Lexus and the Olive Tree Summary

The Lexus and the Olive Tree, written by Thomas L. Friedman, investigates the phenomenon of globalization in our world and how it has established a new international system that has replaced the cold war. This new system of globalization connects people from all over the world from Southeast Asians fighting a recession to Thai bankers to entrepreneurs in the United States. Friedman credits that the democratization of technology, information, and finance has shrunk our world from small to tiny where people all over the world can now transfer information cheaper, deeper, and faster. The walls that once separated our world have now been torn down with the development of the Internet and the television.

Friedman uses the Lexus and the olive tree to symbolizes the balance that a country or company must maintain in order to thrive. The Lexus represents modernization and technology the olive tree represents the uniqueness in communities. It signifies the core values that are dependable and solid. Societies must aim for the Lexus but should recognize the need for the olive tree.

According to Friedman, “globalization is the inevitable integration of markets, nation-states and technologies to a degree never witnessed before – in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before and in a way that is enabling the world to reach into individuals, corporations, and nation-states, farther, faster and deeper, cheaper than ever before.” (XXXXX)

The book is broken up into four major sections. The first section of the book explains today’s globalization system and how it functions. The second section explains how countries, communities, companies, and individuals interact with the system. The third section is dedicated to those who are against globalization, or the “backlashers.” Finally, the fourth section explains the role of the US and how we should be functioning and stabilizing within the new system.

Chapters 1 and 2 go into further detail about the new system. They explain that the last system, the Cold War system, was characterized by division and the new system, the Globalized system, is characterized by integration and the idea of free-market capitalism. These chapters show that globalization was made possible through information arbitrage, or simultaneously gathering and dispersing data to and from other markets to paint a picture of the world.

Chapter 3 is titled, The Lexus and the Olive Tree, where the Lexus represents the drive for sustenance, improvement, prosperity, global markets, and new technologies and the olive tree symbolizes the things in our world that are older, rooted and dependable. The biggest goal of a nation is to find a healthy balance in both.

Chapter 4 reviews the three fundamental changes of globalization. The first change is the democratization of technology, or how we communicate. It’s now faster, deeper, and cheaper. The second is the democratization of finance, or how we now invest on a global market. The final change is the democratization of information, or how we learn. It’s now done through the Internet and television virtually eliminating every wall thanks to satellites and broadband.

Chapter 5 covers the pressures and constraints of globalization by calling it the disease of MIDS. Symptoms are slower productivity and lower living standards. Chapter 6 explains that the only way to avoid MIDS as a nation or company is to put on the "golden straightjacket" and basically giving into globalization and conforming to it's standards of lower inflation, lower tariffs, increasing exports, and opening industries. In addition to putting on the straightjacket, a country must also join the electronic heard. The electronic heard is covered in Chapter 7 and is characterized by short horns and long horns referring to the small and large multinational investors around the globe.

The second section of the book goes into detail about how countries and companies are reacting to this new change. Chapter 8 details the role of corruption in the new system. Chapter 9 goes into the building blocks of democracy that the Herd is imposing and the government can’t resist, such as transparency, standards, free press, corruption, bond and stock markets, and democratization. Chapter 10 questions your company or countries connectivity based on productivity and explains how the “evernet” is now exploding across the country. Chapter 11 goes over some questions to evaluate to see where your company or country stands, such as the growth, the weight, and the brand.

Chapter 12 dives into the theory