Book Reviews
the lexus and the olive tree
by Thomas Friedman, Harper Collins, London, 1999
This is the bible on globalization from the pen of an award winning journalist who sums up his own attitude to globalization:
"Generally speaking, I think it's a good thing that the sun comes up every morning. It does more good than harm. But even if I didn't much care for the dawn there isn't much I could do about it. I didn't start globalization, I can't stop it - except at huge cost to human development - and I'm not going to waste time trying. All I want to think about is how I can get the best out of this new system, and cushion the worst, for the most people."
While not being as enthusiastic or optimistic about some aspects of globalization, I think that in many ways we Maori need to take that advice. Here we are, about 0.5 million of us in a world of about 6 billion; about 0.01% of the population of a world which is rapidly globalizing, with or without us. At the very least, we need to understand what is happening to us, and what forces have shaped our situation these last 15 years, and will continue to shape our destiny for at least the next fifteen.
Friedman has a much wider purview than most of us. For example, he does not focus only on the Intenational Monetary Fund (IMF), World Bank (WB) and World Trade Organization (WTO). He looks instead at what is happening in millions of other places, involving millions of other people.
To understand globalization, Friedman says we first need to understand that this is the geopolitical system which has replaced the Cold War balances of power between nation-states.
By contrast with the singular balance of the Cold War geopolitical paradigm, globalization consists of three balances. The first is the traditional balance between nation-states, now with the USA as the sole superpower. The second is between nation-states and global markets, which consist of millions of investors moving money around the world, called the Electronic Herd by Friedman. Finally there is the balance between individuals and nation-states, with individuals favoured by the modern system gaining power at the expense of the nation-state.
He says that to understand it we also need to understand a number of dimensions, beginning with culture and politics. Then there is the national security, balance-of-power dimension revolving around arms control, superpower competition, alliance management and power geopolitics. To that we need to add understandings about financial markets, advances in technology, and environmentalism. Globalization is indeed a complicated multi-dimensional phenomenon.
Few of us, Maori or non-Maori, understand these things, and even fewer will understand the connections between them. But if we are to understand globalization, we will need to understand all its dimensions.
It's quite frightening to speculate about how many of our politicians, including our Cabinet Ministers and their advisers, really understand it. Not many, perhaps none. In my opinion it's highly unlikely that Roger Douglas and Ruth Richardson and their Treasury advisers really understood what they were doing, in embracing their version of globalization. They were driven by ideology and by blind faith more than understanding, and globalization is a lot bigger than narrow economic ideology.
Friedman describes globalization through a series of connected stories from all over the world. He has travelled extensively and interviewed a wide range of people to collect these stories, and the technique makes an otherwise dense subject understandable in people terms. The title contrasts our old world "olive tree" needs and concerns with the modern luxurious world of the "lexus" car. Friedman does not dismiss our olive tree concerns, which remain important, but shows that the lexus has indeed taken over, like it or not.
"The survival of globalization as a system will depend, in part, on how well all of us strike this balance. A country without a Lexus will never grow or go very far. A country without healthy olive trees will never be rooted or secure enough to open up fully to the world. But keeping them in balance is a constant struggle."
He says that the three fundamental changes that brought about the replacement of the Cold War balance-of-power system by globalization were changes in how we communicate, how we invest, and how we learn about the world. He discusses these as the democratization of technology, finance and information, and he claims that there are no places on the globe that are immune to the microchip, even when they are not enjoying the benefits of globalization.
Freidman describes the global economic policy of globalization as The Golden Straitjacket. It supposes that all those countries that do put on, and lace up tight, the Golden Staitjacket, will indeed benefit from the golden cargo it brings. This is not the experience in Aotearoa New Zealand, but the clothiers who sold us the jacket tell us that we haven't put it on properly, or it's the wrong size, or not done up the right way. Nevertheless The Golden Straitjacket is an apt description of the new orthodoxy.
"As your country puts on the Golden Straitjacket, two things tend to happen: your economy grows and your politics shrinks. .... But on the political front, the Golden Straitjacket narrows the political and economic policy choices of those in power to relative tight parameters."
Similarly his naming of The Electronic Herd aptly describes the "millions of faceless stock, bond and currency traders sitting behind computer screens all over the globe, moving their money around with the click of a mouse from mutual funds to pension funds to emerging market funds, or trading from their basements on the Internet. And it consists of the big multinational corporations who now spread their factories around the world, constantly shifting them to the most efficient, low-cost producers."
The Electronic Herd treat whole countries the same way they treat companies, and stocks and bonds. If they think they'll make money form your country they 'invest', and if they don't like what your country is doing they sell you out, and your currency and economy takes a dive. They don't like it if your country tries to take off The Golden Straitjacket. What they are doing is gambling on a grand global scale with national economies, and the whole world is held to ransom.
Friedman describes the credit-rating agencies who wield so much power over our politiciuans, and over our sovereignty, as the bloodhounds for the Electronic Herd, who bark loudly when they see a country slip out of the Golden Straitjacket. These are Moody's Investors Services, and Standard & Poors.
We are held prisoner in the Golden Staitjacket, imposed upon us by The Electronic Herd, and watched over by their bloodhounds. In Aotearoa New Zealand Governments and Prime Ministers and Cabinets still pretend that THEY are in charge, but perhaps they need to maintain the illusion of power, for they have very little left.
The rest of the book goes beyond the financial and economic dimension to discuss the other other factors leading us into the inevitablility of globalization.
Friedman acknowledges that globalization is creating astonishing riches for some, and devastating failure and poverty for many. He acknowledges that there are huge prizes and far-reaching penalties and shows examples from all over the world.
His thesis is that we must find a balance between the lexus and the olive tree, for globalization is inevitable.
Paradoxically, although I didn't necessarily like a lot of what I read in this book, I did enjoy reading it. It led to a much greater personal, yet still imperfect, understanding of the phenomenon of globalization.