Saturday, July 21, 2012

How to Keep the Debate on Translation Pricing From Going Full Retard

Kirk Lazarus: Everybody knows you never go full retard.
Tugg Speedman: What do you mean?
Kirk Lazarus: Check it out. Dustin Hoffman, 'Rain Man,' look retarded, act retarded, not retarded. Counted toothpicks, cheated cards. Autistic, sho'. Not retarded. You know Tom Hanks, 'Forrest Gump.' Slow, yes. Retarded, maybe. Braces on his legs. But he charmed the pants off Nixon and won a ping-pong competition. That ain't retarded. Peter Sellers, "Being There." Infantile, yes. Retarded, no. You went full retard, man. Never go full retard. You don't buy that? Ask Sean Penn, 2001, "I Am Sam." Remember? Went full retard, went home empty handed...
Tropic Thunder (2008)

It seems as though the Common Sense Advisory has launched a rate survey in order to imbue the idiot-boy shouting match about falling translation prices with some empirical content. The survey has come in for a lot of criticism just because of its formulation. I am not a statistician, but I do know that the creation of an unbiased set of questions is not a simple thing. Kevin Lossner, one of the voices who doubt that prices are declining, regularly summarizes translation surveys by sector organizations that do not point towards the Götterdämmerung celebrated by many self-appointed gurus. His conclusion is as follows:

Rate surveys without a particular ideological or commercial agenda from the ITI and IoL in the United Kingdom and the German BDÜ have larger samples of service providers in many languages, and they mostly tell a story of stable or slightly increasing rates for language service providers.

This to me sounds far more likely than any other sort of scenario (that is, if you are seriously interested in common sense). Of course, there is also the probable fact that translation pricing (mostly for the B2B sector) took a cliff dive in 2008 and 2009, but that is surely due more to the Great Recession than to any factor endogenous to the translation industry (recessions tend to put pressure on prices of all sorts of things because demand craters).

Now, in a vain attempt to keep the debate from going full retard, I have a couple of observations. First of all, even before the current crisis, we lived in a period that some analysts described as the Great Moderation. What does this mean? For reasons that are not altogether clear, the past 30-odd years have been marked by a dramatic cooling off of inflation worldwide. Whereas the seventies were dominated by a precipitous plunge of the US dollar against the ounce of gold, several oil price shocks and runaway inflation, the next three decades were marked by ever lower inflation. Former Fed chief Alan Greenspan recounts in his memoirs how he used to get up every morning and look at himself in amazement in the mirror: productivity and economic growth were skyrocketing, but there wasn’t even a hint of inflation. Many hypotheses were proposed by our dismal scientists (i.e., economists) to explain this remarkable state of affairs. The two most popular explanations were: China (cheap labor) and technology (greater productivity with equal inputs). The latter explanation blossomed further into the idea of the New Economy in the 90s. Basically, it stated that the Internet and better communications technology were allowing the world economy to achieve runaway growth without inflationary pressures. Oh, one corollary of this brave, new theory was that recessions were a thing of the past. Was the “New Economy” theory correct? Well, three little incidents happened along the road to recession-free Tech Utopia: the 2000 bursting of the 90s Internet bubble; the 2001 recession; and the worldwide doo-doo storm known as the 2008 financial crisis (and the ensuing Great Recession). That is why I find it hilarious to see the translation gurus peddling the same outdated ideas about a tech-driven deflationary spiral a full decade after the theory was totally discredited by a little thing called reality.

Even now, four years after the crisis began, the thing that keeps central bankers awake at night is deflation. The financial industry has an in-built bias against low interest rates: holders of financial assets hate them. But central bankers in both the First World and the Third World are still fretting about the opposite phenomenon: their nightmare is about the entire world going down a deflationary drain. If you think lower and lower prices are neat-o, e-mail your closest Japanese acquaintance and ask him how deflation has been working out for the Land of the Rising Sun. If you suggested to any of those central bankers that technology has anything to do with our current problems, he would laugh in your face, because obviously the factor putting pressure on prices currently is fear. Good old fashioned fear. Right now, if you buy a German short-term bund, it gives you a negative interest. Yes, you get less money back when you invest in some German and British tenors. Investors are basically paying safe-haven countries to hold their money. There is so much fear around that the smart money prefers to forgo interests and simply pay a small fee to have a creditor country safeguard their money.

Okay, now for the second observation. In a context of low inflation or even deflation, prices that remain stable or increase slightly are actually posting huge increases in value as everything else drops in monetary value. So, any discussion of higher or lower translation prices is pointless outside the macro context of where prices are going worldwide. For now, world prices are stagnant and threatening to shrink. In that context, stable to slightly higher prices mean that you are winning the rat race. If that is your case, pat yourself on the back. If not, try to find some way to get on the winning wagon.

Remember: fear and unfounded paranoia are only certain recipes for going full retard. And, as Sean Penn discovered, that never pays off. As Robert Downey Jr. reminds us: "Never go full retard."

Miguel Llorens is a freelance financial translator based in Madrid who works from Spanish into English. He is specialized in equity research, economics, accounting, and investment strategy. He has worked as a translator for Goldman Sachs, the US Government's Open Source Center, and H.B.O. International, as well as many small-and-medium-sized brokerages and asset management companies operating in SpainTo contact him, visit his website and write to the address listed there. Feel free to join his LinkedIn network or to follow him on Twitter.