The Lexus and the Olive Tree

Globalization is forcing every country to emulate America, with Anglo-American style capitalism and the golden straitjacket. However, not everyone likes this trend, as they might come from places with different social contracts and different attitudes about how markets should operate. In America, markets are free to sort out winners and losers, but elsewhere (such as in Japan and Europe) there are systems designed to cushion inequalities and equalize rewards while protecting distinctive traditions.

America has been blamed for the trends associated with globalization because the three democratizations and the golden straitjacket originated in America, the electronic herd is led by Wall Street, and American armed forces keep markets open around the world. America built a global economy for its own economic and strategic reasons, and when this combined with the American-led Information Revolution, it gave globalization an American face. While it is clear to those in the US what is Americanization and what is Globalization, it is not so for those in other countries, leading to a love-hate relationship between America and the rest of the world.

Americans today are the apostles of the fast world; they want everyone to be democratic, capitalist, and follow American values: “What bothers so many people about America today is not that we send our troops everywhere, but that we send our culture, values, economics, technologies and lifestyles everywhere–whether or not we want to or others want them.” (385). American power no longer rests on conquest and military might, but on pull factors from its culture and markets, and this has created a backlash against Americanization-Globalization. These pull factors will only worsen, as the economic power gap between the US and the rest of the world will widen before it narrows, owing America’s first-mover advantage in the winner-take-all environment of globalization.

This backlash against America makes America’s relationships with other countries more complicated. Some will go out of their way to antagonize or challenge the US, some will be happy ride on America’s strength, some will stew with resentment and envy, and others will quietly fall into line.

However, the largest problem with Americanization-globalization is that it gives angry men greater tools with which to display hatred for America. First, because we are so much more connected “terrorists can unnerve so many more people at once” (397), and second because weapons that can wreak havoc keep getting smaller and lighter.

This leads to the greatest security threat facing the US, the super-empowered angry man, which is a far greater threat than other countries. These super-empowered angry men range from the non-violent, such as hackers, to the violent, such as terrorists. In particular, Islamic terrorists no longer feel that they must take control of their own states before confronting America and can now attack as individuals. What bothers these super-empowered angry men is not just that America is technologically superior but makes the claim that its culture and values are superior as well. The only defense against these individuals is to isolate them from the society around them by ensuring that those societies have a stake in the globalization system. 

Globalization is everything and its opposite: it’s empowering, but coercive; it democratizes both opportunity as well as panic; it leaves you behind faster, but lets you catch up faster; and it exacerbates our need for both the Lexus and the olive tree. Despite this, in every country globalization has come out on top against the backlash, at least so far.

Globalization is almost irreversible, because forms from aspirations for higher standards of living and powerful technologies. These drives can be inhibited only at a huge cost and only by building ever higher and thicker walls. It is a possibility that globalization could cause its own destruction. If large majorities in many countries start to feel like losers, they will rebel against the system, and this chapter focuses on the reasons why that could occur.

First, rebellion against globalization could happen because it is too hard to adapt. Although a country’s power and economic status now depends on whether its willing and able to apply the right software and operating systems, these processes might prove to be too hard for some countries, particularly larger ones like Russia, China, and Japan. Similarly, some individuals, companies, and countries might find that the speed of change demanded by globalization is more than they can handle.

Second, rebellion could come about because the new world is too connected. Globalization is now so interconnected that small groups of people, either investors or super-empowered angry men, can threaten the whole system. Relatedly, there is also the “virus of over connectedness” (421) that spreads as people are connected to each other 24/7 and feel that they cannot disconnect. Although this constant interconnection is great for businesses, it can be socially claustrophobic. In other words, “when we are so connected all the time the boundary between work and play disappears.” (423).

Third, it could be because we all become just too disconnected. Because of the internet connectedness of globalization, it becomes easier to be increasingly disconnected from each other. In other words, to work alone wherever we are instead of sharing work space with others. While this might be more efficient, it is not as satisfying. Furthermore, everyone is now expected to move from job-to-job and become an “e-lancer,” “[setting] us all adrift and leav[ing] everyone feeling like a temporary worker.” (427)

Fourth, it could be because the new world is just too intrusive. The internet empowers individuals and companies to become “little brothers,” instead of the one government “big brother,” to amass huge amounts of information on each other, and not all will use this information responsibly. While this transparency is good for companies and countries, individuals may not want others to know so much about their private habits. If people experience globalization as something that intrudes into their lives more than it empowers them, they will seek to build new walls.

Fifth, it could be because globalization is seen as too unfair to too many people. People may protest against globalization, but so long as they feel that they derive enough benefits to tolerate it, will not demand disconnection from the system. However, there remains the possibility that there might be a recession in all major markets simultaneously, meaning that the herd won’t be able to reward developing countries, and developed countries may wish to put up walls. At a basic level, everyone needs to feel that the system is for the benefit of humanity.

Overall, if globalization becomes too dehumanizing, then people will turn on it. As a global society, we need to learn to strike the right balance between globalization’s empowering and humanizing aspects and its disempowering and dehumanizing ones. Globalization will only be sustainable if most people feel that the positive aspects outweigh the negatives, and America has the greatest responsibility and opportunity to make sure this stays the case. 

Because America benefits the most from globalization, it has the responsibility to make sure that globalization is sustainable. The only way to do this is to ensure that the international system is stable and that the benefits outweigh the drawbacks for as many people as possible. To meet this challenge, the old political language of the Cold War needs to be thrown out and replaced by a new one that suits globalization. Instead of Left/Right or Republican/Democrat, the new political alignment consists of a two-axis chart that defines who you are and who your political rivals are. One axis describes your perspective on globalization, from Integrationist to Separatist, and the second axis describes your position on distribution from Social-Safety-Netter to Let-Them-Eat-Caker. Under globalization, the only feasible place to be on this chart is in the Integrationist-Social Safety Net quadrant.

A politics of sustainable globalization consists of two things: a picture of the world and a set of Integrationist-Social Safety Net policies for dealing with it. The picture is necessary to show people where they are and how they benefit from globalization so that they will support your policies. This picture also helps leaders defend against those who would distort and demonize globalization; if the public isn’t knowledgeable about the real nature of the world, separatists can exploit this ignorance to undermine globalization.

Globalization also needs the right policies and a new social bargain between workers, financiers, and governments. A pure market vision is too brutal, and therefore politically unsustainable, but the old left-wing welfare state paternalism is economically unsustainable. Instead of these two extremes, there needs to be a new social contract that embraces free markets while making sure they benefit as many people as possible. Politicians like Bill Clinton and Tony Blair exemplify this “third way,” but instead of calling it the third way, the Integrationist-Social Safety net position should be named the Only Way.

To be a globalizer, you need to be a social democrat because if you don’t help the turtles in your society, they will lead a backlash that cuts you off from globalization. To be a social democrat, one must be a globalizer, otherwise you will never generate enough income to take care of the turtles. There are three elements to this balance: the trapeze, the trampoline, and the safety net.

First, the trapeze means that your society needs to be as open and free market as possible, emboldening people to take risks. Societies need to be entrepreneurial, because without entrepreneurs there is no growth, and there is no safety net without growth. This is not just the government getting out of the way of entrepreneurs but also policies that make more people owners and that support venture capitalist investment in low-income areas.

Second, the trampolines are programs that catch workers who fall and retrain them so that they can bounce back. These need to be strong enough to catch someone but not so strong that they stay there forever. Workers need to learn that economic security only comes from lifelong learning, not a welfare state or a union card. Governments need to empower workers to deal with this new world on their own by supporting their knowledge and skill development. Finally, traditional safety nets are still necessary to catch those who will never be fast or educated enough to deal with the fast world. States need to rethink and expand their conceptions of what constitutes the safety net, such as by including guaranteed access to the internet.

There is a tradeoff between these three elements and an open-integrationist economy, and contemporary politics needs to be about locating the equilibrium point. Thanks to globalization, the golden straitjacket produces enough gold to afford both trampolines and safety nets if countries choose prosperity.

However, no politics of sustainable globalization can only focus on economic programs. Getting a country up to speed for globalization is a tough and long-term process, and so countries require more democracy, not less, or people will rebel. In places where there is a sense of ownership over policy reform, the process will have more political legitimacy and therefore more sustainability. The countries that will adjust best to globalization are not the richest ones but the most democratic ones.

Markets are now so big, diverse, and fast that they will never be immune from crises and Friedman predicts that global financial crises will be the norm. The only thing to do is to adapt to the faster world, make sure that international financial institutions are capable of emergency action, ensure that data is transparent, and make sure that there is vigilant banking supervision and regulation. The US also needs to grasp how central and important it is to globalization. Sustainable globalization requires a stable environment, and no country is more essential for this than America. American leaders need to be willing not only to back up economic integration, but also to use power against those who would threaten the system because “the hidden hand of the market will never work without a hidden fist.” (466) Domestically, this will require building a new political coalition to support American internationalism, a difficult task.

Finally, the olive-tree needs in all of us must be nurtured for globalization to be sustainable. We must all learn our values offline, outside the internet, and then bring them with us into cyberspace in order to keep these personal olive trees cultivated. Children must also be taught judgement, good citizenship, and responsibility before they are exposed to the “wild west” of the internet. Globalization and the Internet can bring people together who have never been connected before, but it can also create a false sense of connection and intimacy. There is a risk of people realizing one day that they never interact with others except through a computer, which puts them at a risk for recruitment by extremist groups.

A healthy society is one that can balance the Lexus and the Olive Tree, and the best model for this balance is America. And for globalization to be sustainable, America must be at its best, “a beacon for the whole world.” (477)