George Gilder
George Gilder
Microcosm: The Quantum Revolution in Economics and Technology
ISBN: 067170592X
Microcosm
Economist and author George Gilder takes an intriguing look at the future of technology and the world economy in his most recent work, Microcosm: The Quantum Revolution in Economics and Technology. As opposed to the macrocosm, he explains, where Newtonian laws of physics apply, the microcosm is governed by the laws of quantum theory. Understanding the microcosm, invisible to the naked eye, is what Prof. Gilder identifies as the key to future economic development. He states in this interview that "the microchip is the most important phenomenon in the world today....It is a technology that truly overthrows matter in the usual sense where things get more powerful as they grow bigger; in the microcosm things grow more powerful as they get smaller."
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TRANSCRIPT
Microcosm
Program Air Date: September 24, 1989

BRIAN LAMB, HOST: George Gilder you have a new book called "Microcosm." What is a microcosm?
GEORGE GILDER, AUTHOR, "MICROCOSM": Well Plank- Max Plank- who invented Quantum Theory said it was very difficult for people to accept quantum theory because it entailed movement from the macrocosm where we ordinarily live which we sense with our senses into the microcosm of quantum physics which is an invisible domain and which operated according to laws completely alien to those that govern the things we see and feel and touch. And it's that move from macrocosm Newtonian physics which behaves according to the human senses the way billiard balls and all those other analogies that are used to depict conventional Newtonian physics to quantum theory where you don't have particles and substances in the sense that you do in the Newtonian world. Where in the microcosm everything is invisible and governed by quantum laws which are very mysterious and contrary to our usual beliefs and expectations. And it's quantum theory that governs the microchip. And it's quantum theory that explains the prodigal effectiveness of microelectronic technology.
LAMB: Are you..have you ever been afraid in this process of writing this book that people like me won't understand it?
GEORGE GILDER: No. I mean I devoted really seven years to writing this book and the focus of those seven years was to make anyone understand it. And I think I probably did. I mean I find that people I know with no scientific background at all are capable of understanding and enjoying the book and as a matter of fact gaining a new appreciation for the technologies that mystify us but also greatly dominate our lives. And so I think it gives a glimpse into the microcosm. And by understanding that it's a completely different domain from the macrocosm of our usual lives you can understand it better. I mean it's the effort to try to treat it as if it's just another mechanical technology. As if it's just another machine such as another form of loom or a pick and place robot. It is a radically new technology governed by completely different rules.
LAMB: Why did you write this? Why did you spend seven years writing this?
GEORGE GILDER: Because I think it's the most important thing that's happening in the world today. The microchip is the most important denominate in the world today. And in the next decade all the leading analysts believe that we will move to a billion transistors on a single sliver of silicone the size of your thumbnail. Today..that means the equivalent of 20 cray two super computers.
LAMB: What's a Cray two super computer?
GEORGE GILDER: It's the top of the line in computers. It costs $20 million apiece. Between $15 and $20 million apiece and you'll be able to put 20 cray two super computer central processing units on a sliver of silicone the size of your thumb where it will cost about $100 to produce. Probably under $100. What we're talking about is somewhere a ten thousand fold increase in the cost effectiveness of computing in the next decade or so. This is the most important thing that's happening in the world today. There is nothing that touches it. Not Russia, China, third world debt. All of this is dwarfed in significance by this infinitesimal microchip that become exponentially more powerful every year. And as a matter of fact, what happens in China and the Soviet Union is largely governed by their increasing intuition that the west and Asia possessing the microchip capitalism possessing the microchip has the secret to radically new technologies of every description.
LAMB: Who controls whether or not your theory will be in actuality successful or what the word is will come to pass.
GEORGE GILDER: Well it's freedom. I mean to the extent that individuals are allowed to pursue this technology to its potential it will be achieved. And because the technology itself gives much greater power to individuals against the authority of big bureaucracies and governments. I think it is virtually inevitable that this potential will be fulfilled. It might not..if we retreat from the microcosm and repress the technology in the United States it'll probably be achieved in Taiwan or some other nation but it will be achieved. And that's why its so critical that we cherish and develop our tremendous resources in microelectronics rather than disparage them as we are today through some short sided government policies I believe.
LAMB: As a way of trying to understand how you came to all this where did you write the book? Where did you physically write the book?
GEORGE GILDER: Mostly in my basement and in my parents..in an office I have in my parents house down the road. I moved to different places to write it. I've written it in all sorts of different places with a portable computer that I could carry from one place to another a Zenith Super Sport that I could use almost everywhere I wanted.
LAMB: Is it Terringham, Massachusetts?
GEORGE GILDER: Terringham, Massachusetts.
LAMB: Where's that?
GEORGE GILDER: That's in the western part of Massachusetts in the Berkshire Hills.
LAMB: I'm going to go through some of the acknowledgements just as a way of trying to understand how you put all this together. Who is Cal Tech professor Carver Meade? You say in here "The role in the book will be evident to any reader. But also important was the contribution of his students.." and you name a whole bunch of students.
GEORGE GILDER: Well Carver Meade is one of the titans of microelectronics. Early he studied with Fineman who was the great Cal Tech inventor or the latest theory of quantum theory and with Del Brook who was another Nobel Prize Winner who previously collaborated with Neils Bohr (?) who was one of the key inventors of quantum theory. And he proceeded on to apply these theories to solid state phenomena and when he did he prophesied the kinds of predigitous densities of..on slivers of silicone that currently are being achieved. And at a time when most people thought when you got so many transistors so close together on a chip the heat..they would generate so much heat that the chip would melt and..or fry. It was generally believed that such densities were not possible. And he showed that as you approach the mean free path the smallest distance an electron can go without colliding with the actual cellular structure of the material itself everything gets cooler and cheaper and faster and better as it gets smaller. So you have an exponential increase in capability as the density of transistors on the chip gets greater and greater. As you get first tens then thousands then hundreds of thousands now millions and later billions of transistors on a chip. It doesn't get more difficult to make. Each function doesn't get more difficult to make. It doesn't fry. It doesn't..it gets cooler and better and faster and cheaper.
LAMB: Where did the students come in?
GEORGE GILDER: The students taught me. I mean I..Carver is an extraordinarily busy man. He consults with companies all over the world. He's was writing a new book at the time and although he lavished a lot of time on me he also gave me access to all his students who were willing to explain these technologies laboriously to me over the years. I had written a newsletter on the industry for a year so I had quite a deep immersion in the industry. But the actual technology and physics at the heart of it perplexed me until I did plunge into this Cal Tech crucible of the microcosm.
LAMB: So you'd go out to Cal Tech in California. Where is it located?
GEORGE GILDER: It's in Pasadena.
LAMB: Spend time there?
GEORGE GILDER: Yeah. I spent a lot of time there. I'd go to the Athenaeum which is one of the most beautiful buildings in the country. It's their faculty club and I'd stay there and I'd go to Carver's courses and talk to his students and interview people. And then I'd go to Silicon Valley and interview people in companies many of whom were fulfilling the technologies that he was promoting and inventing.
LAMB: Other things out of the acknowledgements I wanted to ask you about. "I am deeply indebted to Peter Sprague and Nick Kelly for introducing me to this stirring and crucial subject. Who are those two men?
GEORGE GILDER: Well Peter Sprague is Chairman of National Semiconductor Corporation. He lives down the road. His wife was an old friend of mine. He's an old friend of mine and my wife's and we've just have known each other for years. And he is Chairman of National Semiconductor and has at first intrigued me with technology. I became conscious of semiconductors because of his role in industry. Nick Kelly is CEO and was founder of a company called Berkshire Corporation which makes clean room wipers, apparel, materials disposables that get used in a semiconductor clean room and a clean room is ten thousand times cleaner than for example an operating room in a hospital. Ten thousand times cleaner. So anything's dirty in a clean room. So what you have to do is analyze the chemistry of anything you introduce into the clean room very carefully and exhaustively. And so even paper products which seem disposable and simple do have this high tech dimension. And Nick is an old friend of mine and he brought me on the Board of his company and we went together to Data Quest Conferences on industry and I just learned more and more. And as time passed it became evident to me that if you could fully comprehend the microchip its physics, its meaning, its future you would gain a deeper insight into the forces of growth and change in the world economy than by studying any other economic subject. So although I'm an economist I discovered that all the materials I could study in economics were less significant than the silicon I could explore with Carver Meade, Nick Kelly, Peter Sprague and scores of entrepreneurs and engineers from Micron Technology in Boise, Idaho they helped me tremendously to Cypress Semiconductor and T.J. Rogers. Just lots of people contributed to writing this book.
LAMB: In the case of Nick Kelly at the Berkshire Corporation. Berkshire is where..that's the area you live. Terringham, Massachusetts in the Berkshires.
GEORGE GILDER: Yeah.
LAMB: And his company is there.
GEORGE GILDER: Right.
LAMB: Okay.
GEORGE GILDER: Even the..even..you know all over the country key technologies and key companies find themselves involved ultimately in the computer business in some way or another.
LAMB: Also to Ben Rosen this is you're debted to Ben Rosen whose suburb newsletter taught me how to write about it. Who's Ben Rosen and how did that newsletter..what's the newsletter?
GEORGE GILDER: Well Ben Rosen was an analyst a financial technical analyst at Morgan Stanley and he wrote the Morgan Stanley Electronics Letter. And it became the most prestigious electronics letter in the field. And he spun it off by one means or another and started the Rosen Electronics Letter which I started reading fanatically. I mean it was just so lucid and well written. It really gave me a window into the microcosm that no one else had given me. So I read it just fanatically.
LAMB: What year did you start reading it?
GEORGE GILDER: This was back in late '70's early '80's. And then after I wrote "Wealth and Poverty" which just had..it had some references to semiconductors you know they were the key sort of example of a company that defied gull brace rules of the new industrial state. So I used it but I didn't really pursue it closely. And then I went down to..I had just written an article on micron technology for Forbes, this company in Idaho. And I went to Ben Rosen to persuade him to give me the newsletter free because I was tired of stealing it and cadging and copying it when I went from one company to another. And I was writing this book and I thought I could persuade him to give it to me free. And he'd just read my piece on Micron and he said no no. Absolute rule we can't give away free subscriptions. But you can write it if you'd like. So I..and at the time he was phasing out of the newsletter business and selling it to Estradisen (?) another brilliant writer who focuses on software for the personal computer business and was going into Venture Capital and his two of his initial projects was Lotus Corporation which makes the dominate spreadsheets still and the other was Compax Computer which is the fastest growing business in history. So he had a magical touch as a venture capital. It was quite inspiring to me to see this writer and analyst enter Venture Capital and immediately hit the two biggest success virtually in the industry. Anyway..
LAMB: How long did you write it?
GEORGE GILDER: I wrote it for about a year. And I wasn't very good. I mean I was really a big disappointment to the people who had been reading then to read me. But I learned it. I mean I really..you know every three weeks I had to do eight pages of stuff on semiconductors and technical detailed analysis and I got quite a lot of stuff right. I mean I read my newsletter and it wasn't like Ben's but it was you know I did I was beginning to figure out the industry well at that point and all of a sudden it seemed to me that I was capable of writing a major book on the subject.
LAMB: I want to come back to more on the acknowledgments pages. You've written seven books? This is the eighth?
GEORGE GILDER: This is the eight book yeah.
LAMB: Of all those books the public's most familiar with "Wealth and Poverty?
GEORGE GILDER: Right.
LAMB: What's the residual from "Wealth.." when did you publish "Wealth and Poverty?" And today what do people most say to you when they come up to you have read it or remember the controversy or the..
GEORGE GILDER: It's supply side economics. You know they associate it either with supply side economics or the idea that capitalism consists chiefly of giving not taking. That the reason that the genius of capitalism is it's a mode of disciplined giving.
LAMB: Are you comfortable with that?
GEORGE GILDER: Yeah. Yeah. I think it's right. And..but a lot of peo..this idea which is the most radical idea in "Wealth and Poverty" is still arouses a lot of resistance. Even among conservatives who want to really cherish this idea that people are self interest. Really selfishness leads us by an invisible hand to prosperous economy. And I think selfishness leads us by an invisible hand to a socialist welfare state because when people are really selfish or greedy what they want is to have the government assure them an income that they haven't really earned. And so they're truly greedy petitioned to the state to assure them their wealth while the real capitalist has to serve other people. He has to suppress his own self interest in order to serve other people with goods and services that they want rather than what he wants. And so..but any way that was the insight of "Wealth and Poverty" which is still most tenaciously resisted but I think is probably the most important insight in the book.
LAMB: This is the new book by George Gilder "Microcosm: The Quantum Revolution in Economics and Technology" published by Simon and Shuster. What year was "Wealth and Poverty?"
GEORGE GILDER: 1980-81. It..the books appeared in '80 and it officially came out in January '81.
LAMB: In the back of this book on a page there are literally four lines that describe the author you and I want to read it and ask you about it. Why just this these four lines.
GEORGE GILDER: Right.
LAMB: "George Gilder lives in Terringham, Massachusetts with his wife, Nina..
GEORGE GILDER: Nine
LAMB: excuse me..Nine and four children Louisa, Nellie, Richard, and Anina (?) and five computers."
GEORGE GILDER: Right. I threw one of them away I have to say. My old Apple III finally gave up the ghost and I carrie d it out by the road and with great ceremony allowed the junk man to carry it way.
LAMB: "He is an associate of the Manhattan Institute.." what is that?
GEORGE GILDER: That's a terrific institute in Manhattan that supports books. It identifies useful book projects and tends to sup..often supports the authors and actually supported me recently but..
LAMB: Financially? Supports you financially?
GEORGE GILDER: Not me but it has..I still have my health insurance through the Manhattan Institute. I was there for almost a year a decade ago.
LAMB: Is it a non profit organization?
GEORGE GILDER: Non profit organization.
LAMB: And where does it get its money?
GEORGE GILDER: It get its money from businesses and individuals who supports its projects. Charles Murray's books were largely supported by the Manhattan Institute. "Losing Ground." And Peter Huber is a extraordinarily brilliant young writer who gave me critical ideas for "Microcosm" and he is an associate of the Manhattan Institute.
LAMB: And this is the final thing. "And the Terringham Union Church.." It said you are an associate Manhattan Institute in Terringham Union Church and author of seven previous books. Why did you mention the Terringham Union Church?
GEORGE GILDER: Because I think its an important..it's a central part of my life. I've..it's my..it's where I go to church where my family worships and I think it's important for people to understand that the values that sustain high technology are not hostile to the moral values that uphold the civilized society. And that science and religion are not hostile contending forces. Any pursuit of truth in either domain will tend to illuminate the other and they are..that they are..the microchip is not a dehumanizing force or a materialist kind of determinate object. It..
LAMB: What denomination is it?
GEORGE GILDER: It's a congregational church.
LAMB: But you..
GEORGE GILDER: It's a small town of 200 people and it's got one church and people of various beliefs and attitudes attend.
LAMB: But you thought about this before you put that in this book. I mean you put in there for a reason.
GEORGE GILDER: Yeah. I put it there for that reason. I think..one of the important facets of this book is to unify the culture. I think that there's tw..a divided culture. There's the culture of technology there's a conservative culture of churches and there's a secular culture and they're all battling and the idea is that there's something innately hostile to human values in modern technology. And I think the best human moral values are indispensable to modern technology. You don't build a microchip through pursuing hedonistic pleasures of dissipations. You're..the microchip is a discipline which springs from the same kind of family and religious values that have upheld enterprise throughout the history of the United States and of capitalism for that matter.
LAMB: Let me go back to the acknowledgements here " I could mention many friends and family but two uncles put me..put up with the most. I am deeply indebted to Rodman Gilder and Reese Alsop and Millie and Lee." Are they..
GEORGE GILDER: Yeah. They're they're..
LAMB: The wives?
GEORGE GILDER: They're their wives.
LAMB: "For ministrations to mind body and spirit." Why did you mention Rodman Gilder and Reese Alsop?
GEORGE GILDER: They were..their..my father was killed during the second World War. He was an airline pilot and actually was writing a book of economics at the time and his squadron was lost. Airplane squadron of flying fortresses. And so my uncles played a extraordinary role in my life. And some of his..some of my father's friends played an extraordinary role in my life. And Rod and Reese also..Rod Gilder and Reese Alsop were the uncles who've played the father role more than any others in my life and from the beginning of cultivated..both are extraordinary men and they..
LAMB: Where do they live?
GEORGE GILDER: Reese Alsop lives outside..in Lloyd's Neck Long Island and he's a doctor and a poet and a writer of children's stories and an actor an he's had a diverse life. And Rodman Gilder lives in Scarsdale, New York where he's a Psychiatrist who is interested in theory of the mind and also had a very broad scope fascination of the whole range of intellectual pursuits and so has Millie. They've just been very close to me and helped me with a lot of the controversies in this book. Always were willing to discuss them and..
LAMB: By the way what do your kids think of all this?
GEORGE GILDER: They're very intrigued. They're young. Louisa is eleven, Nellie is eight, and they're the most..they're very interested and we discuss it. And I had a discussion of quantum physics with Louisa last night and she thought it sounded pretty fishy but she wanted me to explain just how the chip worked and how one could build a chip. And we had quite an extensive conversation. And at the end of it I think she understood it as well as the average reader of my book.
LAMB: What did you tell her?
GEORGE GILDER: I told her that the key to making a microchip is to view it like a photograph. It's like showing a slide. And when you show a slide you magnify a picture. Well when you make a microchip you get a big picture of what you want on the microchip and you reverse all the lenses so you can miniaturize it. But it's the same essential process based on use of light to inscribe complex drawings that we find in photography. And photography you put in the slide and magnify it. In Photolithography for writing microchips you put in a big design of the microchip and you miniaturize it. But it's the same kind of lens system that's used. And you can..and this miniaturization process is so powerful that today you can put hundreds of transistors not on the head of a pin but on the point of a pin. And it's a it's a fabulous technology that really in a sense overcomes the usual constraints of time and space. When you can put hundreds of transistors on the point of a pin and switch them in trillionths of seconds you've overcome both the usual constraints of both time and space. And it is a it is a technology that truly overthrows matter in the usual sense. Where things get more powerful as they grow bigger in the microcosm things grow more powerful as they get smaller. It's a radically different kind of process.
LAMB: What happened as you described this to your daughter? What did you..what did you see happening in her eyes?
GEORGE GILDER: I saw beg..get the picture of a slide she can understand that. She could get the idea that a photograph was a complicated chemical product. And then there was a certain resistance to the idea that you could make this photograph switch and work in this exciting way. I'd just come from Forbes Magazine that gave a party watching my book. And Malcolm Forbes has on the wall this fantastic little pinballs machine which is a work of art. I mean it's a beautiful, clever little machine that sends balls going through little gates and jumping back and forth in all sorts..in amazing choreography that works perfectly every time. I mean the..the..all the balls are collected at the right place and they're sent down shoots at the right time and they whirl down spirals in a glittering rush to just the perfect moment and the whole thing is a logical system. It's like a chip. And Louisa was ready to recognize that you could put a you know a million transistors or enough transistors on a sliver of sand by this photographic process to depict this machine. But she couldn't understand how you could make the machine actually work. And there I had to explain how gravity in that pinball machine on the wall is replaced by voltage on the microchip. And voltage is a direct analog of gravity where you have just as the ball goes from the high point to the low point the electron goes from the high point to the low point in an electronic device. From negative to positive as it happens.
LAMB: We're talking to George Gilder. This is what the book looks like. You are on the tour?
GEORGE GILDER: Yep. I'm on tour.
LAMB: What do you think of tours? Do you like talking about what you've written?
GEORGE GILDER: Yeah. This is a good and unique conversation. I've never had a conversation like this about my book about any of my books before. It's quite an interesting way to precede. Going through the acknowledgements is..does really work in a way and gets an original perspective. I was quite interested that..
LAMB: Do you enjoy this part of what you're doing? I mean not just this interview but do you enjoy going around and doing radio call in shows and all that stuff?
GEORGE GILDER: Sometimes. I mean it..it's very tiring. I mean I didn't sleep last night I was so keyed up after my last program in New York. I went to the Metroliner and had a bed in the Metroliner but I just tossed and turned all the way down to Washington. So I'm..it's exhausting but very exciting when something works. I mean when you really feel you're communicating successfully. That is exciting and gratifying just as it partakes of the gratification of writing itself. When it's not working it becomes laborious and frustrating. So it's just like anything else. But it..I think writers are very apt to disparage the tour. They all got to do the tour and they are very apt to disparage it. And it..but it has more gratifications than they usually acknowledge I think. And including the you know just the excitement of it. I mean it is just exciting. You never know what's going to happen.
LAMB: Do you ever write in a book like this tucked away buried in the middle of chapters something that you wonder if anybody's ever going to discover it? I mean where you go on to say but I've got theory and I'm just going to throw this in a couple pages and see if anybody ever figures it out?
GEORGE GILDER: I don't think so. I mean what usually happens in a book like this is after you write it the ideas emerge more clearly and you actually wish you could rewrite some parts. And you wish you could go back and do it again. And that happens with every book you write and it's more likely to happen that you did something less well than you'd expect.
LAMB: You have as usual dedicated this book and on this page there's one name Richard Vigalani.
GEORGE GILDER: Right.
LAMB: Who is it?
GEORGE GILDER: He was article editor at National Review Magazine who has been interested in my work for ten years or so and who took a special interest in this book. And during a period when I was having great trouble getting this huge mass of material in order and giving it a coherent logic he came up and helped me do it page by page chapter by chapter logical point by logical point. And without him it would have been enormously difficult to get this book in the form that it is and it wouldn't have been as good. I mean he really decisively improved the book. And you know editors are very important to me. That book was..is..I wrote at least three times as much stuff as this. So I had to distill the material down to this size. And I'd been told in general how to do it by Bob Assahena of Simon and Shuster who was the original editor for this project and carried it all the way through. And he told me what to do but doing it and that was vital to it but doing it was hard and I couldn't have done it without Richard. He came up to Terringham where I live and worked with me on it for probably a month altogether or more. And helped me get the book done. And coherent and functioning. And I think it does function now. It really does have a coherence from beginning to end that he really impart to it.
LAMB: There's another couple of names that jump out of the page. David and Peggy Rockefeller one again offered their generous hospitality for long stints of uninterrupted writing and editing and gave me a vivid sense of the presence of my father in my life and in theirs. Who's David and Peggy Rockefeller?
GEORGE GILDER: David and Peggy were you know my father and mother's virtually best friends when I..
LAMB: The David Rockefeller?
GEORGE GILDER: The David Rockefeller. And he and my father..he roomed with my father in college and when my father died in the war David took a very special interest in me for..and Peggy for years. And I spent a lot of summers with their children and he imparted to me this sense of the importance of what my father had been doing and his sacrifice in the war and the meaning of it and the possibilities for my life. And he really did did contribute very importantly.
LAMB: Couple of other things. And I just can't believe how much..how there's not enough time to get to all this. That's why probably somebody will want to buy this book. George Gilder author of the best selling "Wealth and Poverty" writes regularly for the Wall Street Journal, National Review, the American Spectator, Forbes and other publications. He has been a Fellow of the Kennedy School of Government at Harvard, a speech writer for Nelson Rockefeller and Ronald Reagan and Semiconductors editor of "Release..
GEORGE GILDER: 1.0.
LAMB: ..1.0.
GEORGE GILDER: R.E.L. used to..stood for the Rosen Electronics Letter. Release 1.0 as Esterdisen took it over and converted it into her letter.
LAMB: When did you write speeches for Ronald Reagan?
GEORGE GILDER: I never did write speeches for Ronald Reagan. That's..I have written a speech for Ronald Reagan. I've consulted with speech writers for Ronald Reagan a great deal but that's a mistake that Simon and Shuster I hope will correct in the next edition. My cousin Joshua Gilder was Ronald Reagan's leading speech writer and there's some confusion here of me with him. But he was the speech writer and I've..I did write a draft of Reagan's acceptance speech and did..but you know I was not ever a real speech writer for Ronald Reagan.
LAMB: The reason I ask that was for that very reason. I also noticed that taking time off from vital chores as Presidential Speech Writer Joshua Gilder also did heroic work as the first reader to emerge from the swamps of the much longer and less intelligible version of this manuscript. And you say he's your cousin.
GEORGE GILDER: Right.
LAMB: Wrote speeches for Ronald Reagan.
GEORGE GILDER: That's right. Terrific speeches. He wrote the Moscow..you aren't allowed to say who wrote speeches but he wrote President Reagan's speech as Moscow State University which I think was the high point of the Reagan Administration.
LAMB: You took the words right out of my mouth because I saw this in here. You see I've got my little X by it and I wondered you use this excerpt at the beginning of one of the chapters. Let me close the book James and I'm going to read this so you..I want to ask you why you used it. "In the new economy"..this is President Ronald Reagan at Moscow State University.
GEORGE GILDER: Right.
LAMB: When was that? At the end of '88?
GEORGE GILDER: Yeah. It was toward the end of his admin..no it was November. Don't I have a date there?
LAMB: You do not.
GEORGE GILDER: Yeah I think November '88. No that doesn't sound right. I'm not sure just when it was.
LAMB: "In the new economy human invention increasingly makes physical resources obsolete. Even as we explore the most reaches of science we're returning to the age old wisdom of our culture. In the beginning was the spirit and it was from this spirit that the material abundance of creation issued forth."
GEORGE GILDER: Right.
LAMB: Your cousin wrote that?
GEORGE GILDER: Well he wrote it for Reagan.
LAMB: And Ronald Reagan said it?
GEORGE GILDER: And Reagan liked saying those things. I mean he..Ronald Reagan's still saying these things today without my cousin. He just recently gave a speech which focused on that principle. He's..that was the theme of his administration. But Josh did write that particular speech.
LAMB: "The New American Challenges" chapter 24..
GEORGE GILDER: Yeah.
LAMB: And this heads up actually a part in your book "The Quantum Economy." Why did you use that quote and what's the essence of that chapter?
GEORGE GILDER: Well that quote really applies to the whole last section of the book and it probably applies to the last chapter more than any other chapter. As the..as you may see the quotes are..were..it happens that in the course of publishing the book the quotes were supposed to be in the dividers between the five parts of the book and instead they are put in the first chapter of each part. And that was just..that was supposed to be there rather than in the next page. But once this happened it was hard to change at the last moment so I didn't..
LAMB: So what you're saying is that that quote was supposed to be on this page where you just have a page that separates the parts and then you turn the page and begin.
GEORGE GILDER: Yeah.
LAMB: Okay. And back to the original question on this. "The New American Challenge" and what is the new american challenge?
GEORGE GILDER: The new american challenge is the american challenge to the world that recapitulates in a different form the first american challenge which Servas Schriber (?) the great French editor identified in the late '60's as the american military industrial complex. And that they believed at the time that the new technologies necessarily concentrated power and required huge industrial corporations to pursue. And Servas Schriber believed that the American challenge to Europe and to the world economy was this alliance between the Pentagon and U.S. high technology companies like IBM and AT&T and the defense contractors that were spearheading technology. It was very like the theory that we currently offer for Japan. That somehow there's a new Japanese challenge that consists of gigantic companies in alliance with the state. And the thesis of this book is that microelectronics the law of the microcosm breaks up big accumulations of power inevitably because you can..the power of the chip grows by the square of the number of transistors you can put on the chip. But the communications power just grows very slowly. It's like a..the number of leads you can have from the chip to the macrocosm are very limited. They are limited by the circumference of the chip and sometimes you can put some leads under the chip. But it's very limited the number of leads you can use to connect outside the chip. But the processing power on the chip grows hugely. And so what happens here..it's like the human being. We can do tremendous amount of processing in this head. Then it all comes out of this one little bottle neck below our nose and this technology resembles the mind. It's a information technology and it resembles the mind in that regard. And what the mind does is make us unique individuals and separate in some sense. And this law of the microcosm where off the chip and the macrocosm complexity grows by the square of the number of nodes or switches or interactions or entities that has to be controlled. Complexity grows by the square of the number of nodes outside the chip. But on the chip efficiency grows about by the square of the number of transistors. And so so all big organizations tend to break down because when they..when you attempt to control them from the top because they grow impossibly complex. But meanwhile on the chip efficiency is growing more and more as you concentrate exponentially faster than he number of leads from the chip. So what you've got this tremendous centrifugal force at the heart of technology. It's really explosive when you get an exponential growth in the power of processing and just an arithmetic growth in the communications capabilities. And that's what..that's why the works..that's why in 1977 nearly 100% of all the processing power in the world was in giant mainframes and today less than 1% of all processing in the world is in giant mainframes. It's a radical centrifugal force. All the top down systems with giant computer power concentrated in the center and dumb terminals attached to it are giving way to what are called peer networks of intelligent terminals. Where the intelligence and processing power is on the desk top instead of in some data processing center far away. And that effects television, broadcasting, the factory automation, telecommunications, everywhere the intelligence is moving away from centralize controlling concentrations to the desk top to the individual.
LAMB: Okay let me ask you about that. Louisa is eleven or eight? Your daughter?
GEORGE GILDER: She's eleven. Nellie is eight and she is coming along too on this stuff.
LAMB: Both of them. Okay. Let's take those two daughters of yours and get them up to our age. I'm not sure how old you are. I'm close to 48.
GEORGE GILDER: We're contemporary.
LAMB: When they get to be our age what does all this mean. Is there a way you can explain to a generalist out there what this is going to mean for our lives when they're our age?
GEORGE GILDER: Well I think the crux of it is that all the dreams of dust spots people who think that by controlling the whole system they'll be able to create some wonderful utopian world will be frustrated because what's going to happen is individuals are going to be endowed by increasing creative power year after year after year at a steadily increasing pace. So that there will be just more opportunities for individual creativity.
LAMB: Will you be able to govern all? Will a President be able to govern?
GEORGE GILDER: I think they'll be able to govern better because this is one of the great insights of the Austrian economist. That the effect of a government plan is to thwart all the plans of all the individuals who are closest to the problems and who can plan most effectively and fulfill their plans most affirmatively. And so what you have when you have a big government plan is one of these big systems that becomes overwhelmed by its own complexity. You know the complexity grows exponentially up in the macrocosm and all these macrocosmic planning schemes break down because of the law of complexity. But this scheme and the microchip increase steadily in power as they are emancipated. And that means the world will work much better than it will when you have all these complexity crises breaking out all over.
LAMB: In your book..this is really off the subject but I wanted to ask you about it..in your book you write that it costs something like eighty cents a page no eighty cents a book to..are you talking about a book like this to make it?
GEORGE GILDER: Yeah something like that?
LAMB: That's all it cost to make a book like that?
GEORGE GILDER: About like that. Manufacturing.
LAMB: That surprised me.
GEORGE GILDER: And a chip costs about eighty cents to manufacture. I mean it'..and a floppy disk costs about eighty cents and the actual medium of a hard disk cost something on that order. I mean it's between eighty cents and two dollars is the general cost to manufacture media.
LAMB: Where does the other nineteen dollars and fifteen cents go.
GEORGE GILDER: Ideas. It goes to it goes to all the parts of the economy that people tend to disparage as somehow worthless services or information. It goes to the writer who gets ten, 15 percent of it. It goes to editors, it goes to distributors, it goes to book store retailers, it goes to..
LAMB: Advertisers.
GEORGE GILDER: ..truckers, advertisers and all kinds of people who participate in launching that information product. Manufacturing is you know in this product is less than 10% of the value.
LAMB: How important is this book to you? Is this your most important out of eight?
GEORGE GILDER: I think so yeah. I think it's probably the most coherent and best of my eight books and most original probably.
LAMB: How many copies did they print on the first printing?
GEORGE GILDER: I do not know.
LAMB: Do you expect this book to be one of those that takes off and hits the best seller list and..
GEORGE GILDER: I think it's..it is a really original book. It really is different from any book out there. So I think it'll take a while for people just to discover it. I think it's going to be..it's going to be a book that will build. And I hope it builds a long time and builds well. But I..it's not sort of something that is instantly convertible into a new program as "Wealth and Poverty" was. I mean "Wealth and Poverty" was supply side theory. And it..and Reagan was about to enact supply side programs. So if you understood the theory you could understand the program better and so it had a sort of spontaneous combustion there that..and this is really for people who want to understand their world and how it's going to change in the next 20 years. More radically than it has changed in the last 20 years. I think this is an accelerating movement rather than a maturing industry as some people believe. I think we're just at the beginning because the power of the technology is beginning to reach capabilities that open up more of the human beings like speech recognition. I talk a lot about speech recognition in here. It's the next frontier when you can talk to your computers. It will open them up to you. They'll become more easy to use.
LAMB: I don't know the first thing about computers. Am I going to be in trouble if I don't learn it according what..I mean I get the sense when I read this that I better learn this.
GEORGE GILDER: You're going to use them. They're all around you and you're going to be using them all your life in various ways without knowing it. And that's what's really going to happen to the computer industry. Rather than being something that computer freaks enjoy and pursue in specialized ways you'll have a proliferation of this intelligence dispersed throughout the world. And that will mean that even though you don't know any software programs or nor do you build microchips you will..it will be part of your world. And it will change your world in an important way. The overthrow of matter from the..will be an increasingly influential force in your future.
LAMB: There is a chapter in here that..this is a very parochial question I want to ask you called "The Death of Television." And another thing I haven't asked you about is analog and digital. Before we go into the death of television let me ask you can you very quickly and I know this is probably impossible can you define what analog and digital are and what's the difference between the two of them?
GEORGE GILDER: Well there are really two ways of representing information. An analog system you actually reproduce an analogy of phenomenon that is being depicted. In other words if you..if somebody utters a sound you reproduce those sound ways in voltage or currents so that those sound waves are translated into an electronic analogy. You have waves that resemble the waves that the sound pressure waves that your utterances produce.
LAMB: You see it on a scope?
GEORGE GILDER: Yeah. You see it on a scope as a sign waves.
LAMB: But you can't see it with your eyes.
GEORGE GILDER: No you can't see it with your eyes.
LAMB: What's digital?
GEORGE GILDER: Digital is converting these to numbers. And rather than conveying the sounds of your voice by reproducing voltages and currents that resemble the waves that you utter..
LAMB: Is analog..
GEORGE GILDER: ..you take the amplitude of each of these waves and convert it to a number and..
LAMB: What's the better thing for the future? Is it all going to be digital?
GEORGE GILDER: No it's not all going to be digital. Analog is very efficient for pattern recognition. Our eyes for example operate by an analog system and our eyes are capable of more visual processing than all the super computers in the world put together. Our eyes are incomparably the most efficient of computer system there is and they are almost entirely an analog process. But digital has one great virtue because numbers can be reduced to a binary code of on off switches. You can deal with these numbers billions trillions of times without any errors. And analog builds up because it copies the very pattern of your speech or whatever as in a rec..old fashioned record. It can have errors as it wears out. While in a digital compact disc either the numbers are correct and you can read the numbers or you can't. And if you can read the numbers the rendition of the sound will be perfect. So..
LAMB: Television..
GEORGE GILDER: So that's the..
LAMB: Television and it's written all over as a technology however television is dead. You also say if TV is dead then HDTV the high definition television is still born. Alright go back to Louisa and Nellie. What are they going to be looking at then?
GEORGE GILDER: Computers. They'll be..it'll be a digital computer system that they will be watching.
LAMB: Networks like this won't exist?
GEORGE GILDER: Not exactly like this. Programs good programs will be more valuable because a good program will be very cheap to transmit to all the people who want to see it. So therefore the profit from that program will go directly to the people who originate it rather than most of that profit going to the people who distribute it. The people who own the antennas or whatever.
LAMB: Hard for a President then to capture the attention of the American people at one time?
GEORGE GILDER: It'll be harder. That..it will be possibly harder unless he has something important to say. He won't be..I don't think broadcasting is going to go away. But I think the power of the technology which is..more resembles the telephone than broadcasting top down system where a few broadcasters decide what you see is so much more powerful and attractive. If you can dial up whatever program in the world you want to see any data base any movie anything you want to see dial it up over fiber optic telephone lines. It will make it hard for broadcast systems to compete.
LAMB: George Gilder unfortunately we are out of time. This is what this book looks like. "Microcosm: The Quantum Revolution in Economics and Technology." And this is in your book stores published by Simon and Shuster. Thank you very much.


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