The
author is foreign affairs columnist
for the New York Times, where
he has won two Pulitzer Prizes for
reporting.
The title refers to the conflict
between such forces as community,
tradition, language, religion and
culture and, on the other hand, globalization. Economic nationalists everywhere, however, will curse much
of its contents.
Friedman's thesis is that globalization
is the new international system that
has replaced the Cold War.
It has its own dynamics that
impact on the economics, geopolitics
and environment of virtually every
nation on earth.
Round II of Globalization is
in Lexus essentially a continuation
of the phenomenon which began in the
mid-1800s and continued until the
outbreak of World War I, when a 75-year
hiatus lasted until 1989 when the
Berlin Wall was torn down.
The defining largely unstoppable
technologies of the author's globalization
are computerization, miniaturization,
digitization, satellite communications,
fibre optics and the Internet.
With more than lightening speed,
they are bringing down national borders
and empowering those individuals who
can avail themselves of democratizing
new tools such as the genuinely revolutionary
e-mail.
Among the walls that globalization
has removed are financial ones.
The former monopoly of banks
and insurance companies to finance
home mortgages and foreign government
debt alike is being replaced by issuing,
say, $1000 bonds available to anybody
with some savings.
The same phenomenon has struck
information with the Internet, which
no one owns or can turn off or contain,
and now adds 300,000 new users each
week to the world’s instantaneous
and free postal system.
Most governments are increasingly
feeling pressure to adapt to the democratization
of technology, finance and information,
which lie at the heart of Friedman's
globalization system.
No longer can any head of state
or business leader or media conglomerate
expect to be the only ones to talk
to mass audiences.
As he notes, every country
with a per capita income above $22,000
is a liberal democracy now except
Singapore.
"Golden Strait Jacket"
For economies everywhere, crony
capitalism was an early target of
globalization.
Communism and fascism had their
opportunities on world stages between
1917 and 1989; they simply didn't
work.
To prosper today, says the
author, economies must make the private
sector the primary engine of growth;
maintain price stability; shrink the
size of government bureaucracy; maintain
a balanced or surplus budget; eliminate
tariffs on imports and increase exports,
remove restrictions on foreign investment;
get rid of quotas and domestic monopolies;
privatize government-owned industries;
deregulate so as to promote as much
domestic competition as feasible;
eliminate government corruption,
subsidies and kickbacks; open banking
and telecommunications to competition
and allow citizens to choose among
competing pension options and foreign
and domestic run pension and mutual
funds.
Friedman argues that in an
age of globalization the quality and
transparency of one's government matters
more than ever, especially if one
can build a lean, efficient, honest
public service.
Chile, Taiwan, Hong Kong and
Singapore all withstood the crises
of the '90s much better than their
neighbours precisely because they
had small high-quality governments.
James Wolfenson of the World
Bank wants nations to be graded on
their governance mechanisms:
judicial systems, procedures
for settling disputes, social safety
nets, rule of law and economic operating
systems.
What developing countries need
most are free markets, political institutions
and a popular consensus that protects
property and innovation, and minimum
safety nets.
"Globalution"
In a chapter on "globalution,"
or revolution from beyond, Friedman
argues that investors can now force
governments to be more transparent
and democratic.
They seek stability, predictability
and the ability to protect their property,
but one can't achieve these without
building democracy and good labour
and competition standards.
In the case of Italy, for example,
since 1999 the European Central Bank
has been forcing Rome to clean up
its deficit and inflation.
Friedman even argues that China
will have a free media because without
it Taiwan will continue to do better
economically.
Friedman thinks the demand
for E-government is rising:
why should anyone wait in line
for "six hours at the county
license bureau to get a license renewed,
when one can buy the whole bloody
car online?
…the more people expect
the government to become as quick
and efficient as Amazon.com, the more
government has to operate like
Amazon.com."
Peoples around the world are
learning that political stability,
prudent fiscal policies and business-friendly
reforms can work wonders.
Mozambique and Botswana have
overcome disadvantages to be among
the fastest growing economies on earth
in recent years.
"Evernet"
Today the trend worldwide to
connectivity is the linking of companies
and school intranets into the Internet
and the World Wide Web through the
maximum amount of bandwidth.
Bandwidth megabites per capita
is increasingly as important for commerce
as railroads were in the 1890s as
many move to a world in which the
Internet defines commerce, education
and communications.
Costa Rica, for example, is
implementing a plan to give every
high school student an e-mail address.
Universal connectivity, moreover,
will soon near "Evernet"
in which one can be online continuously
through a PC, pager, television or
other information appliance.
Prosperity can be shared in
many lands, according to Lexus,
if networks of NGOs, individuals,
companies, consumer activists and
like-minded governments shape effective
human value chains.
On the important matter of
workers' rights and sweatshops in
the developing world, for example,
the Fair Labour Association (FLA)
was born in 1999; companies meeting
its working conditions standards can
attach a special "FLA" label
on their garments.
More than a hundred universities
in the U.S. have joined the coalition
and insist that their stores sell
only FLA-labelled products.
The war on poverty can be effectively
fought by micro loans to the 1.3 billion
or so persons who live on a dollar
a day; a French banker for one is
using his website to extend such loans
to many.
Harvesting Knowledge
Harvesting knowledge efficiently
is today more important than having
the best farmlands or coalfields.
Finland is near the top of
lists which indicate which countries
produce the highest percentages of
high school graduates and are spending
the maximum percentage of their national
income on teacher salaries.
Harming the physical environment
is another charge frequently thrown
at globalization's door.
Friedman notes the use of an
ecopark built in north-eastern Brazil.
Another route is demonstrating
to businesses that their profits and
share prices will increase if they
adopt environmentally sound product
rules.
"Super-empowered environmentalists"
can now fight back effectively through
the Internet.
On what he calls "the
liveability issue," Friedman
calls for coherent politics to help
individual communities enjoy intelligent
growth which protects their physical
environment and local culture.
He cites a meeting with Mayan
elders in Guatemala in which they
expressed most interest in preserving
their 3000-year-old education system.
The World Bank today loans
some money to nurture artists, artisans
and poets so local cultures can survive.
The backlash to globalization
is examined carefully. The 1998 melt down in Russia did more damage to Western financial
institutions in a month than 70 years
of Russian Communism.
American labour unions, for
example, participated in the WTO demonstrations
at Seattle primarily because they
wanted, in the author’s view,
protection from foreign products.
Many others want its benefits:
according to the UN, world
poverty has fallen more in the past
fifty years than in the previous 500;
developing nations have progressed
as much in thirty years as in the
previous century.
How many critics know that
foreign firms tend to pay more, create
jobs faster, and export more than
domestic ones?
The United States' role in
contemporary globalization receives
about 100 pages of specific treatment
in Lexus.
The author says the reasons
its economy has done so well as a
globalizer have to do with geography,
a multicultural population and high
percentage of immigrants, efficient
capital markets, an honest transparent
legal environment, the most flexible
labour markets in the world –
especially relative to Europe and
Japan, a free flow of information.
Its weaknesses include crime-ridden
inner cities, an insane lack of gun
control, widening income gaps, under-funded
public schools, a culture of litigation,
too much money, consumers living beyond
their means, and global arrogance.
Many Canadians, including this
reviewer, would reply that our own
country has even more strengths and
fewer weaknesses for a globalized
world than our neighbours:
one-third of our jobs and 41%
of our economic output already depend
on exports of products and services.
For Friedman, the good side
of globalization is that it pushes
down to local communities and unempowered
peoples numerous opportunities and
resources; the bad is that power keeps
moving up to more abstract levels
and the concept asks developing countries
to do in twenty years what it took
the US and others 200 years to achieve.
Many people in developing countries
still support it because they believe
producing for world markets is the
only way to attain reasonably fulfilled
lives.
Most protests in Seattle about
employee and environmental stands
were really adopting a politically-correct
way to oppose trade with countries
which have lower wages.
In fact, governments in the
developed nations have to remove barriers
to trade which presently still impede
growth in the rest of the world.
