I finally finished Tom Friedman's The Lexus and the Olive Tree, which I had been reading for a few weeks now in fits and starts. I have mixed feelings about Tom Friedman's work. Sometimes I find his NYT columns to be oversimplified, condescending and often downright wrong. Sometimes I find them interesting, compelling, and informative. Such it is with The Lexus and the Olive Tree.

On the whole, I'd say the book is not great. Friedman is too caught up in presenting what he thinks of as his clever metaphors (equating institutions of democracy with operating systems) and name-dropping (I was in Bangalore the other day having lunch with X). Even the name of the book itself is one of Friedman's annoyingly cute (so he thinks) metaphors.

However, if you read the book for the anecdotal evidence of the issues surrounding globalization and ignore all the garbage that surrounds it, Lexus is well worth your time.

Because of the recent passage of the Bankruptcy Bill which makes it harder for Americans to declare bankruptcy and start over with a clean slate as in the past, I found this section in which Friedman posits an a geo-political architect fashioning an ideal financial landscape interesting:

He would have designed a country with a system of bankruptcy laws and courts that actually encourages people who fail in a business venture so declare bankruptcy and then try again, perhaps fail again, declare bankruptcy again, and then try again, before succeeding and starting the next Amazon.com - without having to carry the stigma of their initial bankruptcies for the rest of their lives.

In Silicon Valley, says renowned venture capitalist John Doerr, "it is O.K. to fail and in fact it might even be important that you failed before on someone else's money." In Silicon Valley, bankruptcy is viewed as a necessary and inevitable cost of innovation, and this attitude encourages people to take chances. If you can't fail, you won't start. Harry Saal, who founded one of the most successful software diagnostic systems in Silicon Valley, after being involved in several start-up ventures that went belly-up, once told me over coffee in Palo Alto: "The view here is that you are always better and wiser for having failed. Which is why when people here fail after having tried something, they often have an easier time raising money the next time around. People say, 'Oh. he went bankrupt on that first venture? I bet he learned something from that, so I'll bankroll him again.'"

In Europe, bankruptcy carries a lifelong stigma. Whatever you do, do not declare bankruptcy in Germany: you, your children and your children's children will all carry a lasting mark of Cain in the eyes of German society. If you must declare bankruptcy in Germany, you are better off leaving the country. (And you'll be welcomed with open arms in Palo Alto.)

I couldn't agree with Friedman more here. And while I want people who are reckless with their debt to be held accountable, I also want people to be able to take financial risks without fear of living in poverty for the rest of their natural lives. Our liberal bankruptcy laws are probably the number one reason why America leads the world in innovation. That we have given people the chance to try and fail is why so many have tried and succeeded. I really believe that the new bankruptcy law is going to thwart some of our entrepreneurial spirit and stifle innovation.

Later, towards the end of the book when Freidman is talking about the need for transparency in all financial institutions and preventing financial meltdowns like Long-Term Capital Management and the S&L crisis, he makes this comment:

There is no greater restraint on human behavior than having other people watching exactly what you're up to.

I understand where he's coming from, if you only think of restraint in the context of large institutions and government. But I found this thought to be profoundly disturbing, in light of both the secrecy of the present administration and the provisions of the USA Patriot that allow the FBI to find out exactly what you and I are up to by sneaking peaks at library records, amongst other things.

In the world that Friedman describes which is increasingly interconnected, where more and detailed information is maintained on the habits of citizens, but more and more companies with no little or no accountability, it is incumbent on a successful society to maintain the privacy of its citizens, and for citizens to protect their own privacy, though this is harder and harder to do.