Want Growth? Speak English


There's been a lot of bad news out there in the world economy

lately. Supposed economic superpowers like Germany and Japan have

fallen on hard times; Asian tigers that thought the future belonged

to them suddenly find that it belongs instead to Westerners with

ready cash; Latin Americans who thought they had put their past

behind them are watching with horror as financial crisis strikes once

again. And yet there are also some surprisingly happy economic

stories out there. What do they have in common?

The biggest favorable surprise is, of course, the amazing

performance of the U.S. economy. But there is Australia as well--

smack-dab in the middle of the crisis zone, riding the storm out

without pain. (Australia's economy grew nearly 5% over the past year,

while neighboring Indonesia's shrank 14%.) There is Ireland, the

recently dubbed "Celtic tiger," growing at an amazing 8% rate for the

past five years. Then there are the British: They have been

suffering a bit of a wobble recently, but the fact remains that not

long ago they had the highest unemployment rate among major European

countries, and now they have the lowest. Nor should we forget Canada

(it's that cold place north of here, with all the female singer-

songwriters): While it has lagged behind the U.S., it has strongly

outpaced Europe and Japan in growth and job creation.

A lot of effort has gone into figuring out what the world's crisis

countries have in common--indeed, the search for "indicators of

vulnerability" has become a substantial industry. But what about

indicators of invulnerability? What do the countries that have

managed to remain prosperous while the world suffers have in common?

Well, the answer is plain to the naked eye--or make that the naked

ear. Yes, the common denominator of the countries that have done

best in this age of dashed expectations is that they are the

countries where English is spoken.

As Dave Barry would say, I am not making this up. Statistical

analysis suggests that there is a real sense in which the English-

speaking economies tend to have a common destiny, even when they

seemingly shouldn't. Consider the case of the U.K.--which is, say

sensible people, a European nation even if some of its politicians

wish it weren't. The U.K. does much more trade with its European

neighbors than with its transatlantic cousins. But the U.K. business

cycle, it turns out, is highly correlated with that of the U.S.

(since 1982 the unemployment rates have had a correlation coefficient

of 0.74; a 1.0 means perfectly correlated) and not at all correlated

with the new euro zone (correlation coefficient of -0.08!).

Australia may be a sheep-raising and mining economy on the other side

of the world, but its cycle, too, is remarkably correlated with what

happens in the U.S.

So what do the English-speaking countries have in common that

might explain why they are all doing relatively well right now? I've

done some research--namely, talked to a couple of colleagues over

lunch--and come up with the following speculations:

First, there's the Alan Greenspan theory--or is it the Larry

Summers theory? Economic policy in English-speaking economies tends

to be run by smart economists with one foot in the academic world,

who therefore make better decisions than the doctrinaire mandarins

who run ministries of finance. And in a world where the rules have

suddenly changed, the story goes, clever men and women who went to

MIT are better able to adapt than bureaucrats whose only expertise is

in office politics.

A slight variant is the Margaret Thatcher theory. In the 1980s

there was an ideological groundswell in the English-speaking world in

favor of markets and against government intervention; perhaps the

rest of the advanced world missed the tide because it couldn't read

Milton Friedman in the original.

Then there's the globalization theory. English is the language of

the global economy--business must use some lingua franca, and no

other tongue has the necessary critical mass. That means people who

have grown up speaking English have an automatic head start.

Finally, there's the Internet theory. Not long ago, French

President Jacques Chirac lamented that the Internet is an "Anglo-

Saxon network"; what he probably meant was "English speaking." And

it is, as is the whole new technological universe. One particular

point that a friend made to me is that e-mail and the Internet put

people who use nonalphabetic writing, like the Japanese, at a

particular disadvantage.

On the whole, I'd probably place most of the emphasis on Greenspan

and Thatcher. But one thing is clear: Something about the

Zeitgeist-- sorry, I mean the spirit of the time--favors those of us

who speak English. Let's enjoy it while it lasts.