It’s because software is the best way to fight inflation. Automate what people did, replace humans with code, and you cut costs. It’s just Moore’s Law in action.
A year ago, the pandemic gave a big boost to software stocks. Software was the best way to keep the economy going.
There’s irony in this because software is still made by hand. And unlike this story, software maintains its utility, even increases in value, the more it’s used.
This has long been obvious in my house.
My wife became a computer programmer in 1982, supplementing my income as a business reporter. My career remained on a high until the dot-bomb in 2000. Since then, hers has gone from strength-to-strength.
Why? It turns out the most important programming language is English. Understanding what code is supposed to do, how it’s supposed to work, is an enormously valuable skill. I would like to say she has it because she married a writer. It’s really because she has a great memory, is very organized, and can explain herself simply, not just on the page but on the phone. She also holds her temper and works well with others, even idiots.
But there’s another irony that has hurt her career. That’s technology debt. It’s cheaper to launch a new platform, to start over, than to build on an existing software stack. This is behind the rise of cloud-based fintech stocks. All transaction costs are being cut, as are their margins. Visa is now worth more than JPMorgan Chase. Paypal is closing in. Buy Now, Pay Later outfits like Affirm are approaching the value of credit card banks like Capitol One.
The age of software, like the gilded age that created manufacturing and our cities, requires the attention of government. This government must be independent of the software industries to perform its judicial and regulatory functions.
This is the final irony of our time, and the great challenge before democracies. We can’t let software hold a veto over democracy. This will be the great battle of the new decade. The power of software must be controlled, or it will surely control us.