The Lexus, the Olive Tree, and the Internet

by Andy Oram
October 8, 1999

People who have reached the top of their disciplines feel an urge to enlighten a greater public about the ways of the world. Journalism is for me a hobby rather than a profession, but I can still recognize who’s reached the top, and that includes Thomas L. Friedman, author of The Lexus and the Olive Tree (Farrar Straus & Giroux, 1999, ISBN 0374192030). Friedman, the Foreign Affairs columnist for the New York Times, has joined the list of famous trend-followers who try to explain globalization. What particularly drew me to his book is that he puts the Internet squarely at the center of world change:

“…as the Internet proliferates, it is going to become the turbocharged engine that drives globalization forward. The Internet will ensure that how we communicate, how we invest and how we look at the world will be increasingly global. Because from the moment you log onto the Internet you can communicate with anyone globally practically for free, from the moment you log onto the Internet you can invest in any market globally practically for free and from the moment you start a business that has an Internet Web site, wherever you are in the world, you will have to think globally — in terms of both who your competitors might be and who your customers might be.”

Friedman worries about the almost insufferable tensions of our current historical period. His Lexus represents the universal striving for wealth and material security; his olive tree the equally universal yearning for tradition and cultural security. His book is an attempt to reconcile the two goals.

The first half regales us with conventional 1990’s optimism. Information technology, along with the rapid movement of both data and money, brought down not only the Berlin Wall but trade barriers in every country in the world. Like so many apotheosists, Friedman lauds the changes as democratic: “Soon everyone will have a virtual seat on the New York Stock Exchange.” The disorganized mass of investors (in currency, in stocks and bonds, and in real assets such as factories) are termed by Friedman the Electronic Herd.

Friedman does not flinch from the problem of the income gap. In fact, he explains persuasively why globalization causes this gap continually to widen, and why a Winners Take All system affects not only businesses but individuals and whole countries.

So the new information order offers me online intermediaries to find the lowest air fare, and more choice about where to invest my ever-shrinking share of the society’s gross national product. Is that fair compensation for the lack of a pension and job security? Someday (if not already) I can write a Python script to run on my personal data assistant that says, “Get me the current debt and earnings of the 3Com corporation, and if it rises above a certain ratio sell.” But the decisions affecting world resources will be made by the fraction of one percent of people who control significant assets.

I think the Internet’s potential economic benefit for average individuals is not the atomizing role predicted by globalizers, but as an aggregator and organizer. Think about the search for the best price: it will give an edge to the largest buyers and sellers who benefit from economies of scale. Perhaps the Internet can shore up consumers and small businesses by providing ways to aggregate our buying power.

The second half of Friedman’s book is where he shows his true insight, for here he defends the olive tree against the Lexus. When he vividly describes the destruction of the rain forests, a whole new view of the Internet emerges, as well as people and their relation to each other in a modern society. Instead of an undifferentiated mass of wealth-seekers, we now see people with values and a shared concern for a shared future.

Friedman suggests how the Internet can help their indigenous residents form coalitions with environmentally aware supporters around the world. But “Internet activism alone will never be enough to restrain the Electronic Herd,” he warns, and neither will technological innovation in ecologically-friendly production techniques.

So Friedman proceeds to social-democratic restraints on globalization. Thankfully, he lambasts those who think that global free markets will weaken national governments. He boldly defends the safety net of education, welfare payments, and even carefully chosen social subsidies. He supports, for instance, one of the world’s largest boondoggles, the billions of dollars that European Union nations have devoted to keeping afloat small farmers who would otherwise have folded up decades ago. Friedman likes this quaint social net because we need “to create spaces where the market will not rule or invade, and in so doing protect those totally irrational, noneconomic aspects of a country’s national character.” But he does not explain why the European Union gets to protect its local farms while Kenya does not. That’s the weakness in his argument: globalization is not a great equalizer or a force for liberation.

Globalization may stop the manager of a Korean chaebol from concluding an investment deal over lunch with the Minister of Finance, who happens to be his cousin. Globalization may even root out some of the subtler forms of corporate welfare, such as logging rights in U.S. national forests, or the recent scandal where a bank was siphoning off the benefits of needy welfare recipients through ATM charges. But just as citing civil rights law to an aggressive policeman cannot stop him from cracking your head open, open information channels cannot rid the ever-growing megalopolies of their fundamental irrationality.

Consider the waste of disease and ignorance that accompanies unemployment and low wages. The prejudice that keeps talented racial minorities from education and jobs. And the overproduction of goods—the Achilles heel of the capitalist system that always leads to a crash.

So globalization is neither efficient nor sane. Nor are markets free; they are just conduits for the prejudices and greed of the biggest money-holders. That even so sensitive and broad-minded a writer as Friedman could think of free-market globalization as inherently rational shows that broadband Internet cannot remove one source of information distortion — class bias.

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Andy Oram is an editor at O’Reilly Media. This article represents his views only. It was originally published in the online magazine Web Review.