EXCERPT: 'Hot, Flat, and Crowded,' by Thomas L. Friedman

Dec. 3, 2009— -- In his new book "Hot, Flat, and Crowded," bestselling author Thomas L. Friedman examines climate change and competition for energy, and their potential effects on the world.

Read an excerpt of the book below, and head to the "GMA" Library for more good reads.

ONE

Why Citibank, Iceland's Banks,

and the Ice Banks of Antarctica

All Melted Down at the Same Time

On June 15, 2005, as the global economy was booming, the satirical newspaper The Onion carried the following story about Chinese workers and all the stuff they make for Americans. Though a fake story, like many in The Onion it actually spoke some essential truths:

FENGHUA, CHINA—Chen Hsien, an employee of Fenghua Ningbo Plastic Works Ltd., a plastics factory that manufactures lightweight household items for Western markets, expressed his disbelief Monday over the "sheer amount of [crap] Americans will buy.""Often, when we're assigned a new order for, say, 'salad shooters,' I will say to myself, 'There's no way that anyone will ever buy these,'" Chen said during his lunch break in an open-air courtyard. "One month later, we will receive an order for the same product, but three times the quantity. How can anyone have a need for such useless [crap]?"Chen, 23, who has worked as an injection-mold operator at the factory since it opened in 1996, said he frequently asks himself these questions during his workweek, which exceeds 60 hours and earns him the equivalent of $21."I hear that Americans can buy anything they want, and I believe it, judging from the things I've made for them," Chen said. "And I also hear that, when they no longer want an item, they simply throw it away. So wasteful and contemptible."Among the items that Chen has helped create are plastic-bag dispensers, microwave omelet cookers, glow-in-the-dark page magnifiers, Christmas-themed file baskets, animal-shaped contact-lens cases, and adhesive-backed wall hooks."Sometimes, an item the factory produces resembles nothing I've ever seen," Chen said. "One time, we made something that looked like a ladle, but it had holes in its cup and a handle that bent down 90 degrees. The foreman told us that it was a soda-can holder for an automobile. If you are lucky enough to own a car, sit back and enjoy the journey. Save the soda beverage for later."Chen added: "A cup holder is not a necessary thing to own."Chen expressed similar confusion over the tens of thousands of pineapple corers, plastic eyeshades, toothpick dispensers, and dog pull-toys that he has helped manufacture."Why the demand for so many kitchen gadgets?" Chen said. "I can understand having a good wok, a rice cooker, a tea kettle, a hot plate, some utensils, good china, a teapot with a strainer, and maybe a thermos. But all these extra things—where do the Americans put them? How many times will you use a taco-shell holder? . . ." Chen added that many of the items break after only a few uses."None are built to last very long," Chen said. "That is probably so the Americans can return to buy more . . ."

The Onion's satire captured in caricature form the most important engine pulling up living standards across the planet for the last three decades—the intimate relationship between American consumers and Chinese savers and producers. At its core, the China-America growth engine worked like this: We in America built more and more stores, to sell more and more stuff, made in more and more Chinese factories, powered by more and more coal, and all those sales produced more dollars, which China used to buy more and more U.S. Treasury Bills, which allowed the Federal Reserve to extend more and more easy credit to more and more banks, consumers, and businesses so that more and more Americans could purchase more and more homes, and all those sales drove home prices higher and higher, which made more and more Americans feel like they had more and more money to buy more and more stuff made in more and more Chinese factories powered by more and more coal, which earned China more and more dollars to buy more and more T-bills to be recirculated back to America to create more and more credit so more and more people could build more and more stores and buy more and more homes . . .

This relationship, so critical in inflating the post–Cold War credit bubble, was so intimate that when Americans suddenly stopped buying and building in the fall of 2008, thousands of Chinese factories went dark and whole Chinese villages found themselves unemployed. Consider the Chinese artist colony Dafen, north of Hong Kong. Dafen's roughly nine thousand art academy graduates have made the colony the world's center for mass-produced artwork and knockoffs of masterpieces—the oil paintings that hang in motel rooms and starter homes across America. Some 60 percent of the world's cheap oil paintings are produced within Dafen's four square kilometers. "A reasonably skillful copy of Van Gogh's 'Sunflowers' sells for $51," Spiegel Online reported (August 23, 2006). "Buy 100 and the price goes down to $33 . . . The 100 paintings, guaranteed to have been produced by art academy graduates, ship within three weeks." Not surprisingly, Dafen was devastated by the bursting of the U.S. credit bubble. "American property owners and hotels were usually the biggest consumers of Dafen's works," Zhou Xiaohong, deputy head of the Art Industry Association of Dafen, told Hong Kong's Sunday Morning Post (December 14, 2008). "The more houses built in the United States, the more walls that needed our paintings." And we in America sure did create a lot of new walls for a lot of Chinese watercolors. Overconsuming, overbuilding, overborrowing, and overlending all became the new normal during our post–Cold War credit bubble.