why, you have to understand some of the subtler implications of Moore's Law. I
have a lot of personal experience with those implications, because I worked at
Intel, the world's largest semiconductor company, founded by Moore himself, Bob
Noyce, and Andy Grove.
I ran the
microprocessor division at Intel and used to listen to Bob Noyce lament that
economists didn't know how to measure productivity in the semiconductor
industry. They measured the dollar
output per worker -- which grew at a snail's pace, because the price per
transistor sold into the marketplace declined at such a rapid rate. Noyce maintained that the proper way to
measure the industry's productivity was to measure output not in dollars but in
transistors per employee. By that
measure, our productivity was growing at 40 percent per year.
manufacturers continued to build new plants in order to introduce improved
production technology. Our output grew so fast we flooded the market with
transistors, and competition often forced producers to sell transistors at less than the cost of producing
them. During production gluts, we
laid off workers. Not only did we close old plants: sometimes we mothballed new
I suspect that just as the number of
transistors in an integrated circuit continues to grow at an exponential rate,
commodity workers using computers and the Internet are increasing their productivity
at an exponential rate. To add to
this challenge, it is very cheap to construct facilities for commodity workers
such as overseas customer support personnel. In many cases all you need is a computer and an Internet
If worker productivity
is growing at an exponential rate and lots of new facilities are being built,
we are at the point where commodity worker output can easily exceed the demand.
If factory workers become more productive as a result of technological advances,
fewer workers will be needed in each factory. When that occurs, the price for commodity work should
decline, just as the price for transistors did. If this comes to pass, commodity workers will find
themselves producing more and more units of output -- clothes, consumer
electronics, washing machines, the handling of customer questions, etc. -- and
being paid less and less for each one they produce.
workers are about to discover what Alice did in her discussion with the Red
Queen in Through the Looking-Glass.
in our country," said Alice, still panting a little, "you'd generally
get to somewhere else -- if you run very fast for a long time, as we've been
slow sort of country!" said the Queen. "Now, here, you see, it takes
all the running you can do, to keep in the same place. If you want to get
somewhere else, you must run at least twice as fast as that!"
workers driven by Moore's Law will be forced to run twice as fast to get ahead,
those of us with unique skills benefit from their exhaustion. We have been able
to buy inexpensive electronic devices and clothes made in developing
countries. These inexpensive
consumables have helped keep the lid on inflation.