Lexus and Olive Tree

Doscapital 6.0

Country = computer * Basic shell around the economy = hardware
After collapse of Cold War, the world had the same basic hardware, free market capitalism * Broad macroeconomics policies = operating system
Communist economic operating system = DOScapital 0.0
Hungary = DOScapital 1.0
Shanghai= DOScapital 4.0 (China hinterland = 1.0)
Operating systems based on free markets but have still significant welfare-state components: France, Germany, Japan DOScapital 5.0
Have liberalized their economies and have put on the full Golden Straitjacket: United States, Hong Kong, Taiwan, United kIngdom. They have DOScapital 6.0 * Legal and regulatory systems = software

THE GOLDEN STRAITJACKET third way
Once the 3 democratization came together in the late 80s 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, then can demand alternatives, they can insist on a "third way", but for now none is apparent.
From communism to free market
It was revolutionary thinks like Engels, Marx, Lenin and Mussolini, the centrally nondemocratic alternatives offered--communism, socialism and fascism--helped to abort the first era of globalization as they were tested out on the world stage. 104
Thatcher/Reagan
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 in the 20th C. It was reinforced by Ronald Reagan, 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 democratization blew away all the alternative fashions and all the walls that protected them. The Thatcherite-Reaganite revolution 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. They 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. 104-05 To fit into the Golden Straitjacket, a country must either adopt or be seen as moving toward the following: * 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 * Getting rid of quotas and domestic monopolies * Increasing exports * Privatizing state-owned industries and utilities * Deregulating capital markets * Making its currency 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 corruption, subsidies and kickbacks as possible * Allowing citizens to choose from an array of competing pension options and foreign run pension and mutual funds 105
The result: your economy grows and your politics shrink. On the political front, the G.S. narrows the political and economic policy choices of those in power to relatively tight parameters. That is why it is increasingly difficult to find any real differences between the ruling and oppositions parties. With the fall of the Cold War walls and the rise of the Golden Straitjacket, I see a lot of synchronized swimming when I travel the world. 107
The Electronic Herd
The Electronic Herd is made up of all the faceless stock, bonds, and currency traders sitting behind computer screens all over the globe, moving their money around from mutual funds to pension funds to merging funds or trading on the Internet from their basements. It consists of big MNC who now spread their factories around the globe to the most efficient, low-cost producers. This herd has grown exponentially thanks to the democratization of finance, technology and information--so much so that it is beginning to replace governments as the primary source of capital for both companies and countries to grow. As countries have run balanced budgets to fit into the Golden Straitjacket, their economies become more dependent on the Electronic Herd for growth capital. To thrive in today's globalization system, a country not only has to put on the Golden Straitjacket but it has to joint the Electronic Herd. 109
The interaction between the Electronic Herd, nation-states and the Golden Straitjacket is at the center of today's globalization system.
Moody's told Canada in 1995 that if they did not get their deficit-to-GDP ratio more in line with international norms and expectations, Moody's would downgrade their triple A credit rating and every Canadian and company would have to pay higher interest. "The sheer magnitude of Canada's foreign debt in relation to the size of the economy means that Canada has become excessively vulnerable to the volatile sentiments of global financial markets. We have suffered a tangible loss of economic sovereignty," said Paul Martin, Finance Minister. 110 ( JV: democratization of capital or finance)
THE ELECTRONIC HERD
Friedman's definition of the Electronic Herd

But the global marketplace today is an Electronic Herd of often anonymous stock, bond, and currency traders and multinational investors, connected by screens and networks (Friedman, 113)

Supermarkets have replaced the superpowers as sources of capital for growth (Friedman, 116)

Two sorts of Cattle in the Electronic Herd

1. The Short-Horn Cattle: Investors who buy stocks, bonds, future contracts, currencies, derivatives, options, and hedge funds.

2.The Long-Horn Cattle: Multinational corporations that engage in direct foreign investment by building factories and utilities and supporting local corporations in so-called "strategic alliances" and "local partnerships."

The "democratization of technology, finance, and information" --which have changed how we communicate, how we invest, and how we look at the world-- gave birth to ...today's globalization system" (Friedman, 140)
Globalization isn't a choice, it's a reality.
The rise of the Internet certainly contributed to this era of globalization. The Internet will ensure that how we communicate, how we invest, how we look at the world will be increasingly global. Because from the moment you log onto the Internet you can communicate with anyone globally practically for free from the moment you long onto the Internet you can invest in any market globally, practically for free and from the moment you start a business that has an Internet Web site, where ever you are in the world, you will have to think globally. 140