The most significant long-term development that occurred last week did not happen in the South Carolina primary or in Washington, but at the Intel Developers Forum, where the world’s largest computer-chip maker unveiled the world’s fastest chip.
The announcement by Intel, whose Pentium microprocessors dominate the computer world, received only a paragraph or two in the business pages of most newspapers and no mention on the nightly news shows. But that meager response is as much a reflection of the news media’s frequent inattention to technological advances as it is a reflection of our so-what-else-is-new attitude toward high-tech breakthroughs.
Because Americans have become so used to one stunning advance after another, technological achievements are no longer big news. But Intel’s new chip will have a broad, long-term impact on the American economy, our ability to compete in the global economy, future innovations, the budget surplus and even on our politics.
Intel’s fastest chip was the Pentium III, which runs at 800 megahertz. The new chip will be twice as fast, giving future computers more speed and more power. This will help make U.S. businesses and workers more efficient, more productive and thus more competitive, all of which will boost the bottom line. And this in turn will have a huge impact on a number of stubbornly persistent problems and fears that continue to keep the United States from achieving its fullest economic potential.
Take the stodgy Federal Reserve Board’s myopic view of inflation. Sadly, the Fed remains in the grip of the Old Economy paradigm, wringing its hands and complaining that the economy is growing too fast and is thus in danger of inflation. So the Fed’s old-fashioned prescription is to raise interest rates to boost the cost of borrowing, put some people out of work and slow everything down. The Fed has raised rates four times since June.
Of course, no one except Fed Chairman Alan Greenspan can see much, if any, real inflation. And that stems from a number of factors: deregulation; free trade; a wave of downsizing that has made U.S. companies the most efficient in the world; and, most important, the high-tech revolution that has boosted productivity, which has in turn reduced production costs, consumer prices and, of course, inflation.
The super-fast, 1.5 gigahertz chip that Intel unveiled is going to help the United States become even more productive and more efficient, allowing us to grow our economy even faster without fear of inflation. That is, if the Fed does not sandbag the U.S. economy first with higher interest rates.
Of course, U.S. businesses have found ways to overcome the Fed’s tight money policy. While the Fed fears that labor shortages will drive up wage demands, which will in turn drive up inflation, businesses are finding ways to produce more with fewer workers by cutting middle management, reducing inventory costs and turning new products out more quickly all with the help of faster and more powerful computer systems.
The most stunning manifestation of this growth was reported last week by the Fed. Industrial production surged in January to its highest level since the summer of 1998. Output at factories, utilities and mines jumped by 1 percent, far beyond the 0.5 percent rate that most analysts had predicted.
At the same time, the Commerce Department reported that housing construction soared in January despite Fed-induced higher mortgage rates.
So much for all those doomsayers who this time last year were predicting the economy would be slowing down and taking to its bed with a bad case of the Asian flu or an overdose of imports. Remember all those predictions that “the bubble will burst”?
And if all this were not enough, now comes the news that the AFL-CIO wants to offer amnesty to the 6 million illegal immigrants in this country and repeal laws that impose sanctions on businesses that hire them. In a move that was welcomed with open arms by the U.S. Chamber of Commerce, big labor now seems to have accepted the simple reality that immigration does not destroy jobs but helps to create them, and will help boost its declining membership to boot.
But back to Intel’s faster computer chip. To the extent that its development further fuels the growing U.S. high-tech revolution and future economic expansion, it will contribute to political demands for pro-growth policies that will keep the investment engine of the expansion running at full power.
This means that we will need to cut tax rates to spur increased savings and venture-capital investment for the Intel companies of the future; that we will need to let all American workers become owners of the U.S. economy by letting them invest their payroll taxes in stock and bond funds; and that we must deregulate the public-school monopoly with school-choice competition to produce the highly skilled, high-tech workers we will need in the 21st century.
A tall order. But the inventive folks at Intel should give all of us renewed inspiration that the United States is fully capable of achieving it.
Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.