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Probing the macroeconomics side of Moore's Law

Posted: 15 Dec 2014 ?? ?Print Version ?Bookmark and Share

Keywords:Moore's Law? EUV? lithography? transistor? CMOS?

Its use connotes the ideas of economists Robert Mundell and Arthur Laffer. Supply-side economics is likened by critics to "trickle-down economics," a theory that believes money trickles down from the producers to the consumers. Trickle-down economics advocates that producers are job creators in an economy and hence it supports giving tax cuts to the producers as a way to boost economic growth so that producers can hire more employees. There is a flaw in this approach because if the producer is not able to sell what he/she has already produced, why would the producer consider hiring more employees (with an incentive of tax cuts) if the consumer demand for his produce does not increase?

In an interesting article, "Reagan: The Great American Socialist," economist Ravi Batra argued that the supply-side economic policies adopted by Ronald Reagan's economic advisors in 1981 resulted in budget deficits soaring from 2.5 per cent of GDP to more than six per cent, alarming financial markets, sending interest rates sky-high, and culminating in the worst recession since the 1930s. Reagan's supply-side economic policies resulted in the wealthiest facing a 28 per cent tax rate, while those with lower incomes faced a 33 per cent rate. In addition, the bottom rate climbed from 11 per cent to 15 per cent.

This is how supply-side economic policies since their inception have increased the income disparity across US and global economy. This is verily why free market capitalism has been transformed into crony capitalism over years, which is now bringing the global economy and global semiconductor industry to a standstill due to poor consumer demand resulting from a poor return on investments.

IC industry needs to be guided accordingly by Moore's Law

We need to implement economic solutions for sustaining the progress of Moore's law through establishment of a true free market economy where the real job creators in the economy are not only producers but also consumers. Without a healthy consumer demand for the latest and greatest electronic products, any further investments towards the progress of Moore's Law, transitions to 450mm silicon wafers and EUV lithography improvements, are bound to provide a poor return on investments for the producers.

If free market economic reforms can usher in a healthy consumer demand for products, then return on investments for producers can also be ensured. Hence, we can conclude that the slowing of EUV rollout, halting of 450mm wafers, and uncertainty beyond 14nm is essentially a failure of supply-side economics, and is definitely not an end of Moore's Law.

With this in mind, I have undertaken the next venture of authoring another book titled "Sustaining Moore's Law: Uncertainty Leading to Certainty." I hope to provide specific industry solutions to envision a sustainable economic and technological progress of Moore's law. This book will also offer solutions for an exponential growth of Internet of Things (IoT) sector resulting into a broader macroeconomic growth and broad prosperity.

I believe in Ravi Batra's forecast that a new Golden Age will start in America sometime in 2016, after the demise of crony capitalism, thereby solving the problem of unemployment by the restoration of free markets.

- Apek Mulay

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