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1. Read Chapter 6: The Golden Straitjacket of “The Lexus and the Olive Tree: Understanding Globalization" by Thomas Friedman, . The PDF file is available on our course website. Write an essay...

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1. Read Chapter 6: The Golden Straitjacket of “The Lexus and the Olive Tree: Understanding
Globalization" by Thomas Friedman, . The PDF file is available on ou
course website.
Write an essay (maximum onc page) to answer the following questions: What are the pros and
cons of em
acing globalization for developing countries? What does the “Golden Straitjacket™

The Golden Straitjacket
"We're still very much in a straitjacket for the next year or two. The new govermment will have to
e quite careful."
-Umar Juoro, economic adviser to former Indonesian Prime Minister B. J. Habibie, describing to
The New York Times how little room to maneuver the Indonesian govemment has on the
economic front, because if it does anything rash iù will get hammered by the IMF and the global
markets. October 23, 1999.
While I was on that trip monitoring elections in Chinese villages and my interpreter and I
were wandering through the village of Heng Dao, we dropped in on a farmer-turned-
mechanic who had geese and pigs in the front yard, but a stereo and color television
inside his
ick hut. My interpreter, a Chinese student who was studying in America,
noticed something I never would have - that there didn't seem to be any loudspeaker
around. During Mao's day the Communist Party installed loudspeakers in the "
as small villages were known, and used them to blare out propaganda and other messages
exhorting the workers. We asked our host what happened to it.
"We took it down last year," the villager said of the loudspeaker. "No one wanted to
listen to it anymore. We have stereo and TV now." What the villager didn't say was that
he didn't need to hear the message from Beijing and the Communist Party anymore,
ecause he knew what it was and it wasn't the teachings of Chairman Mao. The onlyy
message coming from them was much simpler: "You're on your own. Get a job. Send
A few months earlier I had been in Thailand, watching Thailand's crony capitalist
economy going into a tailspin. I had a
anged to interview Sirivat Voravetvuthikun, a
Thai real estate developer who had gone bankrupt in the Thai economic crash. He and his
wife had become the poster children for the Thai crash, because they had decided to go
into the sandwich-selling business to make ends meet. This once-wealthy couple rented
out some vacant space in downtown Bangkok, set up a sandwich-making operation with
many of their former employees and started delivering fresh ham-and-cheese around the
streets of Bangkok. Sirivat a
ived at our interview ca
ying a yellow picnic box strapped
around his neck like a sandwich vendor at an American baseball game. What II
emembered most about our conversation, though, was the absence of bitterness in his
voice, and the much more pungent air of resignation. His message was that Thailand had
messed up. People knew it they would now have to tighten their bels and get with the
program and there wasn't much else to say. Wasn't he mad? I asked. Didn't he want to
urn down some government building in anger at being wiped out?
No, Sirivat explained to me: "Communism fails, socialism fails, so now there is only
capitalism. We don't want to go back to the jungle, we all want a better standard of living,
so you have to make capitalism work, because you don't have a choice. We have to
improve ourselves and follow the world rules... Only the competitive survive. It will
probably require a national unity government, because the burden is so big."
A few months after this l attended a lecture in Washington by Anatoly Chubais, the
architect of Russia's failed economic reforms and privatization. Chubais had come to
Washington to make a last-ditch appeal to the IMF for more aid to Russia, but at the time
the still-communist dominated Russian Duma, or parliament, was resisting the IMFs
conditions. The Duma was also regularly denouncing Chubais as a traitor and foreign
agent for submitting to IMF demands that Russia radically reform its economy along real
free-market lines. I asked Chubais how he answered his crities, and he told me:., 0.K.I
tell them, 'Chubais is a spy for the CIA and IME. But what is your substitute? Do you
have [any alternative] workable ideas?" Chubais said he never gets any coherent answe,
ecause the communists have no alternative.
I was in Brazil a few months later, where I interviewed Fabio Feldmann, the former
environmental secretary of Sao Paulo and a federal deputy in the Brazilian parliament,
who was campaigning for reelection in Sao Paulo. His office was a beehive of campaign
workers, awash in posters and other campaign paraphernalia. Feldmann is a liberal, and I
asked him about the nature of the political debate in Brazil today. He responded: "The
ideologicall left in Brazil have lost their flag. The challenge of the federal government is
jobs and employment. You have to generate and distribute income. And what is the
program of the left? They don't have proposals to generate income, only to distribute it"
What are these stories telling us? Once the three democratizations came together in the
late 1980s and blew away all the walls, they also blew away all the major ideological
alternatives to free-market capitalism. People can talk about alternatives to the free
market and global integration, they can demand alternatives, they can insist ona "Third
Way," but for now none is apparent. This is very different from the first era of
globalization. During the nineteenth and early twentieth centuries, when the Industrial
Revolution and global finance capitalism roared through Europe and America, many
people were shocked by their Darwinian
utality and "dark Satanic mills." They
destroyed old orders and hierarchies, praoduced huge income gaps and put everyone under
pressure, but they also produced sharply rising standards of living for those who could
make a go of it. This experience triggered a great deal of debate and revolutionary
theorizing, as people tried to find ways to cushion workers from the cruelest aspects of
free-market capitalism in that day. As Karl Marx and Friedrich Engcls described this era
in The Communist Manifesto: "Constant revolutionizing of production, uninterupted
ance of all social conditions, everlasting uncertainty and agitation distinguish the
ourgeois epoch from all earlier ones. All fixed, fast frozen relations, with their train of
ancient and venerable prejudices and opinions, are swept away, all new-formed ones
ecome antiquated before they can ossify. All that is solid melts into air, all that is holy is
profaned, and man is at last compelled to face with sober senses, his real conditions of
life, and his relations with his kind."
Eventually. people came along who declared that they could take these destabilizing.
utalizing swings out of the free market, and create a world that would never be
dependent on unfettered bourgeois capitalists. They would have the government centrally
plan and fund everything, and distribute to each worker according to his needs and expect
from each worker a contribution according to his abilities. The names of these
evolutionary thinkers were Engels, Marx, Lenin and Mussolini-among others. De-
centrally planned, non-democratic alternatives they offered communism, socialism and
fascism- helped to abort the first era of globalization as they were tested out on the world
stage from 1917 to 1989.
There is only one thing to say about those alternatives: They didn't work. And the people
who rendered that judgment were the people who lived under them. So with the collapse
of communism in Europe, in the Soviet Union and in China and all the walls that
protected these systems - those people who are unhappy with the Darwinian
utality of
free-market capitalism don't have any ready ideological altenative now. When it comes
to the question of which system today is the most effective at generating rising standards
of living, the historical debate is over. The answer is free-market capitalism. Other
systems may be able to distribute and divide income more efficiently and equitably, but
none can generate income to distribute as efficiently as free-market capitalism. And more
and more people now know that. So, ideologically speaking, there is no more mint
chocolate chip, there is no more strawbe
y swirl and there is no more lemon-lime. Today
there is only free-market vanilla and North Korea. There can be different
ands of free-
market vanilla and you can adjust your society to it by going faster or slower. But, in the
end, if you want higher standards of living in a world without walls, the free market is the
only ideological alternative left. One road. Different speeds. But one road. When your
country recognizes this fact, when it recognizes the rules of the free market in today's
global economy, and decides to abide by them, it puts on what l call the Golden Strait
Jacket. The Golden Straitjacket is the defining political-economic garment of this
globalization era. The Cold War had the Mao suit, the Nehru jacket, the Russian fur.
Globalization has only the Golden Straitjacket. If your country has not been fitted for one,
it will be soon.
The Golden Straitjacket first began to be stitched together and popularized in 1979 by
British Prime Minister Margaret Thatcher who, as the original seamstress of the Golden
Straitjacket, will go down in history as one of the great revolutionaries of the second half
of the twentieth century. That Thatcherite coat was soon reinforced by Ronald Reagan:
in the United States in the 1980s, giving the straitjacket, and its rules, some real critical
mass. It became a global fashion with the end of the Cold War, once the three
democratizations blew away all the alternative fashions and all the walls that protected
them. The 1Thatcherite-Reaganite revolutions came about because popular majorities in
these two major Western economies concluded that the old government directed
economic approaches simply were not providing sufficient levels of growth. Thatcher and
Reagan combined to strip huge chunks of economic decision-making power from the
state, from the advocates of the Great Society and from traditional Keynesian economics,
and hand them over to the free market.
To fit into the Golden Straitjacket a country must either adopt, or be seen as moving
toward, 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, geting rid of quotas and domestic monopolies, increasing exports,
privatizing state-owned industries and utilities, deregulating capital markets, making its
ency convertible, opening its industries, stock and bond markets to direct foreign
ownership and investment, deregulating its economy to promote as much domestic
competition as possible, eliminating government coruption, subsidies and kickbacks as
much as possible, opening its banking and telecommunications systems to private
ownership and competition and allowing its citizens to choose from an a
ay of
competing pension options and foreign-run pension and mutual funds. When you stitch
all of these pieces together you have the Golden Straitjacket.
Unfortunately, this Golden Straitjacket is pretty much "one size fits all." So it pinches
certain groups, squeezes others and keeps a society under pressure to constantly
streamline its economic institutions and upgrade its performance. It leaves people behind
quicker than ever if they shuck it off, and it helps them catch up quicker than ever if they
wear it right. It is not always pretty or gentle or comfortable. But it's here and it's the only
model on the rack this historical season.
As your country puts on the Golden Straitjacket, two things tend to happen: your
economy grows and your politics shrinks. That is, on the economic front the Golden
Straitjacket usually fosters more growth and higher average incomes through more trade,
foreign investment, privatization and more efficient use of resources under the pressure
of global competition. But on the political front, the Golden Straitjacket na
ows the
political and economic policy choices of those in power to relatively tight parameters.
That is why it is increasingly difficult these days to find any real differences between
uling and opposition parties in those countries that have put on the Golden Straitjacket.
Once your country puts it on, its political choices get reduced to Pepsi or Coke - to slight
nuances of taste, slight nuances of policy, slight alterations in design to account for local
traditions, some loosening here or there, but never any major deviation from the core
golden rules. Governments - be they led by Democrats or Republicans, Conservatives or
Labourites, Gaullists or Socialists, Christian Democrats or Social Democrats that
deviate too far from the core rules will see
Answered Same Day Dec 09, 2022


Rochak answered on Dec 09 2022
36 Votes
The pros and cons of em
acing globalization for developing countries are:
· Development: Em
acing globalization ensures that developing countries get faster infrastructure development than other developed countries
· Global Cooperation: The pro of globalization is that developing countries get more global cooperation with more investment flowing into the country to ensure that the country grows and keeps...

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