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Fueled by the expansion of multinational corporations and financial institutions, technological advances, and the increasing porousness of national borders, Globalization is a

persistent, multifaceted phenomenon, which has and continues to have, significant impact on economical, political and cultural relations. The book, “The Lexus and The Olive

Tree” by Thomas Friedman describes globalization as not just a fade or trend, but political and economical system that replaced the cold war. Friedman explains where we are

and how we get here, through a series of skillful metaphors, highly relevant anecdotes, and cogent analysis. In this paper I provide a concise description of the principle

arguments Friedman makes about globalization, and elaborate on three key points he made.

Friedman compares the views expressed during and after the cold war. One of the most important questions of the cold war was what side are you on? During the cold war,

what mattered most to each country was which side it was on; this determined the source of the countries funds and support. Today, the question most focused on is how

connected are you? Funds and support come from international markets and investors. How big is your missile? Is another question that countries were interested in. Military

mattered most to countries. Today what matter is the technological advancement and in particular Internet infrastructure.

In the cold war, countries had either friends or enemies. Today all countries see each other as competitors. Countries have to make themselves attractive for foreign

investments where everyone is a player. Another important point that Friedman points out is that during the cold war, you were either a supper power in the first world, middle

power in second world, or weak in the third. In globalization what matters the most is the stability of your market, and if your up to speed with world trade, investment and


Friedman adds that, this new era we live in, the era of globalization, is due to three democratizing trends: 1) the democratization of technology – resulting from

miniaturization and, that allows hundreds of millions of people to connect and exchange information in an extraordinary ways, 2) the democratization of finance –

almost anyone can invest in almost anything these days, and 3) the democratization of information. No longer can a government isolate its people from information

about life beyond their borders. Because of these trends, Friedman claims that first; second and third world do not exist- there is just the fast world and the slow

world. This results in a limited choice: globalize, or be left completely behind.

Friedman emphasized on the balance between the Lexus and the olive tree. He compared modern life, comfort, keeping up with technological advances to a luxury car (Lexus).

He also emphasized that we all have to protect our olive trees, which are the roots, heritage, customs, family, and home that we all should cherish. As globalization increases its

impact on our lives, it will be more important for countries and individuals to find a balance between those two poles.

Friedman stressed an important point on technological revolution. According to Friedman, Micro Chip Immune Deficiency System is a disease which countries that have not

invested enough in the technology revolution are infected by. Governments that do not get serious about wiring their schools, public institutions, and citizens are going to fall

and loose badly in the coming economic competition on the internet.

Instead Friedman stressed on points that will allow countries to get up to speed in the global market and be winners in this era.

Friedman describes the combined mass of all international investors through

out the world as the Electronic Herd. He says that these electronic herds will put their money where they feel they will make profit and remove it just as fast. No one person

controls the herd, but the herd is playing a bigger part in the politics of every country of the world. Why is it playing a big part? Because it can rain down millions of dollars of

investment. However, Friedman says that one of the major roadblock for this electronic herd is government corruption. Countries need to let foreigners have open and accurate

information about their country. If this requirement is not met and government cannot provide a stable pool of customers and secure a set of opportunities for investors, they

will simply go and pour their millions else where.

One of the most significant arguments Friedman makes about globalization is that “winners take all”. If you are big, you are really big. Friedman uses examples from the NBA

to show how globalization will create a world in which there are ever-increasing spans between the best paid and the next best paid. Look how much Michael Jordan gets paid

and then look at how much the rest of the guys on the same bench get paid.

According to Friedman, those who are just too slow to get up to the speed that globalization demands, are called turtles. Every country has to deal with it’s own turtles.

Regarding the concept of business and globalization, Friedman expressed some interesting points regarding the new rules for the new economy. Companies have to think

differently than they did during the cold era, and they have to move and change rapidly. He adds any business that believes that it can survive by maintaining an

information imbalance between buyers and sellers would deceive itself. The speed which innovations become commodities is becoming faster and faster. If companies do not

accommodate this transition, they will fall behind and in many cases run out of the business. Friedman believes that we should have a system that quickly punishes the weak

businesses, shutting them down in favor of stronger ones instead of propping them up like Japan did for decades. The process of converting to this system is called putting on

‘the golden straitjackets.’ Anyone suffering from “Microchip Immune Deficiency” has some serious catching up to do. He also emphasizes the Internet’s importance, and importance of connectivity. Friedman deems that the Internet is the main shaper in the economic realm, and will become the backbone of global commerce, education, and


Friedman also talked about the role of governments and politics in the globalization era. Globalization has changed the nature of the playing field of the countries for three reasons.

First, countries have to operate more like companies as they are now on the open market, become more efficient and be competitive for foreign investment. Second, markets

are playing more of a role in determining the fate of the countries. What happens to citizens of a country is determined not by their elected officials, but by international

markets. Third, many individuals are amassing so much wealth and influence that they act as equal players along side nation state. Friedman adds that many of the functions of

a government could be outsourced to companies, which are able to perform these functions more efficiently. In general, Friedman believes that economic growth and politics

are inversely related. If we wish to see our economy prosper, we must shrink politics. He also believes that government should interfere less in the market, and remove all

restrictions such as minimize bureaucracy, lower tariffs, remove foreign investments restriction, and deregulate capital markets; this would eventually leave the private sector to operate freely.

When it comes to culture and globalization, Friedman thinks that unlike the Cold War system, globalizing has its own dominant culture, which is why it tends to be a homogenizing factor. In previous eras this sort of cultural homogenization happened on a regional scale like the Russification of Eastern and Central Europe. Culturally speaking,

globalization is largely the spread of Americanization on a global scale. He used McDonalds restaurants to demonstrate the Americanization of the world. “To many people who

don’t get to travel to America, They have America come to them”. (P.294). Friedman thinks that the invading of American culture to the world can be a lost. The more these

global franchises spread globally, the more other cultures would become vulnerable to the homogenizing pull and push of global capitalism.

Friedman says that countries should learn to develop multiple filters to prevent this from happening. Friedman defines globalization as “the ability of a culture, when it

encounters other strong cultures, to absorb influences that naturally fit into and can enrich that culture or resist those things that are truly alien and to compartmentalize those things

that, while different, can nevertheless be enjoyed and celebrated as different” (p.295).

The book “Global Dreams: Imperial Corporations and the New Word Order” by Richard J. Barnet and John Cavanagh, has explained globalization from a range of disciplinary

perspectives. On the subject of Business and Globalization, they say that Nation States are loosing power to Multinational Corporations. A Corporations power is strongest

when countries are poor and desperate for development. By having production shifting to poor countries, it allows for advanced production in primitive economies. However,

globalization have negative effect and cost on poor countries and their work force. Governments are turning a blind eye when it comes to human right in these underdeveloped

regions. Companies are dictating the level of protection that it provides its workers when it comes to human rights. Multi National corporations are looking to cut corners to

lower their costs in order to have an advantage over their competitor. So, they look for cheap labor in underdeveloped countries. The people in these countries are paid very

little compared to their middle class counterparts who are in turn losing their jobs in North America and Europe. While eliminating jobs and cutting costs may provide short

term gains, those policies will have negative long-term consequences even for the global giants them selves, as fewer people will have the money to afford the products that are


Regarding the topic globalization and politics, Barnet and Cavanagh see the nation state as no longer being able to establish their own economic policies. The globe has become

so integrated economically that for one nation to establish an economic policy it must consult the other dependent economies of the world. Governments are no longer able to

keep the money form either leaving or entering their countries. The only way that they can influence their economies is to “set standards and create incentives to encourage

capital to flow where it is needed” (p.415). All these factors draw the conclusion that the world could set it self up for a major fall. Similarly, an integrated financial market is

making the world economy volatile and insecure. People are borrowing more and many debt obligations aren’t being met. The best example on this situation is the Asian crisis in


Cultural imperialism is the process where one culture

dictates to another culture how it should act, thereby assimilating it. This assimilation leads to an eventual breakdown of the old social institutions that a culture has established,

such as customs. Cultural imperialism is thus a negative aspect of globalization, because as culture becomes more homogenized, they loose their identity and diversity. This

loss eventually degrades the cultures of the world. “The American dream is the nation’s number one export” (p.25) because it is what is most desired of America. The world

has an instable hunger for American culture, and by delivering their culture on demand, they become responsible for cultural imperialism. This phenomenon has often been

referred to as Americanization.

In another article by the economist magazine (may 29 1997), it argues that the forces of globalization and new technology threaten to weaken the power of

Governments, by making them tax their citizens. As the world becomes more integrated, and as capital and labor can move more freely from high-tax countries to low-tax ones, a nation’s

ability to increase tax rates is amplified, where it is being constrained elsewhere. At the same time, the expansion of business conducted over the Internet will make it harder to track and

hence tax transactions. Firms and people are more mobile—and can exploit tax differences between countries. This is the heart of the problem that governments face.

Multinational firms design their product in one country, manufacture in another, and sell in a third. This gives them plenty of scope to reduce tax bills and hence governments

lose power in controlling its tax system. This will have a serious effect on the country’s budget, which might force the government to find other ways to raise money.

Dr. Fukuyama’s book, “The Social Virtues and the Creation of Prosperity,” had an interesting view about culture and globalization. He argues that societies largely

maintain their individual characteristic despite economic pressures. Fukuyama asserts that these cultural values in many respects define how business is conducted within a

nation. He adds that culture is going to be homogenized, but at a much slower process. Although many people think that because the advanced communications technology is

able to project global television culture worldwide, this will lead to homogenization on a deeper cultural level, it’s done just the opposite. Communications will allow

countries to view each other more clearly and this will lead to less mutual liking.

After reading a number of books and articles on globalization, I find it a hot topic. There is no doubt that globalization is easier said than done. I agree with Friedman

that globalization is a fact and it’s not just a passing trend. It is an international system that replaced the cold war system. I do agree with the suggestion made for

countries to go global. However, I think that the world operates in a way much more complicated. Many parts of the world are still suffering from wars, starvation,

and corruption. It’s not easy to come and ask those people to think globally and put on the “Golden Straitjackets” in order to prosper in the globalization era. Why?

Because they have other issues that are much important, like struggling to make a living in a rather thriving global word. I believe that Richard J. Barnet and John Cavanagh’s views

are more realistic and would make more sense. Friedman says that government should interfere less, leaving the world economic forces to move freely. Looking at the

past, Asia in precise, due to the unregulated money markets, Asia’s stock market went down within days creating wide spread recession all over the world. Asia’s crisis

is one of the warning signs, which could inexorably lead to a greater fall. High government interventions, and policies are needed to regulate the nation-state economy

and prevent Multi National companies from exploiting the markets and increasing the gaps in a global economy.

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