58 pages • 1 hour read
Thomas L. FriedmanThe Lexus and the Olive Tree
Nonfiction | Book | Adult | Published in 1997A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Themes
Globalization
The primary theme of the book is Globalization, which Friedman argues is not simply a process, an event, or a fad, but rather a new international system that replaced the old Cold War system after the collapse of the USSR. Globalization has its own logic and rules that affects everyone on the planet, whether they participate or not, and Friedman examines how globalization came to be, how it operates, and the challenges it poses. He defines globalization as:
the inexorable integration of markets, nation-states and technologies to a degree never witnessed before–in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that is enabling the world to reach into individuals, corporations and nation-states farther, faster, deeper, cheaper than ever before. (8)
While the defining feature of the Cold War system was walls and division, the defining feature of globalization is integration and the global market. To Friedman, it is no coincidence that globalization and the internet arose at the same time, as the central logic of globalization is the exact same as the internet: interconnectedness.
To Friedman, globalization is a win-win process, though he is cautious to highlight the backlashes that globalization engenders. He views globalization as not a fully positive or a fully negative system, but one that must be adapted to. The primary driver of globalization is the electronic herd, which is made up of the countless individual investors all making individual decisions based on market logic. Although these investors act individually, because they are all responding to the same information and economic incentives, they will tend to move together. This investment rewards countries and companies that implement good economic governance with economic growth far greater and faster than they could have ever achieved in the Cold War system. At the same time, the speed of the economic herd means that it can stampede out as fast as it stampedes in if it senses trouble. However, the herd is never wrong for long, and Friedman argues that countries that implement the correct policies will always be rewarded over the long term.
The defining symbols of globalization are the Lexus and the Olive Tree. The Lexus represents the desire for modernization, growth, and progress. Countries pursue these Lexus desires by reforming and privatizing their economies in line with the policies demanded by the electronic herd. On the other hand, olive trees are those things which provide us with a stable sense of identity and belonging. To Friedman, the defining challenge of the globalization system is finding the correct balance between the speed and disruption of building a better Lexus, while still cultivating our personal olive trees.
Choosing Prosperity
Friedman argues that globalization is not a choice, because it is driven by market forces and the logic of global capitalism. Countries, companies, and individuals can still make choices, but these come down to whether or not they want to choose prosperity. This entails becoming a free-market, de-regulated state with a legal and regulatory apparatus that protects investors. To choose prosperity, countries must put on the golden straitjacket, and the electronic herd will reward them. Countries can choose not to make these reforms, or choose to put back up walls, but Friedman argues that they will pay an increasingly steep cost for doing so, because in the end there is no alternative other than neoliberalism.
Though Friedman acknowledges that choosing prosperity by putting on the golden straitjacket is difficult in the short term, it is a win-win in the long term. The straitjacket is “one size fits all” and so hurts certain groups more than others, but it keeps pressure on societies to constantly reform. Once a country makes this choice, its politics shrinks while its economy grows. There is more economic growth and income, but political parties have their policy choices constrained because they must keep the electronic herd happy. This can cause a backlash if citizens feel that their democratic choices no longer matter because the direction of their country is determined by the face of the electronic herd. However, Friedman argues that over the long term, the straitjacket becomes golden because the growth it generates gives politicians greater space to maneuver and implement policies to deal with the concerns of backlashers or those left behind by globalization. This is why he considers globalization a win-win: those who choose prosperity modernize, democratize, and grow their economies, while investors are rewarded for their prudent investment decisions.
American Responsibility
The final major theme of the book is American responsibility toward the globalization system. Friedman argues that America was uniquely well-positioned to succeed at globalization because of its combination of free-market culture, effective legal and regulatory regime, economic size, military might, and decentralized political system. This positioned it to be the winner of the Cold War and then the winner of the globalization system. However, because globalization is a winner-take-all system, the gap between first and second place becomes wider than ever before, and the gap between first and last place is almost unfathomably large. Because of this, Friedman argues that America has a unique responsibility to ensure the stability and sustainability of the globalization system because it has benefitted the most from it.
Friedman argues that if people perceive globalization’s negative effects to outweigh its positive effects, then there will be a backlash. America has the greatest responsibility to avoid such a backlash. For globalization to be sustainable, there needs to be someone ensuring global stability. The US is important here, not just to back up economic integration and spread the golden straitjacket, but also to use military power against those who would threaten the system.
At the same time, America cannot and should not be involved everywhere and in everything but needs to learn how and when to act. Friedman believes that for globalization to be sustainable, American politicians will have to build a new domestic coalition to support American internationalism.
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