06/01/1999
It Takes A Global Village
Thomas Friedman champions the new turbocapitalist world, but is he ignoring the fault lines?
Ten years ago, Thomas L. Friedman, chronicled his Pulitzer Prize-winning years as The New York Times's Middle East correspondent in From Beirut to Jerusalem, vividly contrasting life in the Lebanese and Israeli capitals during war, occupation, and the Palestinian intifada. Friedman became the Time's chief diplomatic correspondent when he came home in 1989, and six years later started writing the paper's "Foreign Affairs" column. He was just in time for another wild ride: the fall of the Berlin Wall, the subsequent triumph of global turbocapitalism, and the emergence of the wired world. The Lexus and the Olive Tree is the story of that journey - but this time it's the record of a cognitive rather than a geographical trip, Friedman's attempt to understand and explain the social and political consequences of the information revolution and the end of the Cold War.
It's a superb, if one-sided, job. Friedman is a master of the telling detail, of the anecdotes and analogies that make complex events and processes snap into perspective. We all know about the new global reach of communications technology; Friedman brings it home by describing how in 1988 Larry Summers went from being so impressed with having a phone in his car as a Dukakis campaign aide that he kept calling his wife, to not being the least surprised when, nine years later (as deputy Treasury secretary), he was handed a cell phone while in a dugout canoe en route upriver from Abidjan, Ivory Coast.
This anecdote is an example of the one-sidedness of Lexus. As a Times columnist, Friedman's sources are the rich and powerful - government officials, jet-set academics, hedge fund managers, and CEOs - and Lexus isn't so much globalization for dummies as a refresher course for the elite. It's a book about winners for winners, which makes it dangerously incomplete. As trial lawyers like to say, the plural of "anecdote" is not "evidence," and Friedman's treatment of the downside of globalization is cursory at best.
But strengths first. Friedman's central point is that globalization is more than a discrete set of separate processes - increased economic interdependence, the spread of American popular culture, the worldwide flow of data via the Internet, the global mobility of labor and capital. It is a new, integrated world system displacing the Cold War order and shaping every country's domestic politics and international relations anew. Friedman offers a clever litany of contrasts between the old, bipolar era and the new centerless, interconnected one:
- The Cold War was about separation, division, and walls; the new world is about interdependence, networks, and the World Wide Web.
- The Cold War was driven by e=mc2, and its key metric was missile warhead throw-weights; globalization is driven by Moore's law (microprocessor power doubles every 18 months), and its key metric is modem speeds.
- The central Cold War transaction was a treaty; the "defining document of the globalization system is 'The Deal.'"
- If the Cold War had been a sport, it would have been sumo wrestling; "by contrast, if globalization were a sport, it would be the 100-meter dash, over and over and over. No matter how many times you win, you have to race again the next day."
Just as the falling price of energy drove the first industrial revolution, the falling price of information and the expansion of electronic connectivity (LANs, WANs, the Internet, satellites, CNN) are driving globalization. They have created three new key players on the world stage, according to Friedman. The first is the "Electronic Herd": the anonymous on-line traders who move capital in and out of markets electronically on a minute-by-minute basis, based on their ongoing judgments about the relative stability and safety of given regimes and securities. The second is the global array of "Supermarkets" where the Electronic Herd grazes - the financial centers of Wall Street, Hong Kong, London, Frankfurt, and Tokyo - that decide the fate of nations not by invading them, but by downgrading their bonds and selling their currencies. The third is the "Super-Empowered Individual" - the grassroots trader or political activist who can use the power of the Internet and the networked economy to act directly on the world stage without the mediation of traditional institutions like political parties, corporations, or governments. (Example: the managers of Long Term Capital Management, the Connecticut-based hedge fund that made leveraged bets in world capital markets that were bigger than the entire foreign currency reserves of the Chinese government and who nearly crashed the worldwide banking system when they bet wrong.)
These players have created a global system that is, Friedman contends, the equivalent of each country conducting an initial public offering. Every government in the world is now being judged, like the public corporations of old, on the basis of how efficiently it mobilizes capital and generates an acceptable return on the Electronic Herd's investments. The result, Friedman says, is the "Golden Straightjacket." A country will be redlined and relegated to permanent underdevelopment - unless it adopts "the following golden rules: making the private sector the primary engine of its economic growth, maintaining a low rate of inflation and price stability, shrinking the size of its state bureaucracy, maintaining as close to a balanced budget as possible, if not a surplus, eliminating and lowering tariffs on imported goods, removing restrictions on foreign investment… deregulating capital markets, making its currency convertible, opening its industries, stock, and bond markets to direct foreign ownership and investment, deregulating its economy… opening its banking and telecommunications systems to private ownership and competition, and allowing its citizens to choose from an array of competing pension options and foreign-run pension and mutual funds."
It's not hard to guess what country best fits this description. It's us, of course. Friedman asserts that the United States embodies the solution to what he sees as the defining conflict of the new world order, the polarity between the Lexus - the modern world car, exemplar of technology, efficiency, and change - and the olive tree - the classical food of early human civilization, exemplar of roots, tradition, and stability. "A healthy global society is one that can balance the Lexus and the olive tree all the time, and there is no better model for this on earth today than America….For globalization to be sustainable America must be at its best - today, tomorrow, all the time. It not only can be, it must be, a beacon for the whole world."
That's where the one-sidedness comes in. Friedman, in his introduction, describes Lexus as in part a counter to Robert Kaplan's The Ends of the Earth (Vintage, 1997). Kaplan's book is the record of his worldwide sojourn out of the First World journalist's bubble of jetliner and limousine, air-conditioned hotel, imported Western food, potable water, and wads of always-valuable, always-usable dollars, and into the inflation-battered, black market-driven, sewerless, and medicineless lives of ordinary people in the same world capitals where Friedman interviews heads of state and central bankers. Kaplan's sobering message: the corruption, pollution, pandemics, and violence of failed states in Africa, East Asia, and Eastern Europe may foreshadow the future of North America and Western Europe as well. He concludes that it will take a special kind of social ingenuity - now in short supply - for the current First World to avoid the social disintegration besetting the Third World in the wake of globalization.
Friedman disagrees; he sees emergent order where Kaplan found emergent disorder. "Kaplan's reporting was vivid and honest," Friedman writes, "but he took the grimmest corners of the globe and overgeneralized from them to the fate of the rest of the world." Occasionally, Friedman does acknowledge that all is not rosy in the fast world of Big Macs, iMacs, 24-7-365 uptime, instantaneous document transmission, and ubiquitous communications access. If the Cold War's enduring nightmare was "fear of annihilation from an enemy you knew all too well in a world struggle that was fixed and stable, the defining anxiety in globalization is fear of rapid change from an enemy you can't see, touch, or feel - a sense that your job, community, or workplace can be changed at any moment by anonymous economic and technological forces that are anything but stable." But he remains resolutely inside the bubble, a winner having a conversation with other winners, gazing comfortably out of his first class seat on the troubles of those below.
Friedman's own description of globalization makes it clear that the essence of being digital is being blindsided. And that now goes for denizens of The Am Law 100 as much as anyone else. It's ironic that, as the shock troops of capitalism, lawyers were insulated so long from the solvents of modernity. Even 20 years ago, most commercial lawyers still worked in rigidly hierarchical, guildlike partnerships that offered lifelong employment to those who made partner. Compensation was lockstep, and even partners had little job mobility. Collegiality and loyalty - to partners as well as clients - were the touchstones of the practice, and competition between firms was relatively genteel.
Today, we too wear a golden straight-jacket, one both created and reflected, at least in part, by this magazine and its pathbreaking focus on law firm economics. Globalization for lawyers means not just the death of distance, the loss of privacy, and the end of time to think as we relentlessly email documents back and forth and talk on our cell phones in the car, on the plane, and at the soccer game. It also means that the only values turbocapitalism permits - efficiency and return on investment - make revenue and profits per partner the only measure of our success; not quality of work, quality of life, or contribution to the rule of law. The ever-increasing number of billable hours demanded of associates drives more and more of them out of the profession. A firm's stagnant economic performance prompts star partners to defect. Competition is as fierce within firms as between them, and clients have no more loyalty to firms than firms have to them.
Law on a global scale is now much more of a business, and much less of a profession. That means our ability to make decisions on the basis of disinterested expertise and in the best interests of our clients is increasingly circumscribed by the process and values of globalization that Friedman describes so well. Thus even winners can lose in the new era. In Friedman's terms, our olive tree got run over by our Lexus, and it's not clear if it's ever going to grow back.
Michael Stern, a former journalist and English professor, is a partner in Cooley Godward's Palo Alto office. He was the vice-president of business affairs and general counsel of General Magic, Inc., a Silicon Valley software company, from 1991 to 1996.