The Lexus and the Olive Tree - The Descent of Man PDF

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The Lexus and the Olive Tree...

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The Lexus and the Olive Tree Opening Scene: the World is Ten Years Old The slow, fixed, divided Cold War system that had dominated international affairs since 1945 had been firmly replaced by a new, fast and interconnected system called globalization. Globalization is not totally new; the first era of globalization (mid 1800s to late 1920s) shrank the world from a size large to medium. Now we are in Globalization Round II, which is turbocharged and shrinking the world from a size medium to a small.

Part I: Seeing the System Chapter 1: The New System Friedman’s definition of globalization: it is the inexorable integration of markets, nation states and technologies to a degree never witnessed before- in a way that is enabling the world to reach to individuals, corporations and nation states farther, faster, deeper and cheaper than ever before. The overarching feature of the Cold War was division, whereas it is integration for globalization. The question of the Cold War era was “Whose side are you on?” The question is “To what extend are you connected to everyone?” in the era of globalization. Chapter 2: Information Arbitrage To understand the complex system of globalization a multilens perspective is needed. Friedman calls this multilens perspective the information arbitrage. A successful arbitrageur is someone with a wide net of informants and information and knows how to synthesize it in a way that will produce profit. Six dimensional information arbitrage is the best way to see the system of globalization; politics, culture, national security, financial markets, technology, environmentalism. Chapter 3: The Lexus and the Olive Tree According to Friedman, Lexus and the Olive Tree are good symbols of the post-Cold War era; olive trees are the feelings of self-esteem and belonging that are essential for human survival. Lexus represents the drive for improvement, sustenance, prosperity and modernization. There is a simultaneous tug-of-war, balancing act between the Lexus and the olive tree. Chapter 4: …And the Walls Came Tumbling Down The Cold war era was about walls, ditches and dead ends. Three fundamental changes blew away all these walls are; changes in how we communicate, how we invest and how we learn about the world. Friedman calls these changes the democratization of technology, the democratization of finance and the democratization of information. Chapter 5: Microchip Immune Deficiency The Microchip Immune Deficiency Syndrome is the defining political disease of the globalization era. It is contracted by countries and companies that fail to prepare themselves for the changes brought by the microchip and the three democratizations, which created a much faster, more open and a more complex world. Cold War corporate models create a suitable environment for the disease; a few people on the top hold all the information and the rest simply carry out the decisions of the few. The way to avoid MIDS is the fourth democratization; “the democratization of decision making”.

Chapter 6: The Golden Straitjacket The fall of the Berlin Wall blew away the alternatives for free market capitalism. When I country recognizes this and decides to abide to the rules of the free market; it puts on the Golden Straitjacket. The jacket represents the general principles of a working free market economy; price stability, balanced budget, small bureaucracy etc. and if you don’t wear the jacket you pay a price because of the Electronic herd. The herd consists of all the faceless stock, bond and currency traders and all the multinational companies who move money around the globe looking for profit. The herd is beginning to replace governments as the primary source of capital for both countries and companies and it loves the Golden Straitjacket because it embodies all the liberal, free market rules that the herd wants to see in a country. Chapter 7: The Electronic herd Every country needs to plug in to the herd, because you cannot afford not to have the capital flow which your competitors are enjoying. However, if you break the rules of the Golden Straitjacket by over borrowing or financing inefficient investments, the herd stampedes you and leaves you as road kill. Democracies vote every 2-4 years. Herd votes every minute. This is why the herd an important international actor in the globalized system; it can’t go to war or invade a country, but it can shape the behavior of nation states.

Part 2: Plugging into the System Chapter 8: DOScapital 6.0 Kleptocracy is when many or all of the key functions of a state system have become so corrupt that the legal transactions became the exception rather than the norm. In full-fledged kleptocracies, the state is built around theft. In budding kleptocracies, corruption is widespread, tolerated, expected but some legal norms exist alongside. Chapter 9: Globalution Friedman calls the process by which the herd helps you to build the foundation stones of democracy; “globalution”. In the era of globalization, the herd is the most important force promoting democratization, because it can go deep inside the wiring of the countries in ways that governments and NGOs can’t. This is not because the herd cares about democracy, but because it values predictability and transparency. Chapter 10: Shapers, Adapters and Other New Ways of Thinking about Power The two questions that Friedman asks to assess the economic power and potential; how wired is your country or company? The answer shows the degree of connectivity and connectivity is the new productivity. The second question is; is your country or company a shaper or an adopter? Shapers are the ones that define the rules and interactions that will govern a certain activity. Adapters are the ones that adapt themselves to the rules and interaction frameworks shaped by others. Chapter 11: Buy Taiwan, Hold Italy, Sell France In this chapter, the author describes nine habits of highly effective countries by asking questions. Friedman underlines the importance of speed; the ability to keep up with the net speed, which is the speed of internet. He also asks about connectivity; how well are you

connected to networks, and can you harvest information from them? Weight is another important aspect; can you produce technologic stuff which is light but valuable? Chapter 12: The Golden Arches Theory of Conflict Prevention Friedman introduces the concept of the “golden arches theory,” which notes that no two countries that both have McDonald’s have fought a war against each other since they got their McDonald’s. He examines the Middle East, asserting that the three countries that pose the biggest threat to war—Syria, Iran and Iraq—are the only three Middle Eastern countries without a McDonald’s. This theory is based on the assumption that countries with McDonald’s are plugged into the Electronic Herd, and the economic integration and stability that come with being plugged into this system have raised the cost of war for both the victor and the vanquished. The growing dependence on the herd and the straitjacket make for a much stronger web of constraints on the behavior and policy of nations that are plugged into the system. Globalization, with its straitjackets and McDonald’s’, has the power to constrain aggressive behavior. Chapter 13: Demolition Man Friedman argues that because globalization is creating a single marketplace, it is homogenizing consumption and culture and can run the risk of wiping out ecological and cultural diversity throughout the world. In the Cold War system, cultures didn’t interact as frequently or directly as they do today, where they are often offered up for global competition and comparison against one another. Friedman argues that because globalization is often associated with Americanization, countries need to develop strong cultural and environmental filters so they can interact with but not be overwhelmed and swallowed by the herd. He suggests the most important filter is the ability to “glocalize,” meaning a culture’s ability to absorb natural influences into their culture yet reject those that are alien—to assimilate aspects of globalization into your culture in a way that adds diversity without overwhelming. Globalization will be sustainable as long as we manage these filters in a way that protects our culture while simultaneously getting the best out of others’ cultures. Chapter 14: Winners Take All Friedman discusses the widening gap between the rich and the poor as a negative byproduct of globalization. Since globalization creates a more open global market, those with the best skills and services will dominate the competition for the benefits. This is a phenomenon he refers to as “winner take all.” Due to the elimination of many formal rules that limited competitive bidding, the potential market for any good or service now essentially extends around the world. Those with skills only marginally inferior will often do much less well than those most skilled, with those with few skills will suffer greatly. These widening income gaps have eroded the middle class and stirred a backlash against globalization around the world. Friedman suggests that these income gaps could turn out to be globalization’s Achilles’ heels.

Part III: The Backlash Against the System Chapter 15: The Backlash The rapid change globalization has fostered in wealth and technological innovation has challenged traditional business practices, social structures and cultural norms, generating a substantial backlash. Those revolting feel that since their country has plugged into the system, they are forced into a one-size-fits-all golden straitjacket. Friedman characterizes those who

join the backlash for fear that they don’t have the skills or energy to compete as “turtles.” As globalization replaces manual repetitive jobs with machines, the number of good jobs becomes fewer and the turtles become economically threatened and join the backlash. Because globalization requires a shift in power from one group to another, backlash often comes not only from the turtles, but also from the “used-to-bes:” those in the middle and lower class who found security in the former communist, socialist or welfare systems. The third backlash group that has formed is the “wounded gazelles:” those who have tried globalization but failed and are now trying to shut it out. The backlash of all of these people is rooted in their distaste for the way globalization homogenizes people. Chapter 16: The Groundswell (Or the Backlash Against the Backlash) Friedman argues that globalization comes from below, from street level and from people’s souls—from their desire for a better life. This explains why, along with the backlash, there comes a groundswell of people demanding the benefits of globalization. While the gap between the rich and poor has been getting wider, the floor under the poor has been rising steadily in many parts of the world, and this is due to globalization. According to Friedman, the people in the groundswell are beginning to understand and exploit the fact that globalization can both enhance freedom and contribute to the alleviation of poverty in ways that previous systemic changes and technological leaps have not. Although globalization is harsh, it also gives those brutalized a way to tell people about their pain and garner support and attention, and the poor are beginning to understand that globalization is a tool that will make their lives better.

Part IV: America and the System Chapter 17: Rational Exuberance Friedman uses Greenspan’s warning against “irrational exuberance” by US investors pushing up share prices beyond rational price-earning calculations to discuss his experience of the rational exuberance about America he’s seen throughout the world. Rational exuberance is the intuition among global investors that the USA is in the “full sprint” of globalization while many in Europe and Asia are still trying to adjust their societies. Friedman argues that if a visionary geoarchitect was asked 100 years ago to describe a country that would have been able to compete in a globalization system, he would have described many of the characteristics found in the US today. Friedman ends by noting that America must use its few extra assets to deal with its liabilities: crime, lack of gun control, widening income gaps, underfunded schools, etc. Chapter 18: Revolution is U.S. Friedman believes that the farther ahead America gets in the era of globalization, the more other countries will seek to mirror and mimic America. Although Americanization-Globalization can seem an attractive way of increasing livelihoods, to many it is often seen as an unwanted invasion that can breed a deep sense of “envy and resentment” toward the USA. The impact of this envy creates the other backlash against globalization: the rising resentment against the US. Although this backlash can produce small-time haters who complain about America’s global power while at the same time reaping the fruits of that power, it can more dangerously lead to what Friedman calls “The Super Empowered Angry Men.” An increasingly wired world has made it easier for computer hackers, separatists and large scale terrorists such as Osama bin Laden to use western technology to take out their rage on the west, all while rejecting the western value structure behind it.

Chapter 19: If You Want to Speak to a Human Being, Press 1 Friedman argues that globalization is almost irreversible. These aspirations and technologies can be cut off, but only at a huge cost to a society’s development. Friedman states that societies may view globalization as just too hard, just too connected, just too disconnected, just too intrusive, just too unfair for too many people, or just too dehumanizing. However, societies must find the balance between globalization’s “inherently empowering and humanizing aspects and its inherently disempowering and dehumanizing aspects.” Globalization is always a balance, and as citizens of the world we must ensure that the majority of the population believes that advances resulting from globalization are leading declines. Chapter 20: There is a Way Forward As the country whose people, products, values technologies and ideas are being most globalized, Friedman believes that it is the USA’s responsibility to make sure that globalization is sustainable. According to Friedman democratizing globalization will not only be the most effective way to make it sustainable, it will be also the most self-interested and moral policy that the USA can pursue. For many reasons, globalization is easy to distort. If we don’t demystify globalization for the majority of the world, separatists and dangerous angry men will exploit and confuse this concept to the detriment of their own societies. He also notes that even if politics are right, there are olive-tree/community needs in all of us. A healthy global society balances the Lexus and the olive tree, and America at its best is the best model of this balance....