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Author: Thomas L. Friedman Published: April 1999, Revised 2000

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The Lexus and the Olive Tree: Understanding Globalization
Author: Thomas L. Friedman

Published: April 1999, Revised 2000

Publisher: Farrar, Straus, Giroux (NY)
By: Christopher J. Galeone (Research Assistant)
Author's Background:
Foreign Affairs columnist for The New York Times. Book is based on Friedman's extensive travel and experiences with people across the globe and from all walks of life.
Won two Pulitzer prizes for his reporting for The New York Times as bureau chief in Beirut and Jerusalem.
Globalization is the integration of capital, technology, and information across national borders, in a way that is creating a single, global marketplace and, to some degree, a global village.
Tension between globalization and ancient forces of culture, geography, tradition, and community.
The Lexus and the olive tree are representative symbols of the struggle between the dehumanizing influence of post-Cold War global modernization and the ability of nation-states to retain their individual identity and culture without being transformed by the impersonal forces of the global marketplace.
A Lexus automobile is built almost entirely by a robotic assembly line whose human operators are mostly there to ensure quality control.
The olive tree represents everything that roots and defines one's personal or national identity. It is what gives us the warmth of family, the intimacy of personal rituals, and the feelings of self-esteem essential for human survival.
Nations must accept the fact that they must privatize their economics and adjust their governmental policies to the rules of the global game.
In the Cold war system, the most likely threat to your olive tree was from your neighbor coming over and digging up your olive tree then planting his own in its place.
Not being totally eliminated today but is not the major threat to your olive tree.
Largest threat is likely to come from the Lexus:
Anonymous, transnational, homogenizing, standardizing market forces and technologies that together make up today's globalizing economic system.
There are features of globalization that empower even the smallest political community to use the new technology and marketplace to preserve their olive tree, their culture and identity.
Cold War system was based on a balance between states. Globalization system is based on a balance between states and other states, and between states and the Electronic Herd and the Supermarkets.
Globalization has replaced the Cold War System.
The only real ideological choice left for nations after the collapse of the Berlin Wall and Soviet-style communism.
Domestic politics, commerce, environment and international relations
Forces are powerful enough to influence government policy and behavior.
Three fundamental changes responsible for the end of the Cold War:
Democratization of Technology

changes in how we communicate

Democratization of Finance

changes in how we invest

Democratization of Information

changes in how we learn about the world.

The internet makes it extremely difficult for governments to isolate information from their people and what life is like outside of their borders.
Life inside borders can't be propagandized to look much better than it actually is.
Knowing how each other lives in the world creates a whole new dynamic to world politics.
Expectations of populace are shaped by the awareness of living standards and cultural products emerging from the outside world.
Golden Arches Theory:
No two countries that both have McDonald's restaurants have ever fought a war against each other since each getting their McDonalds.
Hedge Funds:
Huge unregulated pools of private capital that scour the globe for the bets investments.
The Electronic Herd:
Short-horn cattle

Long-horn cattle

The Gold Straitjacket
Private sector must become the primary engine of economic growth.
Maintain a low rate of inflation and price stability, shrink the size of its governmental bureaucracy, and maintain as close to a balanced budget as possible.
Eliminate or reduce tariffs on imported goods, remove restrictions on foreign investment, eliminate government occupation and privatize state-owned industries.
Deregulate capital markets, make its currency convertible, and deregulate its economy to promote as much domestic competition as possible.
Friedman believes that emerging nations that adhere closely to this recipe will be rewarded with economic growth and higher average incomes.
A roadmap for success for developing countries emerging from the grips of the Cold War.
For better or worse, we now live in a society that must adhere to the rules of this new game if we are to succeed as a nation and even as individuals.
Tenets of globalization can be adhered to without totally sacrificing our olive tree (identity).
Nations that lose some of their sovereignty and its leaders will have to accept the role of governor in trying to attract new business and investment dollars.
Nations must tailor their domestic and foreign policy to the effects they may have in regards to their position and credit-rating in the global marketplace.
Globalization must soften its edges and allow some social consciousness to creep in; otherwise, there will continue to be revolutionary forces devoted solely to its downfall.

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