The Two Markets

left, City Market, Bangalore, in the shadow of Mysore Road; right, Indigo Nation, about 5 miles east, 100-Foot Road, Indiranagar.

I'm reading Thomas Friedman's award-winning 2005 book "The World is Flat" at the moment. In case you haven't read it, it's his thesis on how the technological and cultural developments of the late 20th and early 21st century have changed global markets fundamentally by — for lack of a more precise term — rendering geography obsolete. Friedman was inspired to write the book after a visit to Bangalore; he saw the call centers, to be sure, but he also saw the outsourcing of everything from income tax preparation to software-writing. When he realized that Bangalore could effectively be "a suburb of Boston," he decided the world was flat.

The flattening of the world has had an immense impact on this city. The community of Indiranagar, in which land used to be given away as a pension to military officers, has become a burgeoning commercial zone. The 100-foot road houses tony shops from international brands; the Dockers store, most memorably, sits next to a ten by twenty foot picture of the Golden Gate Bridge. The nearby Leela Palace Hotel — a five-star hotel with attached three-level shopping mall — gives a great sense of the growing economy here. Looking to another neighborhood, we drive almost every day down Hosur Road, passing by the Koramangala office of MphasiS, the outsourcing firm whose founder reminded Friedman that America will need to invent a new future in order to survive.

"The great challenge of our time," Friedman would later write, "is to absorb [the changes inherent in globalization] in ways that do not overwhelm people or leave them behind."

—

For most of the history of life itself, survival didn't depend on markets, global or local. For most of the history of life, it didn't matter whether the world was flat or not. In primordial pools, there wasn't even a sense of life forms. There was just life. At some point genes settled down and species became clearer; Darwin's rules took over and suddenly organisms gained a purpose: survival. We went from ingesting sunlight to eating plants to eating animals, and somehow we survived.

Nowadays, survival is completely different. For most people, the only thing that remains unchanged from our animal stage is breathing. Eating is still dependent on finding food, but that's largely bought and paid for. Development has sullied sources of water, so it must be purified, and whether it's from a pipe or in a bottle, this too must be purchased. In other words, survival for most people requires finding a niche in a market and earning.

Why bother mentioning all this? Because walking around the same Bangalore that inspired Friedman to say that the world is flat, I see that there's a round world here too. There's a world of traditional markets as well as a world of global ones, and — this is the important part — far more people live in the round world than the flat one.

Friedman sees an accounting firm in Chicago. It outsources tax preparation to Bangalore; this cuts the firm's costs by, say, 80%. But even at 1/5 the price, in Bangalore this may be a job with prestige and high pay. This brings wealth to Chicago and Bangalore — and creates a market here for more stuff, like motorbikes and Dockers pants and washing machines, which creates wealth elsewhere. This is the rose-colored glasses version: innovation creates new markets and more wealth.

But then I see Ravichandran at the dhobi ghat washing the neighborhood's clothes for three rupees a shirt. While we were speaking to him he bought a two-rupee cup of tea from a Sikh man with a thermos. That man — hypothetically — may have purchased the tea from a seller at an open-air market like City Market. These people are getting by too, in the only market they know. But with less work for the dhobi, it's a round-world economy that suddenly seems vulnerable.

Friedman is right: the great challenge of our time is to digest the globalized world in the least painful way for people. The problem is that the globalized world, the flat world, isn't the only world we need to be worried about.

[edit: you can read some of my initial reporting notes in this post at my personal blog.]