Monday, October 04, 2004

10 2

Delip – 10 2

The Lexus and the Olive Tree

The Lexus and the Olive Tree are symbols…

Lexus = Modernity, open borders/trade (Japan)

Olive Tree = closed borders, fight for home territory, identity based on land/nation (Isreal/Palestine)

If Globalization is an irresistible force, is the “Olive Tree” an immovable object?

Can politics control the effects of globalization?

Should people who identify with their homelands cope with globalization?

Section 1 – The System

How does globalization work? How do constituent parts work together? What motivates globalization? Here, Freidman talks about the technical and economic forces of globalization.

Section 2 – Plugging Into the System

How does one get into economic modernity? A country should be “wired”. How fast is your country or company? How much does it weigh? (are exports physically heavy? (walkmans at $50 each vs. jute at $.05 a pound)

Is your country too corrupt to be competitive? (kleptocracy?) Does it hinder the economy?

Globalization may lead to few players in any market, and therefore the world’s economy will be controlled by few - “Demolition Man” – all restaurants are Taco Bells.

“Winner Take All” - During the heyday of the Bulls the top 3 players made 80% of payroll…what is the morale of the other players, also necessary to win? Free agency made this possible. To what degree is this situation duplicated in companies and countries?

Section 3 – The Backlash

What to do?

How does the Muslim world adapt to modernity?
Olive tree-nations must adapt, however slowly…Democracy is an element of globalization.

What attention is paid to culture during globalization?

The World is 10 Years Old

What happened 10 years ago?

- Technological progress
- End of Cold War politics – capitalism wins
- The acceleration of change – “Post-modernity” “Late or High Modern”
- “Walls” fall

Modernity changes, and present day is different than Victorian England…Traditional vs. Modern society…modern society changes peoples sense of selves…immigrants differ from their more Americanized children…Nostalgia comes from alienation by modernity, a lack of meaning that results…

Modernity – can it be controlled? Can different cultures take different paths to modernity?

Information Arbitrage

“I am a tourist with an attitude engaging in information arbitrage.”

Information Arbitrage = shopping market basket of multiple perspectives

All global phenomena are interrelated, and not strictly economic/technological/political.

Arbitrage in economics = trading based on imbalances. Information on at least two markets is necessary…

There may be a cultural milieu in which information/transactions are not exchanged or conducted in the same way in both markets…keep a critical eye on information, multiple perspectives enable better decisions…

Global Elite – must be cosmopolitan

The Walls Came Tumbling Down

The Three Democratizations – Information, Finance and Technology
MIDS – Microchip Immune Deficiency Syndrome

Nations that do not democratize will suffer – Democratization can be measured

Golden Straight Jacket – market transparency, political democratization, market liberalization, currency speculation

Electronic Herd – Small Horn – individual investors. Long Horn – Corporate investors, pension funds. The herd will move capital to places it gets best return.

Max Weber – Protestant Ethic and the Rise of Capitalism – This is the world/life that counts, God’s work is done on Earth. Disciplined life is virtuous. Countries with this ethic work hard and save.

Capital is formed by saving. (?) The Labor Theory of Value.

- Mass production – more than one laborer, accumulates value
- Specialization – “Division of Labor”
- Surpluses create a need for managing resources – Surplus laborers – R&D

Surpluses were lent only locally or to familiar people: trust. “Stranger Sociability”

Credit is now easy to get!!! U.S. developed because of real estate lending…

Every country wants to attract capital…golden straightjacket gives the herd confidence to invest or give credit to a country.

Is anyone in charge? No!


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