Book Review: Friedman's Horseblinders

WARNING: Personal content

Astute readers and friends know that I am currently pursuing an M.B.A. The second round of education is very different from my first. As an undergrad, I was much more deferential to the professors. I came to realize after entering the real work force that they were just people with ideas, some good, and some bad. They had points of view and many of their models or theories did not hold up in practice. Now, I look at my professors the same way anyone I have a discussion with; with credulity. If I knew then…

Last night we had a discussion on Thomas Friedman's 1999 book, The Lexus and the Olive Tree. Friedman is a New York Times columnist, and his book is somewhat of a darling in the business school I attend. It is rare not to hear some professor refer to his book as though it were the bible of globalization. His ideas and interpretations of the world make up a good part of the bedrock in my curriculum. Aside from some of the substance issues, something always irritates me about Friedman's style and I hadn't been able to pin it down exactly until I plowed through a few hundred pages of his book.

The most glaring problem is his inane way of explaining any phenomenon through personal anecdote. He couldn't tell you that Walmart earns plaudits in the business community for its revolutionary management of the supply chain, he has to tell you a story about lunch he had with a Walmart executive and what the waiters shoes looked like. But he won't stop there; he will go on to recount a couple of shopping stories to make a pretty simple point. It is probably meant to be compelling and accessible, but it comes off as insulting and egotistical.

The second problem he has is with metaphor. His metaphors are always a hodge-podge of cliché. A good metaphor is a lens through which we can more clearly understand the world. It should filter out complexity and confusion that prevent us from fully understanding something. The problem is you have to be careful not to filter out so much complexity and confusion that the model no longer meaningfully relates to the world. Friedman applies half baked metaphors to everything, and often when they are unnecessary. Or to put it another way, many things he describes are not so complex or noisy that you can't understand it without a metaphor model. He uses metaphors to marginalize uncomfortable contradictions and distort reality to better fit his world view.

A third problem is his lack of empirical support for broad statements to explain what is going on in the world. He often assumes correlations between phenomenons that are not clearly correlated. (I will try to give a few examples off the top of my head when I recount a class discussion.)

And a fourth problem is that he marginalizes or dismisses any critics of how globalization is taking shape as neo-luddites. One example occurs around page 180 (I don’t have the book in front of me so I can’t look it up exactly.) He offhandedly refers to the Zapatista rebellion in Mexico as a group of people who are against globalization. That is not quite right, they are pissed because the Mexican government revoked article 27 of the Mexican constitution, which guaranteed the right of land to peasants, in order to approve NAFTA. That is what they are fighting against and Friedman just offhandedly dismisses their grievance, but he does this all the time. Anyone who questions his golden straight jacket doesn’t want to get on the train of human progress. (His metaphors, not mine.)

His model of development, what he calls the golden straight jacket, has been roundly criticized by people of far weightier intellectual merit than he. I don’t mean leftists like Noam Chomsky; I am talking about Joseph Stiglitz, a Nobel Prize winning economist and former head of the World Bank. Or John Gray, a former economic advisor to Margaret Thatcher. In brief, the golden straight jacket means that governments deregulate their economy, open up their firms to foreign investors and ownership, and break down social safety nets. (Something Friedman couldn’t explain without approximately 800 pages and 43 personal anecdotes.)

Stiglitz has a lot to say about these policies, and it isn’t positive. And they are policies, not some force of nature blowing through the world. Anyway, to the main point: Stiglitz argues that when you look at developing countries, successful countries are ones that have rebelled against this model. This is true here too; the U.S. developed its economy with protectionism and subsidization. I will leave it mostly to Stiglitz and others that make the case by examining specific cases, but look at what happened in Argentina 2001 or the Cochabamba region of Bolivia to see what I am talking about. (Friedman would refer to Bolivian peasants that didn’t want to spend half their pay checks on deregulated, skyrocketing water bills as people who are trying to stop the train of progress.)

The thing that was striking to me is the false associations from the class discussion and their shared world view. People assumed that democracy and free market theory are highly related. John Gray has commented on this, explaining that this is a product of New Right propaganda in the 1980s. There is no evidence to suggest that the two are in any way dependant on each other, and in fact are widely considered antagonists. Unfettered capitalism leads to vast inequality and the break down of civil society, no less a figure on the right than Alan Greenspan has repeatedly warned that the current wealth disparity in the U.S. threatens our system of democracy.

Another popular misconception, and this came directly from Friedman, is that wealth in the U.S. is diffusing or becoming more democratic. There are more people in the stock market today than ever before. This is counterfactual; the Federal Reserve just released a study (January 2006) that documents a net decrease in wages over the last 4 years. This continues a thirty year trend of stagnating wages for the working class with brief interruptions in the 1990s. But that is only a measure of income, when you look at wealth it is even worse. The U.S. scores terribly compared to other first world nations on a ratio economists use to measure wealth inequality called the Gini coefficient. The score is now at the level it was just before the Great Depression, as is the percentage of personal debt. (Wealth is a measure of assets, such as stocks, bonds, real estate, etc.)

It is not clear or a foregone conclusion that the current economic model is the ultimate method of development. There are some very ugly aspects of this system and indications that it is unsustainable. (I have elaborated on this topic before.) This is not surprising, nor should it be. The economy is a human institution and all human institutions evolve over time. There is every reason to believe things will change in the future, as they always have. Criticizing or working to change the current institutions is not an attempt to stop human progress, as Friedman insultingly suggests, it is precisely the opposite.

One last comment on the golden straightjacket, the thing about a straightjacket that escapes Friedman’s attention is that when you stumble you can’t put your arms out to balance yourself. And when you fall because of this, you can’t put your hands out to break your fall so you end up on your face. That is a pretty accurate description of what has happened in many countries that followed the Washington Consensus in recent years.

In the Friedman tradition I will close with an anecdote about how I procured his book. I didn’t buy it. One day after registering for classes and finding out I needed it for class; I was running and serendipitously found the book on the curb near a small apartment complex down the street. Someone was throwing the book out along with a pair of tattered cutoff denim shorts and some old issues of Newsweek. Something about that seems strangely appropriate to me now, and when I am done with this class I will likely pass the book along to the next reader via the street curb.