I Hope You're Reading This in English

OK, so this has nothing to do with law firms per se; it's still fascinating (and we're allowed to have recess even while school is in session).  The FT has an analytic/speculative piece comparing the economic performance in the post-WWII period of (a) the US, the UK, Canada, and Australia [a/k/a the "English-speaking" world] with that of (b) Germany, France, Italy, and Japan [non-English speaking, duh]. 

The story in a nutshell?  Starting in 1950 with average GDP per capita at about 35% of the US level, the non-English speaking group grew to about 80% of the US level by 1990, but has since fallen back to 70%; and the UK/Canada/Australia combo has been comfortably ensconced in a narrow band of 70-80% of the US level for the entire time.  (The article's charts are truly well done; be sure to take a look, as they virtually tell the entire story without text.)  So those are the facts.  The interesting question is, "What's going on here?"

Starting with the obvious, at the end of WWII Germany, Italy, Japan, and even France were economic basket cases; they had nowhere to go but up.  The late Mancur Olson contributed the best formulation of an additional consideration:  As economies become more prosperous (and as people become more complacent), "distributional coalitions" seeking their own advantage arise and gain strength, calcifying the economy.  WWII busted the Axis' pre-war coalitions asunder, and it took them 40 years to re-establish themselves. 

Meanwhile, the converse was going on in the US, UK, Canada, and Australia.  When the conspicuous pain of stagnant productivity, high inflation, a crummy manufacturing sector and a crummier stock market all combined to assault those economies in the 1970's, everyone from policy-makers to business executives decided to actually do something:  And the result was an unprecedented wave of deregulation from the public side and massive financial re-engineering (spinoffs, LBO's, hostile takeovers, recapitalizations, de-conglomaterizations, etc.) from the private  side.  Over time, these trends had the predictable beneficent impact.

It gets better.  (At least it gets better if you're reading this in the original English and not as translated into German, French, Italian, or Japanese).   The late 20th-Century and (so far) early 21st-Century acceleration of globalization has had a disparate impact on the manufacturing sector vs. the service sector.  Manufacturing is the quintessential activity capable of being relocated abroad. 

But services are tougher.  (A haircut, a dinner, or even an opera performance, might be cheaper in Mexico, but there are, shall we say, other considerations.)   With relatively greater labor market mobility in the English-speaking countries, and with relatively less reliance on a robust manufacturing sector to begin with, service sector growth and innovation has found fertile soil here. 

If you're a lawyer, this is very good news (see, you knew I'd connect it somehow).

As to whether it will continue, the FT ventures no opinion.  But then, the global economy is not and never has been a zero-sum game.  The happy circumstances we English speakers find ourselves in are not remotely tied to the misfortune of sclerotic economies elsehwere.  We might, however, be well advised to take a lesson and not drive into that same snake-pit of indulging distributional coalitions.