Wednesday, March 19, 2008

Review of The Lexus and the Olive Tree

Review of The Lexus and the Olive Tree
Thomas L. Friedman (1999)

This book was very popular nearly ten years ago. After reading it at a leisurely pace this past month or so I can fully agree that it touches on many major factors concerning this era of globalization in Korea in a manner serving easy understanding through concrete examples and metaphors. I did not choose to read this book out of hindsight however as I enjoy collecting used titles from (at the considerable expense of whathebook)this offering came up at a lovely low price.

My curiosity about this book always focused on the provocative title which describes the world of tradition, and national cultures. This includes the comfort of spirituality, community, religion, and differences in contrast and tolerance. The Lexus may represent a world of convenience, mass production, consumerism, economic interconnectedness, and a mass standardization of product, process and customer service.

What stands out in terms of a notable topic includes Friedman’s description of economic growth contingent upon the putting on of “the golden straight-jacket.” This entails domestic economies compliance with global standards of trade, contract law, and transparency. Such fair trade policies, those which benefit local and international interests equally, equitably and without the taint of informational or cultural bias represent an acknowledgement of the immense power and privilege of being part of the global economy. Those economies responsible and fortunate enough to attract global market investment comply with the needs and goals of speculators and investors worldwide so as to maintain their leveraging capabilities and relationships across wide sources of investment capital.

Korea is often referred to in this book in terms of market forces and reactions or adaptations of local practices to grow more in keeping with international globalization policies whether during the era of the locally termed “IMF Crisis” or as it is known more globally as the “Asian Financial Crisis.” As it is ten years old the last ten years are noticeably absent.

Currently however a different sort of foreign capital flight appears to be taking place in South Korea. Since the elections of the new President, the Honorable Lee Myung Bak, there has been little development of a public policy or plan to adopt a more proactive relationship with the foreign investment community of the world. It appears many Koreans would choose to limit there future comfort and size of the golden straight-jacket out of an unwillingness to collaborate in the dimensions of its size and fit for non-Koreans locally.

Talk and plans of a Korean Tax Capital Rich Canal Project in the press appears a perhaps ominous misdirection of the hard-earned income of the average Korean worker who is often dazzled by showy bits of marketing and advertisement campaigns but for which results and benefits are often lacking.

Especially this development may appear a facile and misguided usage of the President’s considerable power and influence in the construction and heavy industrial sector of the nation geo-politically. While the Sanggye Stream Project was a public relations success, installing a canal which on a cost-benefit analysis provides little or no environmental or globally tuned infrastructural development might satisfy a public desire for an edifice to the tax-payer (as one of my friends argues). However the self-same project might be a disappointing lack of real global development to foreign investors who might at this time seek more improvements in small-business start up or incubator loans, transnational research or partnerships, productivity in the development of a knowledge based economy supported by Korea's web-enabled populace or deeper reforms of inter-governmental policy in terms of integrating global educational and business developments here in Korea which offer opportunities to Koreans and non-Koreans with equanimity.

However, a large scale project of such magnitude defines some of the inherent weaknesses of Korea’s political economy. Centralized planning and government excels at mega-project developments. At the same time narrow hierarchy inadequately invests regional and localized patterns of decision-making present in many other OECD nations. These supply adequate development models to provide road-maps to a less concentrated stratification of planning and decision-making. It may not be a negative positional advantage for a Korean President to wield virtually the entire construction industry of his nation to the developmental benefits of his taxpayers. However international and global investors where and when consulted or perceived as investment partners in Korea’s development might provide alternative patterns to the direction and scale of infrastructural improvements necessary to attract their considerable investment potential. Such a perspective as to the contributions which non-Koreans might add to Korea's list of development options might further the aim of the current government in its “747” plan.

The image of a “747” in most developed nations is that of a workhorse transportation vehicle without any real negative connotations. It has provided steady and fairly reliable service to the world’s international travelling public for nearly forty years. However, it is a large and cumbersome aircraft, with little of current prestige, panache, luster, or comfort to the majority of the travelling public. As a global image to attach to an economic-political plan, it is like advertising that one’s nation seeks to be in some way like a bullock or slow-moving traffic vehicle rather than a gazelle, cheetah, or other lithe, productive, or fast moving globally recognized character of progress.

One might suggest an “A380” plan might make more global sense for some in attracting investors. The “A” could represent seeking to increase Korea’s ratings at Standard and Poor’s or Moody’s Indexes as Friedman would contend this represents the prime investment attractor and the golden aspect of the straight jacket. This would unfortunately require more unbiased and perhaps globally credible regulatory oversight in Korea’s national economic growth plans. Where shareholder interests are heavily protected the gold often appears to outweigh the jacket and could prove painful for local elites accustomed to manipulating their own game plans to ensure hometown successes at the expense of regional growth.

The “3” could represent divesting of political power and decision making away from the perennial focus on Seoul and its environs to that of a federal leadership with truly competitive provincial powers followed by truly competitive municipal powers of decision-making in the attraction of foreign investment. Competition in such plans might provide examples of unique Korean inventiveness, and innovation.

The “8” could represent a Korean recognition that the eight-sided fortification of traditional values and attitudes towards non-Koreans involvement in and influence among Korean society provides few opportunities to install windows or doors to experiment with or develop current positions. To grow a global appreciation of shared interests Koreans might need to realize that capturing gains and creating value for all investors regardless of race, creed, religion or ethnic background is the hallmark of global capitalism. The basic defensive and risk-aversive aspects of Korean political, economic and social community might need to provide greater gaps of opportunity to ensure involved and evolving foreign investment rather than speculation. A widening of acceptance between the structural elements of Korean society to ensure the health and economic prosperity of the core and heart of that society should be the desire of every Korean. Koreans possess all the qualities and aspects of any culture on the earth. Those values which best express a gentile and global Korean identity might grow to possibly require more of the world than an export customer or more of their trade partners in terms of relationship than import source of prestige and/or competitive display of wealth and products.

The “0” might reflect a desire to not only hold and maintain Korea’s position economically in comparison to the OECD but to strengthen that postion with a zero tolerance for Korean companies which do not adequately develop strong trading relationships with non-Korean businesses globally. "No potential investor left out in the cold" would ensure that despite growing global competitiveness zero foreign investors would be repelled from the Korean markets due to local intransigence or unwillingness to participate in multi-dimensional contingencies, negotiations, growth plans, economic development or trade partnerships which equitably distribute the wealth, profits, information, and advantages. Non-Korean investors need to be wooed and are won hearts and minds only to the degree of success in development of a flexible nature for dealing with them in this nation.

Korea has already proven able to adapt quickly enough to retain investment-grade policies and progress which ensure positioning of greater interest than its competitors. However as is described by some concerning the issues of learning English, there needs to be a greater realisation of Korea's interest in the future and plans which enable rather than place limits on that future.

For example, all of the concrete, budgets and profits of construction companies might be better put to expanding current infrastructure in ports, highways, and logistical support for further Kaesong expansion plans. Shaving a few minutes, hours or days off of deliveries could make much of Korea’s desire to improve its international financial status. However it is a demonstration of Friedman’s thesis regarding golden straight-jackets.

In this global age if the political and economic will of a nation is resistant to foreign investment in any way, shape or form, it costs that nation its future developmental successes. For as many construction company sourced advisors the President currently retains one might wish that he would seek the ideas and visions of the world’s great developmental advisors in change process management sourced from corporate, political or advisory capacities far before he pitches the first spade of dirt over another inch of Korea’s most precious resources - scant farmers fields and pure water supplies.

There are many possible local and regional improvements that might make more economic impact and cost the tax-payers far less. To discover these, it is in the Korean identity to listen to one’s family, elders or respected teachers in the delivery of such advice. While few could assume to fill any of those roles as a non-Korean, one might suggest that touring the country’s challenged ports and transportation sectors for information regarding improvements with better benefits than a canal should be made.

Coincidentally these are the Koreans often most in tune and intuitively related to investors, trade partners, entrepreneurs, and global relationship builders. These might also illustrate the experience of constructive concensus which is of the human-kind, one with which past generations of Koreans might easily relate to, the hard work of spirit and personal educational development which is quite independent of any national culture in its benefits.

In maturing one’s own relationships on a global level there might be the possibility that the best plans for Korea’s future do not originate in the successes of construction companies in desert lands but in the hearts and minds of multi-dimensional visionaries, local and global who recognize that the task of attracting and maintaining global investor confidence in the Korean economy should be limitless in its drive to succeed towards such a goal. Friedman explains that such impetus comes from the workers and not the boss. Therefore it may be time for Korean leaders to finally begin listening to their own lower middle classes of managers. Do they have an informed voice? Friedman contends that they often do. Especially if they are encouraged to speak by those who need to learn how to listen.

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