Sometimes geopolitical lessons come from the strangest places. With Eric Schmidt stepping down as CEO of Google and replaced by founder Larry Page, I can’t help but wonder if world leaders are taking note. Google perfected the horizontal business model. To the delight of enthusiasts of David Ricardo, the comparative economist, the company does one thing really well search and has built an ecosystem for others to flourish using it as a platform.
Contrast this with IBM and AT＆T, long past their expiration dates as successful vertical companies. It’s no coincidence that the Soviet Union and IBM, two raging, top-down, command-and-control systems, collapsed at about the same time. What do I mean by vertical In its heyday, IBM did everything from soup to nuts. Designed chips, wrapped plastic around them, wrote operating systems and applications, and then sold and serviced mainframes. The giant captured half of computer-industry sales and 80 percent of profits until horizontal companies Intel and Microsoft knocked it out at its knees. AT＆T owned phones and switches and long-distance lines until a very horizontal Internet and companies like Skype changed the economics of the phone call. These same dynamics are now driving the world economy into a productive horizontal enterprise. And it’s about time.
Economies are about increasing the standard of living of their participants. If you don’t have an economic system to create productivity, you end up stealing it from your neighbors. Think Roman Empire. Or the British who colonized large parts of the world to lock up natural resources to plug into their manufactories. Both very vertical. As of 1989, the United States of America became the world’s sole superpower. But what is America going to do with this status Unlike past empires, there’s no incentive to take over the rest of the world. Why take over a country and deal with the headaches of a welfare system, and have to fix the plumbing in Uzbekistan, when you can buy its output on the cheap, even ordering its goods over the Web Despite all the protests, globalization instills peace. Trade now represents 26 percent of world GDP, up from 18 percent in 1990.
Globalization has linked the free world in a smart horizontal alliance. Computers, cell phones, and fiber optics are not made in any single country to be exported worldwide, but instead have components and labor from more than 30 inseparable countries, including China and Vietnam. Horizontal rules!
Without much forethought or planning, the world has structured itself into a horizontal wealth-creating and peace-maintaining system—a productive system that actually increases the standard of living of all the participants, not just those in the United States. America still sits on top of the heap, sure, but wealth has increased for every country, company, and person that contributes. And they get rich not by stealing from the rest of the world, but by adding value to the food chain. Just ask Google.
IBM’s failure is similar to that of the Soviet Union in that（）
A. the downfall of the latter led to the collapse of the former
B. both were destroyed by horizontal companies like Google
C. both had intended to expand their business around the world
D.both developed the vertical model which lacked efficiency
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