The Lexus And The Olive Trees Essay

, Research Paper

: The Lexus and The Olive Tree

Summary: Opening Scene: The World Is Ten Years Old.

The trouble spread to one continent after another like a virus. USA Today

On December 8, 1997, the government of Thailand shut down 56 of their countries finance houses. These finance houses borrowed heavily in U.S. dollars and lent those dollars out to Thai businesses for the building of hotels, office blocks, luxury apartments and factories. Almost overnight, these private banks had been bankrupted by the crash of the Thai currency, the baht. This situation caused a domino effect on other leading businesses that caused money problems. Many businesses couldn t pay the finance houses back, many finance houses couldn t repay their foreign leaders and the whole system went into gridlock putting 20,000 white-collar employees out of work. The Thai crisis triggered a general flight of capital out of practically all the Southeast Asian emerging markets, driving down the value of currencies in South Korea, Malaysia and Indonesia. Southeast Asian slowdown began to have an important effect on commodity prices around the world, including Russia. Too many of Russia s factories couldn t make anything of value. Without much of a growing economy, the Russian government became dependent on taxes from crude oil and other commodity exports to fund its operating budget.

The hedge funds the huge unregulated pools of private capital that search the globe for the best investments were the transmission device from Russia to all the other arising markets in the world, particularly Brazil. The declines in Brazil and the other emerging markets became the delivery that triggered a herdlike stampede into U.S. Treasury bonds. The abrupt drop in the yield on U.S. Treasury bonds was then the transferal device, which twisted more hedge funds and investment banks. In order to make money in such a profoundly competitive world the hedge funds had to look for more exotic bets with larger pools of cash.

The cold war system that had dominated international affairs since 1945 had been replaced by a new interconnected system called globalization. World War 1, the Russian Revolution and the Great Depression broke the first era of globalization and global finance capitalism apart. The Cold War was also an international system and it lasted from 1945 to 1989, when the Berlin Wall fell. It was replaced by another system: the new era of globalization we are now in. What is new today is the degree and intensity with which the world is being linked into a single globalized marketplace. The new era of globalization, compared to the one before World War 1, is turbocharged. It is built around falling telecommunications costs- thanks to microchips and the Internet. People can now offer and trade services globally, from giving advice to software writing to data processing. This era of globalization is unique not only because these technologies are making it possible for corporations to reach farther, faster, cheaper and deeper around the world, but because it is allowing individuals to do so. To understand the post-Cold War world, you have to start by understanding that a new international system has succeeded it- globalization.

Summary # 2 Tourist with an Attitude

In the very beginning the author says that life is like room service you never know what you re going to find outside your door. When he went to a hotel in Tokyo, he ordered four oranges and each time he got something different, such as orange juice and peeled oranges. Another time at the Metropole Hotel in Vietnam he ordered tangerines and the waiter said there were none left. The waiter then asked if he wanted watermelon and he said yes, and instead of watermelon he brought four tangerines.

He is the foreign affairs columnist for The New York Times and he describes it as the best job because he gets to be a tourist with an attitude. He is the fifth foreign affairs columnist in the history of the Times and it is actually the paper s oldest column. This column started in 1937 by Anne O Hare McCormick and she covered the disintegration of balance-of-power Versailles Europe and the beginnings of World War 2.

When he started the column in 1995, the Berlin Wall had crumbled and the Soviet Union was history. He referred to the post-Cold War system as the globalization system. Which is the international system shaping the domestic politics and foreign relations of virtually every country. As an international system, the Cold War had it s own structure of power: the balance between the United States and the USSR The Cold War had it s own dominant ideas: the clash between communism and capitalism, as well as d tente, nonalignment and perestroika. It also had it s own demographic trends: the movement of peoples from east to west was largely frozen by the Iron Curtain, but the movement from south to North was a more steady flow.

Globalization involves integration of markets, nation-states and technologies in a way that is enabling individuals, corporations and nation states to reach around the world faster, farther, deeper and cheaper than ever before. Globalization has it s own technologies, like computerization, miniaturization, digitization, satellite communications, fiber optics and the Internet. The Cold War system was built exclusively around nation-states, and it was balanced at the center by two superpowers: the United States and the Soviet Union. The globalization system is built around three balances, which overlap and affect one another. The first is the traditional balance between nation-states. The second balance in the globalization system is between nation-states and global markets.

This globalization gameboard today is a lot like a Ouija board sometimes pieces are moved around by the obvious hand of the superpower, and sometimes they are moved around by hidden hands of the supermarkets.

Relation s historians Paul Kennedy and John Lewis Gaddis wrote in an essay the fact that particularists are too often, in too many countries, the ones still making and analyzing foreign policy. They go on to say that the dominant trend within universities and the think tanks is toward narrow specialization- a higher premium is placed on functioning deeply within a single field than broadly across several. The only thriving school of globalists in the world today is hedge fund managers. They have the natural ability and willingness to arbitrage and interpolate information from all six dimensions before drawing their conclusion.

The system of globalization has come upon us faster than our ability to retrain ourselves to see and comprehend it.

Chapter 2: The Lexus and the Olive Tree

The Lexus and the Olive tree were actually pretty good symbols of the post-Cold War era: half the world seemed to be emerging from the Cold War intent on building a better Lexus, dedicated to modernizing, streamlining and privatizing their economies in order to thrive in the system of globalization.

Olive trees are important because they represent everything that roots us, anchors us, identifies us and locates us in the world.

The Lexus represents an equally fundamental, age-old human drive the drive for sustenance, improvement, prosperity and modernization.

The challenge in this era of globalization for countries and individuals is to find a healthy balance between preserving a sense of identity, home and community and doing what it takes to survive within the globalization system. A country without a Lexus will never grow or go very far. A country without an olive tree will never be rooted or secure enough to open up fully to the world. Keeping both the olive tree and the Lexus in balance is a constant struggle.

Chapter 3: And the Walls Came Tumbling Down:

There s now just the Fast World the world of the wide open plain and the slow world the world of those who either fall by the wayside or those who choose to live away from the plain in some artificially walled off valley of their own, because they find the Fast World to be too fast, and too scary.

The democratization of technology enables more and more people, with more and more home computers, modems, cell phones, cable systems and Internet connections, to reach farther and farther, into more and more countries. Because of the democratization of technology, we can all have an office in our home, a newspaper or book in our home and a brokerage firm in our home. This change in technology came together in the 1980 s involving computerization, telecommunications, miniaturization, compression technology and digitization. All of these things make up what the world of technology has to offer, whether it s using a 5.4-ounce cell phone or having special effects in a movie. These examples of technology have made it possible for hundreds of millions of people around the world to get connected and exchange information, news, knowledge, music and television.

The democratization of finance began in the 1960 s with the outburst of the commercial paper market. The creation of the corporate bond market introduced some pluralism into the world of finance and took away the monopoly of the banks. Michael Milken came up with the conclusion that companies that were not considered investment grade were being asked to pay interest rates three to ten percentage points higher than the norm if they could get any loans at all. Thanks to this democratization of finance, we have gone from a world in which a few bankers held the sovereign debts of a lot of countries, to a world today in which many individuals, through pension funds and mutual funds, hold the sovereign debts of many countries.

The third change that made globalization possible the change in how we look at the world, is the democratization of information. Satellite dishes, the Internet and television, make it possible for us to see through, hear through and look through almost every conceivable wall. This breakthrough began with television. Throughout much of the Cold War era, television and radio broadcasting was a restricted business, because the spectrums and technologies available for delivery were limited. At first, only big cable systems could afford to build the antennas to pull down those satellite signals, but thanks to the democratization of technology, millions of people around the world could pull down those signals on a satellite receiver dish. These three types of democratization s all transformed the cold war era, into the more refined, globalization era.

Chapter 4: Microchip Immune Deficiency

Globalization today is not global, in the sense that we are still a long, long way away from a world in which everyone is online. But globalization is global in the sense that almost everyone is now feeling directly or indirectly the pressures and opportunities to adapt to this modern technology. Not every country may feel itself part of the globalization system, but every country is directly or indirectly being globalized and shaped by this system.

Edward Yardeni, chief economist for Deutsche Bank, has pointed out the Internet is the closest thing in the world today to the model of perfect competition. He goes on to say there are no barriers to entry, no protection from failure for unprofitable firms, and everyone has easy and free access to all information.

We have gone from a command and control leadership model in the Cold War to what World Link magazine call s command and connect leadership model in the globalization era.

The latest stage in this process is the one we are now in. It is the era of globalization in which governments and companies are either restructuring themselves in order to take advantage of the three democratizations or failing to do so by succumbing to MIDS. An example of this whole situation is the extreme case of the former Soviet Union. Because the Soviet system was built for the sole purpose of control, it centralized all the main functions of leadership. It centralized decision making, information and strategy. If a company or country has not democratized decision making and deconcentrated power to enable these people to use and share their knowledge, it is going to be at a real disadvantage.

Summary:

This book that Thomas Friedman wrote was one of the best and most interesting books I have ever read. It was so different from other books because he was talking about real life situations and the globalization process of our society. His thoughts and opinions made total sense and he knew how to describe every little detail to make the reader understand. He talked about countries that have different lifestyles, customs and rituals that America does not. He proved in his book that America is the number one advanced technological country in the whole world. We are the producers of this globalization process that is taking place. We rule the business world with our high-class companies and advanced technology. We are the leaders in today s market place and we are going to make the whole world rise to the top of this globalization era.

This book is written in a way that makes you feel like you are having a casual conversation with one of your friends. It s very easy going and relaxing and totally understandable, with no confusion. He has a powerful way of describing things too well, to the point where you say to yourself, That makes so much sense, why didn t I think of that. He brings in his friends and family s names and just makes the book more comforting and understandable. It s easier for people to read a book if they can relate to people or things in the book and this is exactly what you can do while reading this book.

It is such a unique subject matter and it really can t be compared to anything else, just because of the fact that it is so different from any book. It really grabbed my attention and held it the entire time I was reading it. It s awesome to be able to read something and think that this book has something to do with the world I am living in, and that at any moment the world could change forever.