End of the Line: The Rise and Coming Fall of the Global Corporation

On September 21, 1999 an earthquake that registered 7.6 rocked Taiwan. Despite the death toll of 2,400, the quake barely registered in the consciousness of most Americans. Watching the news would lead even the most cosmopolitan American observer to conclude that people in this country were more interested in North Carolina. Hurricane Floyd dropped more than 28 inches of rain there the week before. Yet the shock wave from the quake was felt within days. Xilinx, a highly-specialized American semiconductor designer and manufacturer, lost two of its factories that day in Taiwan. Soon, thousands of assembly-line workers located from California to Texas, were furlogued. The chain reaction did not stop there. Wall Street traders began to place the Taiwanese natural disaster in its proper prospective. Shares of Dell, Apple and Hewlett-Packard began to tumble. By Christmas, American shoppers were scurrying to avoid the shortages of laptop computers, Barbie cash registers and Furby dolls. In short a disaster that only 10 years prior would have been a localized disaster, cascaded into a worldwide crisis. The Taiwanese earthquake had elevated itself into a symbol of how closely connected the world has become. Perhaps, more important, Barry Lynn, a fellow at the New American Foundation in Washington, D. C. illustrates how that out-sourced world faces different risks. Lynn argues today's worldwide economy is an improvisation that creates and distributes wealth in ways beyond the control of its designers. In this well-written and well-researched monograph is an at times angry look at globalization. It offers a departure from the now familiar argument that interconnected, worldwide capitalism is good. In its place, the author offers a subtle and often scary look at a risk-laden system beyond any government's control. Lynn's arguments promise to add clarity to this nation's growing global debate.

Globalization is here to stay. The movement of goods, services and knowledge across national boundaries is accelerating at an unprecedented pace thanks to factors like the internet, modern logistics and supply chain technologies, collapse of communism and reduction in tariffs. But behind this rosy picture lie many risks that have been ignored by companies for temporary gain sacrificing long term stability and national security argues this book. In the initial chapters I got the impression that the argument is primarily to protect American interests, but a full reading of the book reveals that the need and urgency to review existing sourcing strategies by major multinationals is applicable to all nations. The discussion starts will an American nationalistic fervor citing Alexander Hamilton who championed the cause for national self sufficiency in all critical supplies to win the war against the British. Unfortunately the mighty nation is now dependent on companies in other continents for critical supplies to feed its assembly or distribution processes at home. Any disruption to this critical balance can bring major corporations to a halt. As an example, an earthquake in Taiwan, the world's major manufacturer of silicon chips brought assembly lines at Dell to a crawl. But then what made the major multinationals to place all their eggs in one basket or that matter in a few baskets far away from home ?. The author traces this fundamentally to the Japanese onslaught of the American car and electronics markets in the 80's. America had to respond. One way was to outsource manufacturing to the cheapest possible source. Asian countries like China, Taiwan and Singapore were ideal candidates with low labor costs. The cost pressure was further extended down the supply chain and soon a cost effective supply capability emerged to counter and finally overcome the Japanese threat. But in the process, argues the author, American companies have sacrificed manufacturing as a strategic tool that needs to be retained with investment and constant innovation. Companies like Cisco for example rapidly grew through global acquisitions for technology and partnering with contract manufacturers like Flextronics. Shareholders were happy, but the interests of other stakeholders like employees, consumers and national self competencies in manufacturing were sacrificed. American dependence on China ( and vice versa) is brought out as a major risk for America. How long and how much could two nations with diametrically opposite political ideologies grow this equation is a big question. Diversification of risk - market, financial, political and geographic are the elements of any introductory book on business strategy. This book is a call to major multinationals to brush up their elementary lessons once again. There are clear recommendations at the end of the book to correct the course and secure the future of nations from the risks of asymmetries in the global supply chain. A

Barry Lynn's End of the Line is a superb volume that shows why economic analysis should not be left to economists. There are several occupational hazards of being an economist, the most irksome being that you have to pretend that politics and economics are not only different but actually separate. This sort of thinking is fine when one is engaged in a certain type of scientific economics - the dispassionate explanation of an aspect of our economic arrangements - but is a disaster when it comes to explaining real life economies. Market societies, for better and worse, are the product of deeply rooted economic imperatives that play out against institutions built in political - power - struggles between people with opposing interests and disparate means to achieve their ends. Economies are jerry-rigged, improvised institutions that sometimes work well and sometimes work very, very badly. Because Lynn is not an economist, he is less inclined to worship at the altar of free markets and more inclined to look at how the self-interested actions of leading business men and women, government officials and the general public combine to create risk as well as opportunity in our global economic commons. Lynn's lack of free market piety will earn him critics among the acolytes of laissez faire economics, but the rest of us should be grateful that he writes about the real world in these confusing times. Lynn's point in End of the Line is to remind us that the global economy is, like all human creations, a grand improvisation that creates and distributes wealth in ways that are beyond the control of its designers in business and government. Lynn has penned a wise, witty and at times angry look at globalization that departs from the stale argument about whether global capitalism is good or bad in favor of a far more subtle, and scary portrait of a risk laden production system that is, at least for now, beyond any government's control. End of the Line is a meditation on what happens when short term self-interest leads global businesses to make bottom line decisions that enhance their own profitability in ways that increase the vulnerability of the system as a whole, and governments abdicate their responsibility to monitor and manage an economy - even a global economy - for the sake of the common good. Lynn asks us to see the global economy as a vast and intricate system of economic plumbing that links suppliers and customers in every corner of the globe. This plumbing system is nothing but an ever evolving set of connections that becomes denser when corporations outsource their operations to producers in lower cost countries in order to provide customers with high quality products at low prices. The global growth of free trade, with relatively little regulation or oversight by governments in the interest of global prosperity, has been an immense boon to the fortunes of millions of previously desperately people around the world, whose incomes and life

Over the past decade, globalization has been presented as a cure-all for the world's economic problems, as inevitable, or as the curse of our times. Barry Lynn offers a uniquely fresh view of the subject. He looks at the long supply line inherent in the global optimization of production and the many resulting consequences and possible vulnerabilities. This is a thinking person's examination of globalization. While this book will be of interest to corporate managers and governmental policy makers, it should be of the greatest interest to investors, whose capital is being deployed in new ways in far away places, often at great risk. Lynn writes beautifully, making an important topic clearly accessible to the general reader, and interesting. Pat Choate

This book challenges and then illuminates almost everything we think we know about today's global economy. People will be talking about Barry C. Lynn's "End of the Line" for years to come. This book is key to the current debate within the Democratic party on trade, business, jobs, outsourcing and economics. The book is extremely well written, and fun to read.