On Aug 7, 4:29 am, Day Brown hughes.net> wrote:

Sounds like old thinking since most of the poor-non-white world is
where most of the economic action is going on, and they are
industrializing and getting connected into the network of
relationships to the west's disadvantage. I guess the text below is
supposed to represent the new thinking that will greatly increase
pollution when every country gets online;

The World Is Flat -Thomas L. Friedman
http://www.amazon.com/exec/obidos/tg/detail/-/0374292884/

1. Golden Arches Theory of Conflict Prevention
2. Dell Theory of Conflict Prevention

---------------------------

1. Golden Arches Theory of Conflict Prevention:

...the extent that countries tied their economies and futures to
global integration and trade, it would act as a restraint on going to
war with their neighbors...

...in the late 1990s, when, during my travels, I noticed that no two
countries that both had McDonald's had ever fought a war against each
other since each got its McDonald's. (Border skirmishes and civil wars
don't count, because McDonald's usually served both sides.) After
confirming this with McDonald's, I offered what I called the Golden
Arches Theory of Conflict Prevention. The Golden Arches Theory
stipulated that when a country reached the level of economic
development where it had a middle class big enough to support a
network of McDonald's, it became a McDonald's country. And people in
McDonald's countries didn't like to fight wars anymore. They preferred
to wait in line for burgers. While this was offered slightly tongue in
cheek, the serious point I was trying to make was that as countries
got woven into the fabric of global trade and rising living standards,
which having a network of McDonald's franchises had come to symbolize,
the cost of war for victor and vanquished became prohibitively high.

2. Dell Theory of Conflict Prevention Dude:

The Dell Theory stipulates: No two countries that are both part of a
major global supply chain, like Dell's, will ever fight a war against
each other as long as they are both part of the same global supply
chain. Because people embedded in major global supply chains don't
want to fight old-time wars anymore. They want to make just-in-time
deliveries of goods and services-and enjoy the rising standards of
living that come with that. One of the people with the best feel for
the logic behind this theory is Michael Dell, the founder and chairman
of Dell.

"These countries understand the risk premium that they have," said
Dell of the countries in his Asian supply chain. "They are pretty
careful to protect the equity that they have built up or tell us why
we should not worry [about their doing anything adventurous]. My
belief after visiting China is that the change that has occurred there
is in the best interest of the world and China. Once people get a
taste for whatever you want to call it-economic independence, a better
lifestyle, and a better life for their child or children-they grab on
to that and don't want to give it up."

Any sort of war or prolonged political upheaval in East Asia or China
"would have a massive chilling effect on the investment there and on
all the progress that has been made there," said Dell, who added that
he believes the governments in that part of the world understand this
very clearly. "We certainly make clear to them that stability is
important to us. | Right now] it is not a day-to-day worry for us... I
believe that as time and progress go on there, the chance for a really
disruptive event goes down exponentially. I don't think our industry
gets enough credit for the good we are doing in these areas. If you
are making money and being productive and raising your standard of
living, you're not sitting around thinking, Who did this to us? or Why
is our life so bad?"

There is a lot of truth to this. Countries whose workers and
industries arc woven into a major global supply chain know that they
cannot take an hour, a week, or a month off for war without disrupting
industries and economies around the world and thereby risking the loss
of their place in that supply chain for a long time, which could be
extremely costly. For a country with no natural resources, being part
of a global supply chain is like striking oil-oil that never runs out.
And therefore, getting dropped from such a chain because you start a
war is like having your oil wells go dry or having someone pour cement
down them. They will not come back anytime soon.

"You are going to pay for it really dearly/," said Glenn E. Neland,
senior vice president for worldwide procurement at Dell, when I asked
him what would happen to a major supply-chain member in Asia that
decided to start fighting with its neighbor and disrupt the supply
chain. "It will not only bring you to your knees [today], but you will
pay for a long time-because you just won't have any credibility if you
demonstrate you are going to go [off] the political deep end. And
China is just now starting to develop a level of credibility in the
business community that it is creating a business environment you can
prosper in-with transparent and consistent rules." Neland said that
suppliers regularly ask him whether he is worried about China and
Taiwan, which have threatened to go to war at several points in the
past half century, but his standard response is that he cannot imagine
them "doing anything more than flexing muscles with each other."
Neland said he can tell in his conversations and dealings with
companies and governments in the Dell supply chain, particularly the
Chinese, that "they recognize the opportunity and are really hungry to
participate in the same things they have seen other countries in Asia
do. They know there is a big economic pot at the end of the rainbow
and they are really after it. We will spend about $35 billion
producing parts this year, and 30 percent of that is [in] China."

If you follow the evolution of supply chains, added Neland, you see
the prosperity and stability they promoted first in Japan, and then in
Korea and Taiwan, and now in Malaysia, Singapore, the Philippines,
Thailand, and Indonesia. Once countries get embedded in these global
supply chains, "they feel part of something much bigger than their own
businesses," he said. Osamu Watanabe, the CEO of the Japan External
Trade Organization (JETRO), was explaining to me one afternoon in
Tokyo how Japanese companies were moving vast amounts of low- and
middle-range technical work and manufacturing to China, doing the
basic fabrication there, and then bringing it back to Japan for final
assembly. Japan was doing this despite a bitter legacy of mistrust
between the two countries, which was intensified by the Japanese
invasion of China in the last century. Historically, he noted, a
strong Japan and a strong China have had a hard time coexisting. But
not today, at least not for the moment. Why not? I asked. The reason
you can have a strong Japan and a strong China at the same time, he
said, "is because of the supply chain." It is a win-win for both.

Obviously, since Iraq, Syria, south Lebanon, North Korea, Pakistan,
Afghanistan, and Iran are not part of any major global supply chains,
all of them remain hot spots that could explode at any time and slow
or reverse the flattening of the world. As my own notebook story
attests, the most important test case of the Dell Theory of Conflict
Prevention is the situation between China and Taiwan-since both are
deeply embedded in several of the world's most important computer,
consumer electronics, and, increasingly, software supply chains. The
vast majority of computer components for every major company comes
from coastal China, Taiwan, and East Asia. In addition, Taiwan alone
has more than $100 billion in investments in mainland China today, and
Taiwanese experts run many of the cutting-edge Chinese high-tech
manufacturing companies.

It is no wonder that Craig Addison, the former editor of Electronic
Business Asia magazine, wrote an essay for the International Herald
Tribune (September 29, 2000), headlined "A 'Silicon Shield' Protects
Taiwan from China." He argued that "Silicon-based products, such as
computers and networking systems, form the basis of the digital
economies in the United States, Japan and other developed nations. In
the past decade, Taiwan has become the third-largest information
technology hardware producer after the United States and Japan.
Military aggression by China against Taiwan would cut off a large
portion of the world's supply of these products . . . Such a
development would wipe trillions of dollars off the market value of
technology companies listed in the United States, Japan and Europe."
Even if China's leaders, like former president Jiang Zemin, who was
once minister of electronics, lose sight of how integrated China and
Taiwan are in the world's computer supply chain, they need only ask
their kids for an update. Jiang Zemin's son, Jiang Mianheng, wrote
Addison, "is a partner in a wafer fabrication project in Shanghai with
Winston Wang of Taiwan's Grace T.H.W. Group." And it is not just
Taiwanese. Hundreds of big American tech companies now have R & D
operations in China; a war that disrupted them could lead not only to
the companies moving their plants elsewhere but also to a significant
loss of R & D investment in China, which the Beijing government has
been betting on to advance its development. Such a war could also,
depending on how it started, trigger a widespread American boycott of
Chinese goods-if China were to snuff out the Taiwanese democracy-which
would lead to serious economic turmoil inside China.

The Dell Theory had its first real test in December 2004, when Taiwan
held parliamentary elections. President Chen Shui-bian's pro-
independence Democratic Progressive Party was expected to win the
legislative runoff over the main opposition Nationalist Party, which
favored closer ties with Beijing. Chen framed the election as a
popular referendum on his proposal to write a new constitution that
would formally enshrine Taiwan's independence, ending the purposely
ambiguous status quo. Had Chen won and moved ahead on his agenda to
make Taiwan its own motherland, as opposed to maintaining the status
quo fiction that it is a province of the mainland, it could have led
to a Chinese military assault on Taiwan. Everyone in the region was
holding his or her breath. And what happened? Motherboards won over
motherland. A majority of Taiwanese voted against the pro-independence
governing party legislative candidates, ensuring that the DPP would
not have a majority in parliament. I believe the message Taiwanese
voters were sending was not that they never want Taiwan to be
independent. It was that they do not want to upset the status quo
right now, which has been so beneficial to so many Taiwanese. The
voters seemed to understand clearly how interwoven they had become
with the mainland, and they wisely opted to maintain their de facto
independence rather than force de jure independence, which might have
triggered a Chinese invasion and a very uncertain future.

Warning: What I said when I put forth the McDonald's theory, I would
repeat even more strenuously with the Dell Theory: It does not make
wars obsolete. And it does not guarantee that governments will not
engage in wars of choice, even governments that are part of major
supply chains. To suggest so would be naive. It guarantees only that
governments whose countries are enmeshed in global supply chains will
have to think three times, not just twice, about engaging in anything
but a war of self-defense. And if they choose to go to war anyway, the
price they will pay will be ten times higher than it was a decade ago
and probably ten times higher than whatever the leaders of that
country think. It is one thing to lose your McDonald's. It's quite
another to fight a war that costs you your place in a twenty-first-
century supply chain that may not come back around for a long time.

The World Is Flat:

A Brief History of the Twenty-first Century
by Thomas L. Friedman
http://www.amazon.com/exec/obidos/tg/detail/-/0374292884/
http://www.thomaslfriedman.com/worldisflat.htm
http://www.thomaslfriedman.com/