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1-Page Summary of The Lexus and the Olive Tree
Overall Summary
The Lexus and the Olive Tree is a book by Thomas L. Friedman, who won three Pulitzer Prizes for General Non-Fiction and one for his memoirs about reporting Middle East relations. He also wrote The World Is Flat (2005), which focuses on many of the same themes as The Lexus and the Olive Tree.
The Lexus and the Olive Tree was first published in 1999. Two years later, an expanded edition of the book was released. In it, Friedman argues that globalization is a system rather than a trend or fad. He believes that understanding this will help countries and individuals survive in today’s world.
The book’s title refers to the two symbols of globalization. The Lexus represents prosperity that comes from adapting to globalization, and the Olive Tree represents a stable sense of identity and belonging in the face of rapid economic, political, and cultural changes.
Friedman divides the book into four major sections. The first section describes how globalization emerged and changed the world. It also contrasts it to the Cold War system that preceded it. The second section discusses how countries should choose prosperity in this new system, as well as what happens if they don’t choose prosperity. The third section examines backlashes against globalization, such as terrorism and environmental degradation, and argues that America has a responsibility to ensure stability in this new system of global interdependence.
Introduction: “The World Is Ten Years Old”
The book begins with Thomas Friedman in Thailand during the financial crisis of 1997. His cab driver points out all the investment banking firms that have recently closed, which were significant catalysts for what would be a global financial crisis. The economic crisis spread to rest of Southeast Asia, then Russia and finally the hedge fund Long Term Capital Management in United States. From there, it spread to a friend’s internet bank that Friedman had invested in. In other words, it took nine months for events on a high street in Thailand to hit Friedman’s main street. This is an example of how the fixed system created after World War II became globalization as defined by its fluidity and interconnectedness around 1989.
The time period before World War One was similar to the current era of globalization in terms of economic interconnection and ease of contagion. The Great Depression, World War II, and the Cold War ended this first era by fracturing the world both physically and ideologically. This created a pause between eras of globalization for 75 years until 1989 when the Soviet Union fell apart.
The difference between the first era of globalization and the second is that now, instead of transportation costs being lowered, telecommunication costs are lowering. This new system called globalization has replaced the Cold War system as it’s currently shaping our world.
Chapter 1: “The New System”
Throughout the post-Soviet era, conservative economists discussed post-Cold War discussions due to all of the changes in our world. Many people used those terms without having a sense of what they truly meant or felt about them. But Friedman realized you could describe it as an entirely new economic system called “globalization.” Whereas communism was based on separation and segregation, capitalism is based on integration and coordination. Globalization is when markets are more efficient than ever before online and around the world.
Globalization is a result of free-market capitalism. The more you let market forces rule and open your economy, the more efficient it will be. Unlike the Cold War system, globalization has its own dominant culture that’s global rather than regional. Whereas missiles were a measurement in the Cold War era, for globalization it’s telecommunications speed. Economists use creative destruction as their measurement tool to determine which countries are succeeding and which are lagging behind; those who embrace creative destruction succeed while those who try to stop this process fall behind.
