In Box

Opening Gambit: Moore's Flaw

Why the tech industry's unbridled optimism won't save the world.

Next year marks the 50th birthday of the first commercially produced silicon microchip, a device that has arguably reordered society more profoundly than any invention since the internal combustion engine. It will also be the 46th birthday of Moore's Law, the prediction coined by the billionaire co-founder of Intel, Gordon Moore, who more or less told us this would happen.

In an April 1965 essay in the trade journal Electronics, Moore predicted that the number of transistors that could fit onto a single chip would double every year -- later revised to every 18 to 24 months -- causing the power of chips to increase, and their price to fall, exponentially over time. It was an audacious claim, and one that proved accurate enough for Moore's Law to make the leap from obscure technical rule of thumb to omnipresent nugget of pop business philosophy, the kind of thing that MBAs love to invoke alongside Sun Tzu's battlefield aphorisms and Malcolm Gladwell's tipping point.

Moore's Law was a perfect fit with the broader zeitgeist of the early '00s. When the United States invaded Iraq with shock and awe, ABC News technology columnist Michael S. Malone crowed that Defense Secretary Donald Rumsfeld's military strategy, favoring high-tech weapons over heavy troop deployments, demonstrated how the "U.S. military has now jumped aboard Moore's Law." A 2004 editorial in the British Journal of Anaesthesia argued that a Moore's Law-like effect was at work in cardiovascular science and medicine, "both of which are advancing at a similar breakneck pace." And environmentally minded politicians like former U.S. Vice President Al Gore have made a habit of invoking it in the service of the most pressing technological struggle of the early 21st century: the effort to wean humanity off its reliance on fossil fuels.

But is the silicon chip really such a great model for solving the world's problems? Moore's prediction, formulated when its author was a 36-year-old researcher working at a Palo Alto semiconductor laboratory, was never the immutable natural principle its most ardent apostles believed it to be. "There's nothing law-like about Moore's Law," says W. Patrick McCray, a historian of technology at the University of California, Santa Barbara. What it was, first and foremost, was an economic argument.

When Moore wrote his essay, the silicon microchip was one of several possible technologies jostling in the primordial soup of midcentury computer science. Moore was arguing that an investment in silicon-based chips then under development at labs like his own would pay off faster, and more dramatically, than an investment in the alternatives. The particulars may have been dry, but Moore's Law struck a peculiarly American chord, with its promise of a rapturously unlimited future and its swaggeringly specific confidence. It had a whiff of Manifest Destiny, and a bit of Babe Ruth pointing to the bleachers at Wrigley Field.

It became a spectacularly successful self-fulfilling prophecy. By 2000, the integrated circuit had made semiconductor manufacturing into a $200 billion-plus industry and transformed the broader economy dramatically enough for U.S. Federal Reserve Chairman Alan Greenspan to remark that "information innovation lies at the root of productivity and economic growth." Moore's prediction of endless computing power and ever-shrinking prices, meanwhile, largely came to pass. A microchip in the early 1970s contained a couple thousand transistors, each of which cost just shy of a dollar. Intel's Xeon processor, introduced in 2007, is loaded with 820 million transistors, each one less than 1/800th the width of the thinnest human hair and costing less than 1/100,000th of a cent.

The exponential growth had a profound effect on how the Silicon Valley entrepreneurs of the 1980s and 1990s viewed the world. In the 2000s, many used their newly minted fortunes to start enterprises with the aim of tackling the world's big technological problems, the sort of things they had dreamed about in their geeky and idealistic youth. The multibillionaire founders of Amazon and Microsoft launched commercial spaceflight ventures. PayPal's Elon Musk started the electric car company Tesla Motors. Former dot-com executives founded Complete Genomics, a firm that hopes to transform genetic sequencing into an affordable consumer service, like getting an X-ray. And the venture capitalists who funded the 1990s tech boom have embraced the clean-energy business en masse, investing $12 billion from 2001 to 2009 in companies hoping to devise and market alternatives to oil and coal.

"We can already see a Moore's Law dynamic operating in the energy sector," John Denniston, a partner at Kleiner Perkins Caufield & Byers -- the venture-capital firm that bankrolled Google and is now a major clean-energy investor -- told a U.S. Senate panel in 2007, "giving us confidence [that] the rate of green-tech performance improvement and cost reduction will offer new energy solutions we can't even imagine right now." Vinod Khosla, the billionaire founder of Sun Microsystems and now among the most vocal clean-energy investors, wrote in Wired about the growth he expected in the capabilities of plant-derived fuels: "Like Moore's Law, this trajectory tracks a steady increase in performance, affordability, and, importantly, yield per acre of farmland."

Such analogies are the information economy's most seductive legacy, and its most perilous. Few other industries are so elegantly reducible to the movement of electrons; the cost and speed of sequencing the human genome, for instance, might be proceeding at a Moore's Law-like pace, but that doesn't mean that human life expectancy is, too. Photovoltaic solar cells are getting better and cheaper, but not exponentially so. And the high-powered batteries used in electric cars are rapidly approaching physical barriers to advancement.

In reality, Moore's Law had little to do with the kind of breakthroughs we typically associate with innovation: The prophecy held because the industry committed to a massive strategic investment in manufacturing, and the technology itself allowed for predictable, incremental processing gains. Even Microsoft founder Bill Gates has come to acknowledge the limits of the analogy. "We've all been spoiled and deeply confused by the IT model," he said this summer when asked about the relevance of Moore's Law to energy technology.

Perhaps the greatest irony of Moore's Law is that it has enabled the rise of Asian economies whose rapid ascent has reminded us that our most confounding problems are not technological, but human. By 2030, the massive expansion of China's and India's appetites, along with more prosaic growth elsewhere in the world, is expected to create a need for three times as many cars and twice as much food, plus shelter for more than one and a half times today's urban population -- and there's no Moore's Law for the oil rig, the cornfield, or the steel mill.

None of this means that progress is impossible. What it means is that progress will be difficult, and it won't look like it did in the 1990s. "Moore's Law, to a degree, has a psychological resonance," says computer scientist and futurist Jaron Lanier. "There's such a rush to it; it's a pleasure -- we want things to go on forever. But they don't."

ISTVAN BARA/KEYSTONE/GETTY IMAGES

In Box

What Shape Is Your Recession?

The alphabet soup of economic misery.

What it means: We're on the way back up. The most optimistic scenario for global recovery, V-shaped recessions only last for a few months before economic growth accelerates sharply again.

Precedent: The 1997 Asian financial crisis, triggered by the revaluation of the Thai baht, saw a deep slowdown and a quick rise thanks largely to multibillion-dollar loans by the International Monetary Fund.

Who's predicting it? The most recent U.S. recession technically started toward the end of 2007 and ended in June 2009. Nonetheless, some influential voices continue to predict a rapid upturn. Hedge-fund investor John Paulson, whose bearish investments paid off during the initial crash, told reporters in April that the "economy is showing strong signs of a recovery" and that he expected it to keep moving up. Analysts at Barclays Capital also predicted in August that a V-shape would prevail, based on the strength of corporate earnings and the capacity of central banks.

What it means: We're still in a hole. A U-shaped recession, in which growth remains stagnant for a long time before slowly returning, is a more negative appraisal of the current recovery.

Precedent: The U.S. economic "malaise" of 1973 to 1975, in which high unemployment and high inflation were exacerbated by an oil-supply crisis.

Who's predicting it: Former IMF chief economist Simon Johnson compared this type of recession to a bathtub: "You go in. You stay in. The sides are slippery. You know, maybe there's some bumpy stuff in the bottom, but you don't come out of the bathtub for a long time." Goldman Sachs's economic research team, unswayed by the growth numbers of early 2010, thinks that tightened lending conditions mean that the recovery will remain sluggish and we're still tracing the bottom of the U. Former Federal Reserve Chairman Alan Greenspan has also thrown in his lot with the U crowd, foreseeing the recovery as a "slow, trudging thing."

What it means: It's going to get worse again before it gets better. More commonly known as the dreaded "double dip," economies in a W-shaped recession recover quickly from an initial shock, only to crash again.

Precedent: Many economists think the Great Depression was actually two separate downturns, one from 1929 to 1933 and a second from 1937 to 1938, caused by premature fiscal tightening and persisting until World War II gave a boost to U.S. industry.

Who's predicting it: Nobel Prize-winning economist and New York Times columnist Paul Krugman is a noted "double dipper," arguing that government measures to boost economic recovery, such as the $1.1 trillion in stimulus spending pledged by G-20 countries, have been insufficient. Harvard University economist Martin Feldstein, who battled the 1980s double-dip recession as President Ronald Reagan's chief economic advisor, also thinks we're likely headed for a second downturn, saying in 2009, "I think we're going to see a temporary substantial improvement. I emphasize the words temporary and substantial."

What it means: The "Bloody L" is the worst-case scenario: The economy essentially falls off a cliff and growth remains stagnant for years.

Precedent: Japan's "lost decade" of the 1990s, which followed the bursting of the Tokyo stock-market bubble after years of rapid growth.

Who's predicting it: Dartmouth economist David Blanchflower warns of an L-shaped global recession if more stimulus measures aren't taken promptly. "That could result in … even [an] L-shaped recovery, given that the private sector seems to be on its back," he wrote last year. An increasing number of economists are now predicting a long and painful L-shaped trajectory for European countries, which have less control over their monetary policies and labor markets, even as they cautiously note that Asia and the United States might be turning back from the bottom.

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