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Review by Adam Yarmolinsky


The Lexus and the Olive Tree: Understanding Globalization
By Thomas L. Friedman
(New York: Farrar, Straus and Giroux, 1999.
Pp. xix, 394. $27.50 cloth.)


Returning to Tokyo on a bullet train from a visit to a Japanese factory where Lexus luxury automobiles are produced by robots, Thomas Friedman was struck by a story in the International Herald Tribune on a controversy over the right of return in Israel’s West Bank. This book is an extended reflection on the contrast between the effort that went into a venture in international high technology, and the continuing struggle over the ownership of ancient olive trees. It benefits from Friedman’s perspective as a veteran foreign affairs correspondent and commentator for The New York Times, and at least as much from his excellent education, beginning as a schoolboy biblical scholar and then as Middle East expert. It is evident that he has always done his homework.

Friedman’s thesis is that the breakdown of barriers to the movement of money, information, and technology has created a new international system. Some societies can avoid the impact of the new system—which can have effects that are brutalizing as well as life-enhancing—but only for the time being, and at great cost to themselves and their neighbors. The destruction of the Berlin Wall was the symbolic event marking the onset of a new age, but ’The Berlin Wall didn’t just fall in Berlin, it fell East and West, North and South, and it hit both countries and companies, and hit them all roughly the same time.” The end of the Cold War was a necessary but not a sufficient condition for the big change. That event unleashed revolutionary changes that had been incubating during the era of the Cold War.

The author summarizes these changes as the democratization of technology (the cell phone, digitization, networking), the democratization of finance (the emergence of a commercial paper market, junk bonds, and the growth of 401(k) investment accounts), and the democratization of information (with multichannel television, e-mail, and the Internet).

The consequences of the globalization revolution are described in a series of colorful and incisive metaphors:

  • Microchip immune deficiency is a disease that strikes companies that fail to decentralize decision-making; the New Age motto for the CEO is “The buck starts here.”
  • The Golden Straitjacket forces countries into “maintaining a low rate of inflation and price stability, shrinking the size of its state bureaucracy, maintaining as close to a balanced budget as possible, eliminating and lowering tariffs. . . removing restrictions on foreign investments, getting rid of quotas and domestic monopolies. . .” and the list goes on, drawing the major political parties closer together.

The Electronic Herd moves investment capital around the world in response to changing opportunities, riding over local preferences, as the herd thunders over the landscape. In an imaginary conversation between Mahathir Mohamad, the Prime Minister of Malaysia, and Robert Rubin, then U.S. Treasury Secretary, Rubin tells the Prime Minister “You talk about globalization as if it were a choice you had. It isn’t a choice. It’s a reality. . . . And the most basic truth about globalization is this: No one is in charge—not George Soros, not ‘Great Powers’ and not I. I didn’t start globalization. I can’t stop it and neither can you—except at huge cost to your society and its prospects for growth.”

Friedman’s Golden Arches Theory of Conflict Prevention, already publicized by previous reviewers, asserts that “[t]oday’s version of globalization, with its economic integration, digital integration, . . . Its spreading of capitalist values and networks to the remotest corners of the world [as exemplified by the spread of McDonald’s Golden Arches] makes for a much stronger web of constraints on the foreign policy behavior of those nations which are plugged into the system.” He is realistic enough to remind us, however, that the causes of conflict as Thucydides described them—honor, fear, and interest—remain.

Cognizant of the dangers of globalization and especially cultural homogenization, Friedman argues that: “Globalization will be sustainable depending, in part, on how well each of us manages the filters needed to protect our cultures and environments, while getting the best out of everyone else’s.” The roots of all the olive trees must be watered.

According to Friedman, there is a cultural Backlash and a bureaucratic Backlash, and a backlash of the turtles, who—unlike the lions and gazelles—don’t start running the moment they awake. Friedman finds turtles in the Third World countries, which are being left behind by a lack of education and job training, and in the inner city neighborhoods of our own country. Some of his examples of the Groundswell (the Backlash against the Backlash) sound a little too much like the old Readers’ Digest series on the most unforgettable character I ever met. But his point remains that while globalization unleashes vast impersonal forces, it also empowers individuals in new and exciting ways.

In his concluding chapters, Friedman focuses on the role of the United States in an increasingly globalized world. He sees America extraordinarily well-positioned to take advantage of new opportunities for reasons he describes in characteristically methodical fashion: enviable geographic location, with a diverse population linked to every continent; efficient capital markets, especially valuing venture capital; open to new immigrants (if only as knowledge workers); and excelling in knowledge industries. But he doesn’t lose sight of the beam in our own eye, from obscene (my adjective, not Friedman’s) income gaps to underfunded schools. He has some harsh words to say about both parties, among other things, for organizing American internationalism around “the big enemy” rather than “the big opportunity” or better “the big responsibility.” And he goes beyond criticism to recommend a number of sensible and imaginative public policy measures, including an annual Rapid Change Opportunity Act, which could incorporate everything from public employment and retraining for displaced workers to increased lending to Third World development banks.

Building a better world, across political, economic, and cultural boundaries, is no task for the faint-hearted. Thomas Friedman’s rational, informed enthusiasm moves us a little distance nearer to that far off goal.


Adam Yarmolinsky is Regents Professor of Public Policy in the University of Maryland System.

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