America’s Future Dominance in the Global Economy

Part 1:  English Language Dominance Over Software

When I began my career in the 1980s, the U.S. economy was sending mixed signals.  In some ways, it seemed to be roaring back, yet many Americans believed that we had lost our global economic competitiveness.  Some even thought the Japanese were going to take over many of our facilities.

There was reason to be concerned. The Japanese invested $20 billion directly into the U.S. economy in 5 years, we had movies like Gung Ho, and in 1989 the Mitsubishi Estate Company of Tokyo bought the Rockefeller Center.

Then there was an inflection point, driven a lot by the PC revolution and by software. Microsoft had been founded in 1975; Apple Computer was founded in ’76, and Oracle was founded in 1977.  These were to become three great companies in our time, yet in 1980, they were just embryonic. They all grew to be forces and then became public in the latter part of the decade.

Out of this success, something unintended happened. The Western World began to prevail over the rest of the world mostly because of its dominance in software. The software advantage was, in large part, due to the genetic superiority of the English language for writing software, compared to pictographic based alphabets of kanji and simplified Chinese.

Think about this for a moment. There are over 25,000 characters in Chinese. The early computers, 8-bit computers and 16-bit computers couldn’t process a 25,000-character pictograph language. So, you needed a 26-character language. Hence, all the early software languages — Basic, DOS, UNIX, etc., are all in English. It was no accident that English language companies that were preeminent there.

Imagine if you were 18 years old and living in China or Japan then, and your parents told you that you needed to be a computer programmer to make money. At age 18 then – and now – you must first master English. It’s a big difficulty, and that’s the challenge you still face today if you live in China or in Japan.

But let’s go back to the 1980s for a moment.  It was then that we started to see things change in the technology industry. Intel was about to go out of business. Its bread and butter, memory chips, had been developed at a lower cost and higher quality in Japan and, soon after, Korea. But the CPU, the microprocessors, the very brain of the computer saved it. And we saw the promise and performance of the PC lift Microsoft, Intel, Dell Computer, HP and IBM to preeminence.

Next we saw the Internet wave of the ’90s, and that brought to prominence a new wave of American software companies, such as, eBay, Amazon, and Netscape, along with new technologies, such as, Java and ShockWave. Then came Wikipedia, Google, and Yahoo. Again, no real non-American companies, but why is that?

Much of the reason has to do with the fact that as soon as something becomes software, the variable cost of distributing it goes to zero. So while it’s expensive to write the first copy; the next copy’s a penny, which means if I win the major market for software then I win every other market. And what we’ve seen in the software industry is there are substantially no successful non-American companies. The only successful non-American company of record in the software industry is SAP. But SAP is run by Americans, uses English as its primary language and, for all practical purposes, is an American company.

The truth today is that if you speak English, you can purchase everything cheaper. If you sell in English, you will sell everything, your product or service, more expensively. There’s a bigger market when you market and sell in English. There’s a cheaper cost when you buy in English.

The point here is that the center of gravity of global business is the English language and it’s primarily due to software.  I will explore the ramifications of that further in a future blog post.

Now that the 2012 election is decided, it is time for us to focus on creating jobs, fostering business growth, and developing American technology. As I’ve said before, I believe that the combined forces of mobile and social software will transform 50% of the world’s GDP in the coming decade. America is in the position to be at the forefront of this economic transformation and in return, the world’s largest beneficiary.