The Lexus, Olive Tree, Globalization and Its Discontents

I read two books regarding globalization: The Lexus and the Olive tree, and Globalization and Its Discontents.

The Lexus and the Olive Tree was well written, the author, Thomas L. Friedman is a journalist with a wide range of working experiences, and he is an exceptional story-teller. The title itself reflects his style: he uses the Lexus to refer to the trend of modernized, precisely-programmed technology, rapid-paced nowadays; and the olive tree refers to tradition, cultural beliefs and faith, ethnic heritage, etc. A sucessful path of globalization will require a balance between the modern and the traditional.

Friedman argues that globalization is a set of neutral principles, as well as an unavoidable trend; nobody is in charge of globalization, you will benefit from it if, and only if, you are able to follow the rules. You better be fast; no, you must be faster. You better make sure that your government steps aside from the free market and keep the information transparent as much as possible, or the hot money will disappear in a second and your stock market will collapse and everybody goes bankrupt.

So who's to blame if you lose everything in the process of globalization? Since nobody is in charge, it is no one else but yourself to blame. You should have developed a more democratic system and a freer economy so you have a chance to win the game.

To my surprise, Taiwan was seen as an excellent model of a well-adaptive country. In 2000 when the book was published, the author thought that Taiwan is number one in Asia regarding free press and democracy. As an insider I see flaws and injustice in our system, not to mention that China keeps casting a shadow over us.

There are people against globalization. But in Friedman's view, they protest to demand a bigger share, which in turn proves that globalization is a welcome trend.

It is quite a different vision in Globalization and Its Discontents. The title is a parody of Sigmund Freud's Civilization and Its Discontents. The author, Joseph E. Stiglitz is the winner of Nobel Prize in economy in 2001, and what he sees is that there is nothing transparent in the decision-making of the International Monetary Foundation (IMF), while the third world countries are constantly under the threat of being cut off from international aid for not offering enough information, i.e. not transparent enough.

He vividly describes how the IMF messed up with poor countries in Africa and Asia by coercing a standardized policy upon them. IMF demanded an African country to speed in privatization of banks ignoring the fact that most people there lived on agriculture and didn't know much about western banking system. As a result, there were 14 banks folded up in a year and the society was in a crisis.

The IMF is powerful because it is in charge of loans. Stiglitz points out that there were several bias in the thoughts of IMF: 1) They are over-optimistic about the market and over-pessimistic about the government, but even Adam Smith was never that naive about the free market. In fact, the very idea of IMF is to create a public force to intervene when the market doesn't work well, and that happens from time to time. But in reality what IMF did is to shove off any public forces and rely solely on the market.

2) The decision-makers of IMF are with backgrounds of finance and banking, so they care too much about inflation and too less about unemployment, but the latter is a social glue. A society with high unemployment rate will pay a high price in crimes, riots and other forms of splits.

In the economist's view, the globalization is not a neutral, impartial principles; the Department of Finance of the U.S. is behind the scenes of IMF. With good intentions, maybe; but wrong policy, and more importantly, wrong way to reach the conclusion.

Friedman is right about that we want globalization. But he may distort the goal of anti-globalization campaign: not to reverse the Lexus back to the olive tree; but to pursue a fair world where poverty is diminished.

--An old entry from an old blog, before Erasmus Mundus

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