World 3.0

by Pankaj Ghemawat

  What does such cosmopolitanism require? Use a structured framework like industry-level CAGE analysis to remap your business environment. Invest in the organizational glue necessary to make a company more than the sum of its parts. Consider strengthening adaptation to deal better with external distance. And pay more attention to what might be called “social alignment.” Is your company contributing to broader social welfare or taking advantage of market failures to gain at society's expense? Are you actively making the case to the public and to political leaders about the benefits of integration, or are you free riding on the efforts of others? And finally, are you and your people really ready on a personal level for World 3.0?

  For many companies, the greatest challenge may be fostering the human capacity to connect and cooperate across distances and differences, internally and externally. How much would your profitability increase if you could broaden circles of trust and cooperation across departments, countries, and business units so people really work together rather than against each other? What if your people could stretch their perspectives to care more deeply about customers, colleagues, and investors? Knowing what we know about distance effects, it's unrealistic to think of a big company as a family: a multinational firm can never become a World 0.0 tribe or clan. But people can broaden their sympathies to bring “them” a little closer to “us,” with inspiring results. That's the topic of the final chapter.

  Chapter Fifteen

  Us and Them in World 3.0

  THIS BOOK HAS FOCUSED, so far, on how to improve the world for the people in it. This chapter is about how to improve the people themselves—or rather, ourselves. Not in general, but in terms of how to rethink our own relationships with the rest of the world. The security of existing levels of integration and the possibility of additional gains from opening up ultimately depend on popular opinion supporting or at least continuing to tolerate openness. In the words of former British Prime Minister Tony Blair, “Educating people to be open to the other person—I think that's the challenge of the twenty-first century.”1

  The unfortunate truth is that we're far from open to others at present. In fact, as this chapter suggests, distance shapes our emotions and personal relationships far more than we usually think. As philosophers have long noted, we tend to interact with, trust, and care more about people who are closer to us; as distance increases, human connectedness declines. Recognizing the full extent of such distance sensitivity and reducing it is important to realizing more of the gains from World 3.0.

  Psychic Distance

  The notion of distance sensitivity cropped up in the domain of the human psyche fifteen hundred years before it emerged in the physical sciences with Newton's law of gravitation. The Stoic philosopher Hierocles was the pioneer in the human domain:

  Each one of us is as it were entirely encompassed by many circles. The first and closest circle is the one which a person has drawn as though around a centre, his own mind … Next, the second one further removed from the centre but enclosing the first circle; this contains parents, siblings, wife, and children. The third one has in it uncles and aunts, grandparents, nephews, nieces, and cousins. The next circle includes the other relatives, and this is followed by the circle of local residents, then the circle of fellow-tribesmen, next that of fellow citizens, and then in the same way the circle of people from neighboring towns, and the circle of fellow-countrymen. The outermost and largest circle, which encompasses all the rest, is that of the whole human race … Once all these have been surveyed, it is the task of a well tempered man, in his proper treatment of each group, to draw the circles together somehow toward the center.2

  Eighteenth-century Scottish philosopher David Hume supplied a more pointed characterization of the problem that preoccupied Hierocles: “Sympathy … is much fainter than our concern for ourselves, and sympathy with persons remote from us much fainter than that with persons near and contiguous.”3 Other thinkers who have written about these circles and the challenge of drawing the outermost ones closer to the center include Immanuel Kant, Ralph Waldo Emerson, Mahatma Gandhi, Albert Einstein, Martha Nussbaum, and Peter Singer. Figure 15-1 provides a visual representation of this concentric circle model.

  The best term to describe the distance that Hierocles wants us to reduce, the radii of the circles, is psychic distance, but the definition of this term has been muddied over the years. First, it refers to subjective or perceived distance—not actual objective distance—even though researchers have often analyzed it based on objective metrics.4 And second, its scope, particularly in business and economics, has expanded vastly, to the point that it has come to span at least the cultural and economic dimensions of the CAGE framework, often incorporates administrative differences as well, and sometimes even adds in geographic factors.5 Thus, the Wikipedia entry on psychical distance concludes with the statement, “The CAGE (Cultural, Administrative and Political, Geographical, and Economical) framework is commonly used to ana- lyse psychical distance when investigating international expansion opportunities.”6 Valuable precision is lost by simply collapsing all the CAGE dimensions into one distance category. Instead, I prefer a narrowly scoped and thus more distinctive definition of psychic distance: the (subjective) degree of emotional or sympathetic detachment maintained toward a person, group, or place.7

  Figure 15-1: Greek philosopher Hierocles' circles of identity—extended

  Since the concentric circles and increasing detachment across them have been discussed for two millennia now, I will attempt something a bit more novel: I'll try to calibrate, very crudely and as dichotomies/trichotomies, how some indicators of engagement versus detachment—reported trust levels, news coverage and official aid—depend on distance. In other words, I'll try to attach numbers to perceived distances instead of focusing, as the previous chapters mostly did, on actual distances.

  Chapter 11 presented a calibration of this sort, based on Eurobarometer data on how much citizens of EU-16 countries reported trusting people based on national origins. As we saw, 48 percent on average indicated significant trust in fellow citizens, 20 percent indicated trust in citizens of other EU-16 countries, and 13 percent indicated trust in citizens of the thirteen other, mostly East European countries included. While this is a very rough classification (focusing on just the three outermost circles in figure 15-1), it does suggest a reduction of trust by more than one-half for the “near abroad” and nearly three-quarters for the “far abroad” (which, given its East European/developed country bias, isn't really as far as it might be). By comparison, an extreme World 1.0 vision that saw home and abroad as sharply opposed would imply equal trust ratios for the near abroad and far abroad (both equal to zero, in its most xenophobic variants), and a truly integrated World 2.0 would presumably exhibit ratios of 1:1 across the board, because the distinctions between “us” and “them” would cease to exist.

  Since trust is the aspect of engagement that has been studied the most, the other findings about it that were cited in chapter 11 are worth recapping. Bilateral trust decreases with geographic, linguistic, religious, genetic, and somatic distance (measured by an index of body type differences) as well as with income differences and a history of wars—findings that hit on all four dimensions of the CAGE framework but especially the cultural dimension.8 And while variations in trust might seem too ethereal to affect much on the ground, moving from lower to higher levels of bilateral trust can increase trade, direct investment, portfolio investment, and venture capital investment by 100 percent or more, even after controlling for other characteristics of the two countries.9

  Beyond trust, we can attempt to quantify the extent to which we possess sympathy or concern for others. News coverage of natural disasters affords clear-cut if chilling evidence: while overseen by the organizations that bring us the news, it is presumably tuned to our willingness to take an interest. Compare two disasters that occurred within a year of each other, the Asian tsunami and the devastation of the U.S. city of New Orleans dur
ing Hurricane Katrina. Katrina generated more news coverage in the United States, even though nearly a hundred times as many people perished in the Asian tsunami.

  More systematically, a study of more than five thousand natural disasters suggests that from the standpoint of U.S. media coverage, each dead European was “worth” three South Americans, forty-three Asians, forty-five Africans, or ninety-one Pacific Islanders.10 The same study also confirmed the influence of factors that in an ideal world wouldn't matter at all. For each person killed by a volcano, more than forty thousand people would have had to die in a drought to receive the same expected news coverage. And even more disturbing, when the news media was occupied with nondisaster news, such as the Olympics, the number of dead had to be three times more than during a slow news period to have the same chance of receiving government relief.

  That last finding is particularly disturbing because it goes beyond suggestions of arbitrariness and bias in media coverage to point out that it has a real effect on relief efforts. And while that study focused on the United States, an analysis of Japan also linked official disaster relief to coverage of the disaster in Japanese media and predisaster trade interactions.11 In addition, Muslim-majority countries appeared much less likely to receive Japanese aid!

  The suggestion of very large differences in willingness to help is borne out if we compare aid to the domestic poor versus official development assistance (ODA) to the rest of the world's poor. Based on the weighted per-person averages for fourteen developed OECD economies, national governments spent 30,000 times as much helping each domestic poor person as each poor foreigner.12 (The actual domestic-to-foreign ratios of help per person ranged from 20,000 to 100,000-plus, with Switzerland topping the list at 140,000.) So aid levels, measured by these numbers, seem to be only .003 percent—1/30,000—as high for the foreign poor as for the domestic poor. And no matter how one redoes my calculations, it is hard to avoid the conclusion that domestic-to-foreign aid ratios run into the thousands, at least.

  These sympathy discounts are graphed in figure 15-2.13 Although the data are very sparse, several important points do stand out. While a flat World 2.0 would predict a flat line—the bold one running across the top of the grid—our real-world measures of trust, concern, and aid all slope downward, decaying with distance. At the other extreme, World 1.0 might be interpreted as implying zero international engagement—see the bold vertical line in the figure—but that isn't a good representation of reality either. Psychic distance sensitivity clearly falls in between these two extremes. But it varies greatly depending on which particular measure we're talking about, which is why I had to use a logarithmic scale to make things fit. Trust actually appears to be relatively distance insensitive, although this may reflect self-reporting and the relatively homogeneous set of countries included in that analysis. But our sympathies are revealed to be much more distance sensitive—that is, localized—when it comes to concern for others (news coverage) and, especially, aid.14

  Figure 15-2: Distance decay curves for sympathy: Illustrative

  The high distance sensitivities underscore how detached we are from what happens overseas, but also remind us of the huge room for improvement. Thus, asking rich countries to fulfill the promises they made in 1992 at Rio de Janeiro—to give 0.7 percent of GDP as official development assistance—is not equivalent to asking them to target anything near a 1:1 domestic-to-foreign ratio of the sort evoked by World 2.0, but instead, to reduce that ratio from an average of about 30,000:1 to about 15,000:1! While that target may or may not be achieved, it doesn't seem nearly as impossible as a target of 1:1.

  The magnitudes of these sympathy discounts surprised me when I first calculated them. Yet perhaps they shouldn't have, given how intensely localized most of our daily interactions still are. Telephone traffic still behaves like aid flows: scaled by population, the intensity of domestic phone calls is about 10,000 times greater than international calls, and international calling intensity itself is more than 40 times higher between countries whose main cities are less than 500 kilometers apart.15

  Face-to-face contact is even more localized, of course, since it is limited by people's physical movements. One study of cell phone users in a rich country found that nearly three-quarters mainly stayed within a ten-mile radius over six months and tended to return to the same few places over and over.16 Likewise, residential proximity still predicts best how often friends socialize.17 And while improvements in information and communications technologies have relaxed the old rule that most collaborations happen among people working less than fifty feet apart, knowledge flows remain very significantly localized, as explained in chapters 2 and 4. The “Twitterzone” and social networks have generally been superimposed on Hierocles' circles, allowing for “eccentric” connections, but that doesn't change a basic reality: most people we are close to in cyberspace are people we are close to offline along the CAGE dimensions, and we generally continue to lack connections to people who are very far away.

  Rethinking Cosmopolitanism

  If you're like me, you may have found the steeper lines in figure 15-2 depressing overall, not just surprising, as indicators of how parochial our concerns still are. And if so, our attention naturally gets directed toward how to change this state of affairs. But the question of what duties and obligations we do have to people at varying distances from ourselves is not a simple one. Table 1-1 included discussion of the individual mind-sets that guide responses to such questions, associating Worlds 0.0 through 3.0 with communitarianism, nationalism, cosmopolitanism, and rooted cosmopolitanism, respectively. I'll focus here on elaborating the differences between the conventional cosmopolitanism of World 2.0, which aspires to a state in which distance doesn't matter, and the rooted cosmopolitanism of World 3.0, which recognizes the continued importance of distance as well as its essentially egocentric character. What's close and what's far for you depends on where and who you, at the center of the concentric circles, are.

  Let's start with World 2.0. The cosmopolitan project central to ethical conceptions of World 2.0 is basically the one articulated by Hierocles: “to draw the circles together somehow toward the center.” Philosopher Martha Nussbaum is a contemporary proponent: she defines a cosmopolitan as “the person whose allegiance is to the worldwide community of human beings” and explains that “whatever else we are bound by and pursue, we should recognize, at whatever personal or social cost, that each human being is human and counts as the moral equal of every other.”18 True cosmopolitans strive to sever the link between political boundaries and people's life chances, and they typically focus on alleviating conditions in the poorest countries given the extent of economic deprivation there (see chapter 9).

  Philosopher Peter Singer offers one specific rationale for such cosmopolitanism with his image of the shallow pond.19 Singer argues that if one saw a child drowning in a shallow pond and could save him or her without any risk to one's own safety, with no inconvenience other than getting one's clothes wet and dirty, one should literally leap to the rescue. By extension, since many emergency needs of this sort still exist where our help could easily save lives (especially the lives of children), we shouldn't think of anything else until those basic needs are met—which they currently are not.

  The practical problem facing many would-be do-gooders is the sense that what they are confronting is not a shallow pond but a bottomless pit. The difficulties are twofold. First, looking at the lines in figure 15-2, particularly the aid line, and remembering that the scale is logarithmic, we realize that the challenge of complete equality is very daunting indeed. And second, the invitation to focus all of one's social energy on helping very poor people who are mostly very far away doesn't resonate with the psychology bequeathed to us by Worlds 0.0 and 1.0, which emphasizes obligations to people close to us.

  In recognition of this problem, another prominent philosopher, Kwame Anthony Appiah, stresses local obligations in addition to duties to those far away. Appiah contrasts ho
w we value friends with how we value money: “You may not mind whether you have this million dollars or that million dollars; but you value your friend not as a token of the type friend but as this particular person with whom you have a highly particularized relationship. A radical egalitarian might give his money to the poor, but he can't give his friends to the friendless.”20 His own position is that we have duties to strangers by virtue of our shared humanity, and we also have additional obligations to particular people and communities that are close to us by virtue of our relationships with them. And of the terms Appiah has used to describe his view, I prefer rooted cosmopolitanism because it suggests that deep connections to particular people and places are necessary for the cultivation of an individual's capacity to live a cosmopolitan life.21 For Appiah, this is a “composite project, a negotiation between disparate tasks.”22

  The idea of negotiating multiple deeply held commitments allows us to frame rooted cosmopolitanism in terms of shifting the whole distance decay curve—or some part of it—upward instead of focusing just close in (communitarianism) or far out (cosmopolitanism).23 That way, we can retain some of the strivings of cosmopolitanism while redefining progress not as a focus on the unattainably distant norm of perfect sympathy for everyone everywhere, but in terms of improvements to a highly imperfect reality where sympathies are still highly localized.

  The rooted cosmopolitanism of World 3.0 recognizes that the gain, or at least potential, from helping out is, by a number of measures, greatest in the very poorest countries. But it also accounts for Zipf's law, the principle that it takes more energy to connect to those far away than to those nearby. To that, one might add the reality that sometimes when we try to help people whom we don't understand well enough, we do more harm than good. Thus, most of us shouldn't drop everything, including family and friends, to help the distant poor. But we also can't allow ourselves to simply abandon fellow humans who are suffering far away.