While reading “The World is Flat” by Thomas Friedman, I realized something incredibly frightening: Countries that speak English will gain a substantial advantage over those that don’t in this new era of globalization.

In this article, I will try to give my conclusions for the more hidden effects of globalization on especially the Continental European countries, and how to counter them:

• Detachment from Productivity Improvements
• Intellectual Isolation
• Isolation from Talent Pools

Trajectories

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All this cheap labor is ‘virtually’ pouring into the USA (and other countries that can absorb English speaking call center support). Does that make a difference economically? What is going on in the First World Economies?

The old European powerhouse triage Germany, France and Italy are coasting along at a disappointing annual growth rate of less than 2 percent. The USA, the UK, China, India and Brazil are growing at twice or even higher that rate.

Is it simply a coincidence that the lines seem to be drawn between countries that speak English (either as a first or second language) and those that do not? Is that a statistical fluke or is something deeper at work here?

The Impact of Language

Detachment from Productivity Improvements

In a time where economic battles are fought over product creation as well as the cost structures of making a product and serving a market, the outsourcing opportunities for English speaking countries are simply more abundant.

As low-paying jobs pour into the developing world, the companies using them to serve markets increase their productivity (that is the cost to make and serve their products) dramatically.

What happens to those not speaking English? Well, they are forced to use higher-cost employees to perform low-value tasks. The immediate result is a detachment of the non-English speaking world from the benefits of low labor cost in India and China. Will these countries eventually service the other economies? Maybe. It depends on whether they cannot find higher-paid tasks with their existing customers.

Intellectual Isolation

I was reading a book by the German Institute for Economics called ‘Wachstumsfak­tor Innovation’ (meaning Growth Factor Innovation), published 2003. It is a good book, giving references to prior work. It does not, however, mention any of the names that I have grown so accustomed to. No Clayton Christensen, no Gary Hamel, no Tom Peters. It rather listed secondary or tertiary work done by Germans (some more than 50 years ago), or work by the OECD, some French authors and a few publications from the UK. Nothing about the current revolution in Innovation Management globally.

This is what I call Intellectual Isolation. If an economy does not or cannot participate in the global development of knowledge, it will always use tools that are outdated. There is a process map for Innovation Management in this book on page 121 that would have served well 10 years ago. Now it is simply obsolete.

The other form of isolation is the filtering language barriers impose on people. If you cannot read English, you rely on translators to convey the finer points of arguments. In essence, you are dealing with interpretations. Most of the time, this is not very apparent, a hidden barrier.

Isolation from Talent Pools

How do you get the best people if they cannot live in your country because they do not speak the language? How do you grow your best people if they cannot interact with the best globally? The isolation through living circumstances and learning opportunities is a subtle but powerful way of disconnecting economies from vital talent pools. There are some hotspots where the big multinationals like SAP are creating environments where English speakers can actually live, but they are far and few between.

Since we are right now living in Germany ourselves, we can speak about this first hand. We are constantly asked to justify our experiences in the USA or the rest of the world. The typical question I get from local prospects is ‘Have you done this in Germany, because we are different than the USA?’.

This attitude will cut Germans off vital supply lines for talent. It will both discourage highly-talented people to open shop in Germany, importing their global knowledge and experience, and prevent Germans without a zeal to speak English to connect with the global knowledge pool to actually learn from the best.

What should be done?

Here are a few recommendations for continental Europe.

Education:
Continental Europe needs to understand that their multitude of languages serves as a economical resistor as well as a cultural adhesive. The one does not evolve in hard sync with the other. There is a way to retain cultural identity without sacrificing economic prowess.

Change has to start in school. Modern education needs to adopt the attitude that fluency in English is not another course like Math or Physics, but the basis, the enabler of those. Children leaving primary school aged 10 need to be able to receive schooling in scientific topics both in their native language as well as in English. Beyond Age 13, the classes in Math, Chemistry etc. should be held exclusively in English. This will enable a generation of students to take full benefit of the large pool of scientific writing available in English, instead of either being caged into the writing of their native tongue or having to acquire the skills of using English at a time when such basic learning will distract from the task at hand: to get a degree.

The upgrade of workforce education is the issue of this century.

Business:
The business community in continental Europe needs to open up their knowledge pool to English. So many exciting and powerful insights are available in this language first. Waiting for a translation or shunning them out of linguistic separatism is neither beneficial nor sensible. The tired argument that Europe is looking for an alternative way of life and business is touching, but it also is crumbling under the onslaught of those nations that are embracing the Anglo-Saxon way of Commerce, surpassing the European nations in their desire to force social ideas into business at all cost.

Cultural Export:
The need to find cheaper labor somewhere else on the planet will not pass the continental European economies. Language is, as discussed above, a strong barrier to this development. Rather than stubbornly insisting on their way (the way it has always been), these economies need to embrace the new. Why does the Goethe Institut of Germany spend so much time on exporting German Art, History, in short “culture”? Should one of its driving mandates be the development of enclaves of German speaking employees that can provide those services to Germans that are no longer generating enough value to pay for the substantially higher cost of living in the Vaterland? The misguided belief that this would be cultural oppression and exploitation needs to be addressed and reversed. Giving people value-creating work for a decent salary and a chance for growth is not exploitation but the most earnest form of international aid.

Resources

‘The World is Flat’, by Thomas Friedman, ISBN 0713998784.

‘Wachstumfaktor Innovation’ by Institut der deutschen Wirtschaft Köln, ISBN 3602147193