Tuesday, 30 July 2013

Book Review: The Lexus And The Olive Tree, by Thomas L. Friedman (1999)

New York Times foreign affairs columnist Thomas Friedman takes a dive at the deep end of the globalization pool, and emerges with a weighty tome. The Lexus And The Olive Tree leaves no aspect of the modern-day economic system unexplored, but does so at the expense of brevity.

Friedman convincingly presents globalization as the defining world order in the post cold-war era. He wastes no time debating whether globalization should or should not exist; it does exist and indeed dominate the world, so the book quickly moves on to clarify the enabling conditions that came together to unleash the free flow of goods, people and money to where the most money can be made. In one of numerous, and eventually quite tiresome, attempts to create cutesy labels for everything, Friedman describes the Democratizations of Technology, Finance and Information as the three major streams that converged to create globalization.

He goes on to describe the domineering influence of the instantaneous and continuous global market search for good investments, which he defines as the Electronic Herd, and the power of the herd to handsomely reward countries that create the environment for safe investments, and mercilessly punish countries that prove to be risky grounds for international capital. This triggers the need for countries to adopt what Friedman calls the Golden Straitjacket, a defined set of government initiatives required to ensure transparency and battle corruption to protect capital and foster a healthy market environment, initiatives that rarely exist outside democratic regimes.

Written in the shadow of the 1997 Asian Financial Crisis that saw countries such as Thailand, South Korea and Indonesia suffer at the hands of an Electronic Herd fleeing emerging markets that revealed themselves to be high-risk, The Lexus And The Olive Tree does not turn a blind eye to the cultural and societal downsides of globalization. From workers unable to adapt to the pace of the new world to long-standing cultural norms threatened by the internationalization of the world, he assesses the risks and offers ideas on how globalization will need to be sensitive to the "olive trees" of the world, or risk backlashes.

The Lexus And The Olive Tree suffers from an excess of wordage, and it's a good 100 pages longer than it needed to be. In addition to chasing branded titles for everything (DOScapital, Globalution, Glocalism, Self Empowered Angry Man...), Friedman never settles for one example to make a point when five are available. And he throws in far too many personal experiences with random street vendors, shop owners, and assorted businessmen and politicians in far-flung villages and cities, aiming for folksy but often drawing large conclusions from small encounters.

But Friedman also deserves a lot of credit for pinpointing the specific threat of Osama Bin Laden and his ilk, two years before the events of September 11, 2001. He also identifies the danger of recessions becoming more global in scope as world economies become ever more tightly dependent, and he accurately predicts the monetary crisis in Europe and its causes, namely the inability of some member countries to adapt to the Golden Straitjacket. Yet to transpire is another Friedman forecast: that China will be facing some not insubstantial turmoil, as the forces of economic freedom eventually collide with a rigid political system.

The Lexus And The Olive Tree is a mostly well-written, easy to understand guide to the capital forces shaping the world's economies. Friedman may sometimes slip into excessiveness, but his enthusiasm for understanding and explaining the topic is infectious.

Subtitled: Understanding Globalization.
475 pages, plus Index.
Published in softcover by Anchor Books.

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