Democratization

Here’s the kernel of Alex Tabarrok’s explanation at Marginal Revolution for why there are so few semiconductor manufacturing companies:

In the entire US workforce there are approximately 3.7 million workers (2.3%) with an IQ greater than two standard deviations above the mean. (Mean 100, sd, 15, Normal dist.) Two standard deviations above the mean is pretty good but we are talking professor, physician, attorney level. At the very top of semiconductor manufacturing you are going to need workers with IQs at or higher than 1 in a 1000 people and there are only 164 thousand of these workers in the United States.

164 thousand very high-IQ workers are enough to run the entire semiconductor industry but you also want some of these workers doing fundamental research in mathematics, physics and computer science, running businesses, guiding the military and so forth. Moreover, we aren’t running a command economy. Many high-IQ workers won’t be interested in any of these fields but will want to study philosophy, music or English literature. Some of them will also be lazy! I’ve also assumed that we can identify all 164 thousand of these high-IQ workers but discrimination, poverty, poor health, bad luck and other factors will mean that many of these workers end up in jobs far below their potential–the US might be able to place only say 100,000 high-IQ workers in high-IQ professions, if we are lucky.

It’s very difficult to run a high-IQ civilization of 330 million on just 100,000 high-IQ workers–the pyramid of ability extends only so far. To some extent, we can economize on high-IQ workers by giving lower-IQ workers smarter tools and drawing on non-human intelligence. But we also need to draw on high-IQ workers throughout the world–which explains why some of the linchpins of our civilization end up in places like Eindhoven or Taiwan–or we need many more Americans.

From that first sentence in the last paragraph above, I gather that he sees the flaw in his reasoning. That sentence is a succinct summary of what has happened over the last 300-400 years. Areas of fabrication that were once the exclusive province of extremely skilled artisans have been democratized through automation. Rather than a master smith, weaver, or potter being needed to make an eating utensil, garment, or dinner plate, all of those are now highly automated.

Paradoxically, that doesn’t mean that we don’t need smiths, weavers, or potters but it does place a premium on the technicians who are able to master the new skills necessary for the new methods of fabrication. You can see that happening even now in many areas.

Today’s guilds are much more successful in preventing their artisanal ways of doing things from being democratized through mass production than the guilds of 400 years ago were but I don’t believe that will go on forever. It isn’t burger flippers whose livelihoods are most at risk due to automation today but doctors, lawyers, computer programmers, and college professors. That doesn’t mean we will no longer need doctors, lawyers, computer programmers, college professors, or, indeed, semiconductor designers but it does mean we will need better, smarter ones and there will never be enough of those to satisfy our needs.

One more word of caution about the last clause of Alex’s piece quoted above. We should heed Joschka Fischer’s advice: “We wanted workers; we got people”. Unless we are willing to be coldheartedly selective, to import a single prospective American with an IQ three standard deviations or more above normal we will need to import a thousand total prospective Americans, half of whom will never be able to support themselves. Shorter: it isn’t 1883 any more.