental and geopolitical whirlwind. If there was ever a time for some big collaboration, it is now, and the subject is energy. I would love to see a grand China-United States Manhattan Project, a crash program to jointly develop clean alternative energies, bringing together China’s best scientists and its political ability to implement pilot projects, with America’s best brains, technology, and money. It would be the ideal model and the ideal project for creating value horizontally, with each side contributing its strength. Said Scott Roberts, the Cambridge Energy Research Associates analyst in China, “When it comes to renewable technology and sustainable energy, China could be the laboratory of the world—not just the workshop of the world.”
Why not?
Twelve: The Dell Theory of Conflict Prevention
Old-Time Versus Just-in-Time
Free Trade is God’s diplomacy. There is no other certain way of uniting people in the bonds of peace.
—British politician Richard Cobden, 1857
p. 414 Before I share with you the subject of this chapter, I have to tell you a little bit about the computer that I wrote this book on. It’s related to the theme I am about to discuss. This book was largely written on a Dell Inspiron 600m notebook, service tag number 9ZRJP41. As part of the research for this book, I visited with the management team at Dell near Austin, Texas. I shared with them the ideas in this book and in return I asked for one favor: I asked them to trace for me the entire global supply chain that produced my Dell notebook. Here is their report:
My computer was conceived
when I phoned Dell’s 800 number on April 2, 2004, and was connected to sales representative Mujteba Naqvi, who immediately entered my order into Dell’s order management system. He typed in both the type of notebook I ordered as well as the special features I wanted, along with my personal information, shipping address, billing address, and credit card information. My credit card was verified by Dell through its work flow connection with Visa, and my order was then released to Dell’s production system. Dell has six factories around the world—in Limerick, Ireland; Xiamen, China; Eldorado do Sul, Brazil; Nashville, Tennesee; Austin, Texas; and Penang, Malaysia. My order went out by e-mail to the Dell notebook factory in Malaysia, p. 415 where the parts for the computer were immediately ordered from the supplier logistics centers (SLCs) next to the Penang factory. Surrounding every Dell factory in the world are these supplier logistics centers, owned by the different suppliers of Dell parts. These SLCs are like staging areas. If you are a Dell supplier anywhere in the world, your job is to keep your SLC full of your specific parts so they can constantly be trucked over to the Dell factory for just-in-time manufacturing.
The World Is Flat Page 47