I was thinking little deeper than AMD when I posted that news item about INTC. The worries of slowing of productivity gains, with so much of processing power at your finger tips going so cheap is my point, the productivity gains will only increase and the recent wage pressures from consistently 'falling wages' over last two years will just be enough to catch up with the robust growth of the economy. You need to afford a little affluence, imagination is in short supply with conservative people.
Your point of AMD demise is well taken, but it is the GTW's and HWP's who are passing this saving on to the customers, a economy so much dependent on IT with basic elements of that sector declining in price instead of raising in face of robust demand only points to one direction we are witnessing failure of conventional laws of 'demand and supply in economics'. In case of higher demand, prices rise and suppliers adjust supplies to maintain equilibrium, here we see that company like INTC in a hurry to catch the huge unmet demand of computers are cutitng prices, the processor is a silicon wafer it does not take hulk of ton of wasted pulp to produce one. In this molecular march to processing we may be in need of new laws of economy, the new paradigm has lot of critics but ordinary guys like me keep thinking and are being provoked by this constant falling prices of what I consider to be the big ticket item on most families agenda. Like 32 months back I wrote on this very thread 'death of phillip curve' the relationship between employment rate and GDP growth, in those days 4.8% umemployment used to be considered as unsustainable I think we sre entring a phase where even with lower ratre of unemployment wage pressures would not be seen. In a normal model INTC should have been rasing prices of its top quality CPU not reducing, I would prefer INTC processor any day, but the markets are so huge.. the demand is increasing but the input cost is reducing. Unlike industrial economy the age of silicon would define new frontiers of economy, we can only see it coming but our future generations would not read the same books from which we learn our demand and supply. The co-relations are breaking down classical economists are worried but I may just beg to differ with AG and Krugman, think big think global is my request, it is no more about interest rate tickering.
Only 3% global population of 6 billion has a luxury of owning a PC and that includes a lot of 286's.. INTC's and MSFT's of the world after breaking classical wisdom has a long way to go. |
