Wednesday, March 15, 2006

Book Review: The Lexus and the Olive Tree by Thomas Friendman and Confessions of an Economic Hitman by John Perkins

These books should be read back to back. For me, it was just dumb luck. The Lexus and the Olive Tree is told by globalization cheerleader Thomas Friendman. He tells the story of the components of Globalization, the Global Herd, the IMF, and the World Bank, and how these organizations will force transparency and democracy throughout the world. He makes a very good case. He symbolizes this with a Lexus, to him a representation of the successful adoption of globalizations, the symbol of victory. The Olive Tree is the desire, while being pulled in the direction of globalization, to return to our roots, defend our traditions, be protective of our traditions. This tension is what motivates the title.

My favorite aspect is the way he puts a framework in place to discuss globalization using computer community terminology: hardware, software, operating systems, etc. Was actually a VERY useful analogy to be used in many future discussions :)

Tales of an Economic Hitman is the perspective of one man 'in the trenches' of globalization. Working for one of the firms involved in building up other countires (I'll avoid 3rd world, etc.) he talks about the process as an economist doing simulations and estimates for various projects like power plants and dams around the world. He paints his version of how the funding for these large projects takes place. And he should know, since he was the economist doing many of the forecasts. Essentially, he was told to AND WOULD, exaggerate demand of various economies and their energy requirements. For example, he would estimate at 12-18% a year growth for Indonesia when no economy anywhere had ever registered about 6% a year energy growth requirements, then defend these decisions fervently and with lots of 'evidence' when those numbers were questioned. Ultimately, he was convincing and thus, was promoted to very high levels in his company. Next, these governments would take out huge loans that they couldn't pay, then the 'pound of flesh' would be extracted from the country by the debt holders, making everyone rich except the country who was forced to spend huge amounts to finance their debts. Its funny, I try to talk to people about this stuff and they usually just have these weird looks of impossibility on their faces that this type of things happen. This is not Noam Chomsky talking, this is one of the economists involved with the inflation of these numbers. He has lots of examples. A great great book, one that balances the cheerleading of Friedman. I feel globalization is a phase, it will result in moving us in the next direction, which will likely be tribalism to cope with the globalization, but this tribalism will be less based on geographic topology than previous movements. Instead, social groups will form across the globe to push around the balance of power.

He builds an interesting model of how these processes work together and the mechanims imperialists lose when they don't, ultimately relying on 'jackals' to do attempted assasinations then finally all out war if the jackals can't assasinate. Rather than just claiming these to be true, he gives a great number of examples in very good detail: Panama, Indonesia, etc. I think it may be lost to history that the reason Germany and France opposed the war with Iraq was not that they had some noble cause, but was the loans that the current Iraqi government (Saddam Hussein) was servicing to their economies, and the damage defaults on those loans would do to their countries. Interestingly, both of these books are told with a US centric approach to globalization, not doing a good job of understanding what George Orwell taught so well in 1984, that many of these issues have less to do with being the United States and more to do with being a global superpower in the 21st century. The US isn't alone, and neither is the US financials. Some are german, some are swiss, some are british, etc.

Both great books, but Hit Man is the more important to read, Lexus is outdated and rather obvious nowadays, but I'd read the first 1/3rd of the Olive Tree if you're pressed for time. 4/5 for both.

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