Identify and define two of the “rules” of Friedman’s (2000) “Golden Straightjacket.” Briefly explain the political implications of the Golden Straightjacket.

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Two rules Thomas Friedman lists in the chapter “The Golden Straitjacket” from his book The Lexus and the Olive Tree include balancing budgets and letting the private sector function as the primary source of economic growth. The latter rule relates to Friedman’s overall idea of the Golden Straitjacket. According to...

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Two rules Thomas Friedman lists in the chapter “The Golden Straitjacket” from his book The Lexus and the Olive Tree include balancing budgets and letting the private sector function as the primary source of economic growth. The latter rule relates to Friedman’s overall idea of the Golden Straitjacket. According to Friedman, the Golden Straitjacket took hold in 1979 with British Prime Minister Margaret Thatcher. In the 1980s, United States President Ronald Reagan advanced the Golden Straitjacket. Both leaders redirected power away from the government and toward the free market. Now, it was up to private companies to expand the economy.

The stress on the private sector narrowed the political arena. As countries surrendered power to private corporations, it became difficult to spot any “real differences between ruling and opposition parties.” The political choices devolved into “slight nuances of taste” and “slight nuances of policy.” With the Golden Straitjacket, robust policy debates all but disappeared, since neither party wanted to alienate the private sector.

The emphasis on private companies relates to the importance of balanced budgets. At the end of the chapter, Friedman explains how Canada was more concerned about the arrival of a person from Moody’s, a credit rating company, than the arrival of Bill Clinton, the President of the United States at the time. The attention paid to Moody’s representative highlights the priority of economics. A balanced budget can hurt certain citizens because it restrains the government from spending money that could help them. The implications are that the government puts the welfare of the private sector ahead of the welfare of the citizens it's supposed to serve.

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