Geof Brown(A review of Thomas L. Friedman's The Lexus and the Olive Tree)
Economic model vs. economic muddle; the moot and counter-moot have fuelled the national debate on Dr. Davies' economic policy and the fall-out therefrom. But there is a broader picture which generally escapes local analysis because too often we can't see the forest for (because of) the trees. I am deeply indebted to a rather blockbuster of a book revealing in a powerful but readable way the nature of the forest in this era of globalisation. I feel strongly impelled to share some gleanings with readers trying to make sense of it all.
The book, The Lexus and the Olive Tree is a paper-back edition by Thomas L. Friedman. Its sub-title is Understanding Globalisation. The author is a Pulitzer Prize-winning foreign affairs columnist for the New York Times. Mr. Friedman was also the winning author of the National Book Award in the US for his work From Beirut to Jerusalem. Just by way of kudos, the New York Times Book Review said The Lexus and the Olive Tree delivers the best (and most enjoyable) answer yet to what globalisation means". And the Christian Science Monitor: "Required reading... no one gives a better explanation of globalisation than Thomas Friedman".
The imperatives of economic change as determined by the advent of the Internet, are the concern of the substance of Friedman's work. I say "imperatives" because of the inescapable impact of globalisation on the economic well being of the world's nations, Jamaica being one. Two organising principles emerge from the book to help our understanding of the forces shaping the economic 'forest' even as we struggle with our indigenous economic 'trees'. Friedman terms them "the golden strait-jacket" and "the electronic herd".
In short, for countries to succeed economically in a globalised environment, they must fit into the golden strait-jacket. Friedman describes it thus (9p.105 Anchor Books edition): "Countries must make the private sector the primary engine of its economic growth. Maintain a low rate of inflation and price stability; shrink the size of state bureaucracy, maintain as close to a balanced budget as possible, if not a surplus; eliminate and lowering tariff on imported goods, removing restrictions on foreign investment, getting rid of quotas and domestic monopolies opening its industries, stock and bond markets to direct foreign ownership and investment... opening its banking and telecommunications systems to private ownership and competition...." (There's more).
Does any of this sound familiar? Here is the rub. Says Friedman, "on the political front the golden strait-jacket narrows the political and economic choices of those in power to relatively tight parameters. That is why it is increasingly difficult these days to find any real differences between ruling and opposition parties in those countries that have put on the golden straitjacket". Does that sound familiar? The alternative to accepting the straitjacket is economic disaster. Friedman cites Korea, Malaysia and Thailand as examples of their economic fortune varying as to whether or not they donned the golden strait-jacket.
"Governments," declares Friedman, "that deviate too far from the core rules" (of the strait-jacket) "will see their investors stampede away, interest rates rise and stock market valuations fall". The gold of the strait-jacket then becomes the dross of failed economies (my words). In short, there is relative impotence of governments which try to survive the effects of globalisation. Friedman quotes Manmohan Singh India's Finance Minister speaking in 1998 on the loss of control. He felt after India had to abandon its statist quasi-socialist economics:
"If you are operating in a globalised economy.. we have a world where our fates are linked, but (India's) specific accounts and aspirations don't get taken into account. If you are operating an exchange rate policy or monetary policy, your policies become an adjunct of what Alan Greenspan does. It reduces your degree of freedom, even in fiscal policies."
True for India, what of Jamaica? A fellow Finance Minister when congratulated on his appointment replied "Don't congratulate me. I am only half a Minister. The other half is in Washington".
But if Friedman brilliantly documents the effects of the web and the free market in setting up the golden strait-jacket (fit in or get lost) his second organising principle of globalisation is even more scary. The "electronic herd" he tells us, is, in today's global market place "anonymous stock bond and currency traders and multi national investors, connected by screens and networks.
"In the relatively closed economies of the pre-1970s Cold War system, a government's own monetary policy completely dominated the setting of its own interest rates and a government's own fiscal policy was far and away the dominant instrument for stimulating growth". But with the rise of the Internet and the gradual lifting of capital controls in the 1970s, "suddenly emerged a vast global plain where investor herds from many different countries could roam freely".
Thus, by the late twentieth century according to Friedman, "the Electronic Herd and the supermarkets have replaced the super-powers as sources of capital for growth". (Does Dr. Davies borrowing forays in foreign capital markets ring a parallel tune?). Of the electronic herd Friedman says, "While they cannot go to war or invade a country, like nation-states, they are able to shape the behaviour of nation states in many areas. They can even topple governments.
Friedman tops off the characterisation of the faceless electronic herd thus "It cuts no one any slack. It does not recognise anyone's unique circumstances. Countries today cannot thrive without plugging into the Electronic Herd and cannot survive unless they learn how to get the best out of this herd... (p114) And he adds "Globalisation isn't a choice. It's a reality". Read the 475-page book; this cursory review cannot begin to convey its fascination.
Geof Brown is an HRD consultant who lectures part-time at the University of the West Indies.
E-mail:
browngeof@hotmail.com.
