A Conversation with Peter Thiel and Niall Ferguson - Institute of Politics

good evening everybody welcome to the John F Kennedy jr. forum my name is Trey Grayson and I'm the director of the Institute of Politics and we're excited to have all of you here we see a lot of faces we don't normally see in the forum and we want to welcome everybody you can come back to the more political stuff to all of our tech friends in the audience we're excited to have everybody here this project this tonight's forum wouldn't be possible without the partnership of the IOP and the Harvard program unconstitutional government under the direction of Harvard professor Harvey Mansfield we're glad to have professor Mansfield here we're going to bring him up to introduce our moderator and our speaker professor Mansfield thanks very much I first introduce Peter Thiel born in Germany graduated from Stanford Stanford Law School clerked after law school three years on Wall Street left for Palo Alto founded PayPal founded a hedge fund Clarion Capital an early investor a canny investor in facebook author of diversity politics multiculturalism and the politics of intolerance at Stanford said to be an avowed libertarian not your typical average billionaire more interesting and reflective than Warren Gates and Bill Buffett with their lukewarm bromides and bad advice perfect speakers for a Harvard commencement we're probably Peter Thiel will never be seen unless but let's not be obvious I also introduced Neil Ferguson Lawrence a Tisch professor of history at Harvard a senior research fellow Jesus College in Oxford a senior fellow at the Hoover Institution at Stanford he comes very welcome credentialed is the author of books in economic history German inflation the House of Rothschild the cash Nexus the ascent of money the life of Sigmund Warburg books on war the pity of war the war of the world books on Empire how Britain of Empire how Britain made of the modern world Colossus the rise and fall of the American Empire all of which prepared him for his latest which is called civilization he's been named one of the 100 most influential people in the world but tonight he will content himself with being moderator professor Fergusson well Harvey is quite right I'm playing the part of Charlie Rose tonight and so please direct all your fire at my guest and I'm going to use as little air time as possible so Peter let me cut straight to the chase I know you're not allowed to talk about a fistful of dollars face book anything like that but I can't ask you a general question about about Silicon Valley is this dot-com bubble 2.0 and are we going to see another crash around the corner or do you see something that's more sustainable going on in Silicon Valley right now well I don't think I don't think we have a second full-on bubble and technology at this point it is it does seem that it's more sustainable the business are being built more slowly more incrementally the valuations are nowhere I mean sandy level is nowhere like where it was in the in the late 1990s at the same time it is of course all happening on a much smaller scale and and even though there's definitely some optimism around Silicon Valley especially around the computer and Internet sectors it has not been enough to move the dial on the whole economy much less say not even say the state of California so if you if you were you know if you were to say that Silicon Valley is doing fantastic therefore you would infer that California must be the best state in the United States and that's not quite true so so I think that I think that there is no excessive optimism of the sort you had in the 90s but at the same end there are definitely pockets where there seems to be a lot of progress happening especially around computers in the internet but there many other areas where where it's not been enough to move the dial for California and I believe for not enough for the country or the world as a whole well it certainly moved the doll for you and one of the most impressive things about your resume a which Harvey just read us it's just how many winners you've you've picked I'm guessing there are at least some people in this audience who are only here in the hope that you will tell them what the next phase we'll be so what is the thing we've never heard of that you've already invested in that we'll hear about some time next year when it's too late well I'm not gonna not going to hype any of my companies here I think that I think that one of the things that's very different from technological progress versus globalization if you say so the two big themes the 21st century are globalization the developing world copying the West a sort of horizontal growth if you will going from 1 to N and vertical progress technology people doing new things which is what the developed world needs to be doing going from 0 to 1 the horizontal progress of the sort that you see in China is very straight forward and you have a very mechanistic way of figuring it out you can just look at what has been done and there's a way to just mechanically turn the crank and copy things there may be some problems with China it may or may not work as straightforwardly but there's something you can say about what you need to do on the other hand in going from 0 to 1 by definition every every time there's a major innovation in technology either in science or in a business context there is something about it that has a non repeatable character and there's something about that's very specific and unique and so the most important aspects of it are things that are are not easily repeatable and so it involves some complex judgments around where technology is what can be built are these the right people who can who can build a particular thing in many cases it has a you know it's globally competitive you have to have if you're starting a new technology company you have to be the best in the world and so much of it has the flavor of you know get a gold medal if you're the best that there is no silver and there's no bronze there's no you know there's often nothing in second or third place and so by the time there's a trend or a theme and people talk about what is the next you know company and category X that's often it's already already looking very much in the rearview mirror and that's that tends not to be the right idea I want to shift now from your work as an investor to what strikes me is you equally interesting work as a thinker last year you published what I thought was one of the most interesting think pieces of the year National Review a piece which deserve perhaps a little bit wider coverage they got was entitled the end of the future and then it you made an argument that I found very striking namely that there's a kind of two-speed world right now and this has been true for some time you've been a part of an incredible time of innovation in the technology sector but that kind of innovation hasn't been going on elsewhere and you mentioned in particularly the energy sector as a place where there just hasn't been comparable innovation tell us a bit about the argument you made in that piece preps for those who didn't read it give us a quick quick review of quick summary well the question I tried to pose is how much technological progress is happening are we still living in a time of accelerating technological change and the answer was that we are seeing it in computers in the internet and basically nowhere else and and you know the most straightforward place where we're literally not moving faster is in transportation where you know if you looked at every decade from 1500 onwards you had faster sailing boats faster railroads the 19th century than faster cars faster airplanes and it basically today we're basically at the levels of 1970 if you include low tech airport security systems maybe we're back to 1960 levels and you know Concorde was authorized in 76 decommissioned in 2003 and so that's one place where things have definitely not continued to accelerate if you broaden it from that to energy things have basically been stagnant to be defined technical technology is doing more with less Energy's had the opposite aspect where so much of it has involved things that are ever more expensive and and so even though oil prices are are far above the levels of the of the early 1970s alternate energies are costing even more we've had sort of a failure both on the conventional side and to date a very serious failure in alternatives which are no costing more and there's a lot of questions what's gone wrong in that area you know there and as you go down many other areas I think you see this pattern repeated you know I think biomechanical progress which I'm also very interested in has continued to go at a pretty good clip you know life expectancies going up about two and a half years a decade that's been a uniform trend since 1840 but even there I think there are a lot of reasons to be worried there may be a one third as many new drugs in the pipeline as there were 15 years ago the large pharma companies have basically responded by simply firing all the scientists and researchers that did so little have yield it's a little progress in the last decade in half and so I think there are many areas where things have slowed down um one even once or frame it in one somewhat simplistic way I think that I think that we have seen progress in the world of bits but not in the world of stuff and so anything involving a virtual world has seen progress this has been in computers as well as finance so computer engineering and financial engineering were very good fields to go into even though people are a lot more skeptical of how much real progress there was was in the latter at this point so why do something you said and in the article well we we don't really have space to get into that here but it's actually a really interesting question for me as an economic historian why is the innovation being concentrated in the virtual world of bits and as why is it stagnated in the world of stuff well my my basic premise would be that it's been we are we aren't willing to take risk and it's basically been regulated to death in all these other areas and so if you were if you were an engineering student when I went to Stanford in the in the mid 80s you did quite well if you went to Computer Engineering Electrical Engineering was still a pretty good area and all other engineering fields were actually quite bad if you went to civil engineering mechanical engineering Chemical Engineering say nothing of nuclear engineering petroleum engineering aero-astro engineering and and I think to a very first approximation in a variety of reasons it's been very heavily regulated and it's been you know a lot harder to make progress it's when you ask why did all the rocket scientists go to work on Wall Street and people say well they were paid too much we need to punish the Wall Street people the other side of that that coin is they were maybe paid too little or to be more precise they were paid nothing at all as rocket scientists and you have to also think about that end of it so I from a libertarian perspective I tend to think that there was an enormous amount of regulation and we became much more a risk-averse society I think there are there are certainly are other reasons it's been deprioritized you know there's a probably a liberal argument that there was not enough money put into science and engineering and that but there was somehow deprioritized there's a conservative argument that that maybe progress requires sacrifice and sacrifice is motivated by war and that you know the Apollo program the Manhattan Project were motivated by a military exigencies that people no longer quite believed in and that so when you know maybe the space program ended with the Apollo Soyuz docking we were going to all be friends why should people be working a hundred hours a week building new rockets I think I think there's a conservative argument there's a liberal argument I'm biased towards the libertarian one but it's possible they all have significant elements of true but compatible with other people who theorized having made their billions in Silicon Valley you seem on the on the pessimistic side if I compare your piece with something like Eric Schmidt's for the first piece saying Google is going to democratize the world or if I think of yuri milner vision of the entire world being networked into a super brain that will solve all our problems I mean you seem like the sort of party pooper in Silicon Valley well do you show up to kind of make everybody feel slightly more pessimistic than they otherwise would is that temperamental is it ideological or do you or do you think that you simply have a different take on her the historical process well I think there's a I think the question the question that's worth posing is how important and how valuable are computers and how valuable is ever thing else and how does one measure that so I I agree with I agree with Schmidt and Milner that the computer revolution is continuing and will have major repercussions in various fields in the decades ahead on the other hand there are many other areas where there's a lot less progress so we for example have had very little innovation in agriculture which is gonna biotech area where we had the Green Revolution that increased world food production by 125 percent from 1950 to 1980 and has stalled out very badly in the last in the last 30 years and so if you look at say something like the Middle East you can look at it through the prism and optimistic technological prism which is that it's a shift from authoritarianism to democracy that's being mediated through through information technology Twitter and other companies and and that it's also a story of positive technological progress or you can look at it through the prism of that one of the triggers is that that basically food prices went up 30 to 50 percent in the last year and that the Green Revolution in the Middle East is really linked to the failure of the where I would say was the true Green Revolution of the 50s and 60s and that you have to say that in many ways these are people these are hungry people who have become more desperate than scared which sort of gives you a very different cut on what's going on I think there's a lot of truth to both and it's important to understand both of these stories so that the people who speak about technology are almost all from inside the computer industry and I think it is it's worth asking how it fits with everything else certainly the part that's very odd is is when you look at wages in the u.s. living standards when you take surveys of do people think that the next generation of Americans will be better off in the current generation and the surveys have steadily been moving in a northeasterly direction where more and more people think they'll be worse off and so you have a an extraordinarily disconnect between the broad public opinion and and the claims of these experts and it's an important question who is right this gives is a very different read compared with I don't know economists like Paul Krugman or Jeffrey Sachs who say well inequality as a result of deregulation what we shouldn't have done was deregulate the financial sector what we need to do is increase you mentioned this point earlier increase the role of the federal government in research and development education and that kind of thing it seems to be you're saying something entirely opposite from that which is that it was actually the regulation in these other sectors that prevented the innovation and trapped people and these are in underperforming sectors do in other words have a a broader critique of what might be called the liberal conventional wisdom believed by I would guess 99% of the people in this in this room because it's actually quite a profound critique you're making but everything should be deregulated well I I certainly think technology should be heavily deregulated and and that it's regulation forced people to do other things so you know if you were if you lived in the Soviet Union you know everything was outlawed and if you were a really smart talented person who didn't want to you know who didn't want to compromise your integrity you became a chess player or maybe a number theorist and it produced great chess players and great number theorists and and the US has produced tremendous amount of innovation computers and Finance and I think these things were on the whole good I like chess I like computers I like Finance but but I think we have to ask the question whether it implicitly distorted a lot of other things that have just sort of have sort of dropped from view I think the economists like like Krugman are are most wrong on the on the view that you can do aggressive printing of money and aggressive fiscal borrowing here and so if you think of the technology slowdown as both a fact and a problem it's a problem we need to figure out what to do about but if start you have to start with it as a fact and and the big question about the current debates on fiscal and monetary policy is whether you're digging yourself into a deeper and deeper hole which would be the sort of the tea party austerity view of this of the Merkel viewing away or are you digging yourself out of a hole which would be the standard Keynesian view and I think the Keynesian Theory works well in a world of rapid progress so you can borrow lots of money you can smooth things out and we'll go back to this incredible trend line growth rate whereas if you're in a world where there's no progress that's a lot more problematic and I think you know a lot of the debates about the current crisis involve a debate about his about history and people are very fixated on the 1930s as a data point and the Conservatives and the Republicans were wrong in the thirties they they basically believed that there was not that much progress happening and that you had to you had to stay on the gold standard you couldn't print money you had to you couldn't have this deficit spending the sort of root-canal republicanism was very much discredited but I think it was not so much because Keynes's theories were profoundly correct as it was that you had you had incredible technological progress so even in the 30s you had the creation in the movie industry of the aerospace industry the plastics industry home appliances were popularized you had the development of the secondary oil recovery and and then and so even though there was a major economic and financial crisis there were incredibly powerful tailwind of progress that helped a great deal and and even though I think a lot of the New Deal economic theories were not quite correct in a world of incredible technological progress you will have a tailwind that will power many delusional ideas they ask one more question then go to the audience it's an election year you're a libertarian so I guess you want Ron Paul to be president right well I don't think I don't think it's gonna happen at this point no I think that I would I would like I would like there to be I would I would I would like their most to be some serious discussion of these of these issues and I would like there to be a serious discussion of of how we get growth restarted as a society and how we deal with some of these these are these topics that are not even being discussed and what I think is is most disheartening about the political process is that so few of the real issues can be discussed and you sort of get the sense that people cannot talk about the growth challenges or the deficit challenges or any of these things because to do so is to automatically put yourself in a completely unelectable position and and this is sort of you know insight I think we are headed towards a time of austerity because I think it'll be hard to get a technology reaccelerating and I think it will be a chaotic austerity it will not be there'll be nothing planned about it because because people are not able politically in our system to talk about about the various challenges we face fascinating let me now turn this over to the audience but there are rules of engagement which I have to remind you of in my capacity as Charlie Rose all questioners must identify themselves and if you identify yourself as a journalist you will be stopped you'll not allowed to ask questions here if you're a journalist that's what it says here up your second rule one brief question per person no speeches so don't do that thing I once heard a German man do and say I have only nine points and three it it is a question we want from you and and so it has to have a question mark at the end you have to go up at the end of the sentence and I'll be monitoring that very strictly there are microphones dotted all around I believe for in different places I'm going to start with this microphone here yes sir good evening my name is Ari Cole and I'm the Lum of the Kennedy School class of 2008 also I'm a physician that does intensive care and primary care medicine I want to thank Facebook for changing our world you guys are brilliant and thank you Mark Zuckerberg I'm sure you're watching somewhere in the world chalo ha from harvard my question has to do with electronic medical records as an intensive care doctor sometimes our internal hospital systems of everything being put on the computer crashes and I have a critical patient or patients that I have to see daily in the hospital and we don't have a backup system Facebook has wonderful memory towards pitchers for EKGs and chest x-rays and CT ability also ability to do notes between you know encrypted notes for patients if you know an encrypted kind of file between doctors and nurses about the patient what how could Facebook help us in this situation of saving lives and you guys making money by being a medical records backup system or a protein system for hospital systems they can't pay the one to two million dollars to make those electronic medical record systems work I'm not a guru with algorithmic algorithms or encryptions but we have a dire need to save lives in a critical situation how could we do this possibly spend a day long question I'm gonna have a slightly short answer I cannot answer anything related to Facebook because we filed our s-1 are in a quiet period maybe I could broaden it out away from Facebook and ask why is it that when you encounter the US healthcare system which is about them as if the most expensive in the world it appears to have the worst technology that you could possibly have I mean I still get handed a clipboard with a badly photocopied form every time I go to see a doctor no matter how many times I've been there it's amazing it's actually worse than the British National Health Service it really is and yet it costs three times as much in relation to GDP why is that is there's a good example of your kind of your story of stagnation I mean the technology is surely there why is it not in health care well it's you know our health care system like that in many other countries involves significant elements of both the public and private sector and there probably is a role for some sort of technocratic solution our government is not oriented towards finding technocratic solutions and so you know what if you were really going to reform health care in the u.s. you should appoint someone as you know as the secretary of HHS who has an engineering degree or has run an engineering company and would figure out how to go about implementing these things of the sort of the sort the questioner asked and that's that's not the mindset we have the mindset we have is that all of these technology issues are just minor secondary problems that and that you know I think it's like by the way unfairly that a lot of people in the audience would respond to that question is what an annoying stupid question this is because but but it and and and then on a policy level we should be talking about you know how do we provide money to uninsured people how do we do this how do we do that those are the ideas we should be talking about and the engineering questions of how we build these are our ones people people generally are not focused on and if you look at the Obama administration or the Bush administration I don't think it's really a partisan issue there are very few scientists and engineers because we don't think of these as the problems that need to be solved right so a question from this microphone here not about Facebook good evening my name is Alexander Russell emo I'm chairman of a think-tank the Center for security and social progress now your great success as a technology entrepreneur and investor is undoubtedly a reflection of your talents education and thinking abilities among other factors my question is how much of your success might you attribute to Blind Luck and could you give us some examples well I I think I should explain my once invested in a dot-com company and I just wasn't very lucky that's why I'm asking well you know people always say that they're either they always say that they're either um brilliant or or unlucky so there's the the tends to be sort of a very large number of unlucky people and a very large number of a brilliant people you know I think I think I've been I've been quite fortunate I was certainly you know in in in the right place and the right time and it's it's hard to really evaluate how much luck played because I can't run the experiment a thousand different times and figure that out i I do think it's I do have a bias that it's not the best way to approach these things so when I've looked at investing in technology ventures whenever I've thought about it that I can't really figure out what's going on and this is just a flyer and it'll just have to you know it might work it might not work I'll put some money in that's almost always been a formula for things not working and so you know once you think of the world as consisting of lottery tickets you have set yourself up to lose and what you have to do is to move beyond thinking of the world is just a lottery ticket and and even though there may be certain things that involve irreducible elements of luck I think that in many cases an excess of emphasis on this you know you know is sort of it's not this intellectual truth about the world but is really a kind of laziness where people don't want to think as hard about things as they as they should and so in my investing where I've had where we've done our homework and thought the hardest about things that's we've done the best where we've thought that it's just a lottery ticket that's where it's tended to go the most wrong it's a presumably you've invested in a hell of a lot of company we only get to hear about the ones that are super successful but I mean most of the things you've invested in by your standards actually failed well I think the the I would say the the the binary standard would just be has the investor B has the valuation of a given business gone up we we've looked back on it there probably about 140 businesses I've invested in over the last 12 years and you know something like um somewhere slightly north of 50 percent have actually have actually worked which is not as high rate as one would like but is certainly higher than the you know one in 20 lottery ticket type thing people tend to think great let me go up to the gentleman that microphone yes sir hi my name is Matthew delifrance a I'm a student here at the Kennedy School studying social entrepreneurship I was wondering what would you practically do to save Europe's current lost generation well I think that I think that you know I think that there's no straightforward answer but I would say the first first step is you have to somehow understand what the nature of the problems are and the the critical question in Europe as in the u.s. is this question of how you get growth restarted and I think without growth you're going to have just this the zero-sum game where it's just a question of who takes stuff from whom and you know is does you know does Germany take stuff from Greece or does Greece take stuff from Germany and you have to figure out a way to to get growth restarted that's that's what the debate needs to be about and I think I think that in a way it's not a problem that's really limited to to Europe I think you have the same problem in the u.s. where I think you have the risk of a very serious risk of a lost generation as well and the growth weights slightly higher but the deficits are much crazier in the US and so you know if you assume that's not entirely sustainable I think you know we really are in the same boat and of course Japan is is also the country people don't mention that often and so I think in some ways the entire developed world is in this in this boat where people don't believe in growth you know actually actually what one of the one of the things I think has become sort of problematic is the way in which globalization has the emphasis on globalization has displaced an emphasis on technology so you know we used to speak of the world as the first world in the third world which was maybe had some problems but today we speak of in terms of the developed and developing world the developing world are the countries that are copying the advanced developed countries and are going to converge those this is a very Pro globalization story and so it's very straightforward you tell young people in China or Brazil or India is they should just copy things that are working but when we talk of Western Europe and Japan and us the US as the developed countries we've already implicitly thrown in the towel because we are saying implicitly these are the countries where nothing new will happen because they are developed and the question that needs to be asked is you know how would you go about developing the developed world and how do you get back to the growth question and that's that's a question needs to be flagged again I think there's probably a deregulatory piece that's very important there's a realism piece that's that's very important there's certain kinds of problems that that need to be tackled I think the energy problems is a very critical one that needs to be tackled because the super high energy prices act as a barrier to all also all sorts of forms a lot of forms of growth so I think there are some very specific problems that one would need to address I'm really tempted to ask a follow-up question but I'm gonna go to this microphone instead yes sir I'm yabba-doo off I'm an undergraduate student at Brown University and your thoughts on the higher education bubble let me do research on it and I think you're right my question is in practical terms as well how do you think a solution in the educational paradigm will manifest itself just to be clear you've been quite critical about higher education mainstream our education and they've even encouraged students to get out of a class and innovate beyond the campus tell us a bit about why we've had a series of bubbles in this country and so I think in a world where there has not been a lot of growth but in which people have this cornucopia a arethat growth automatically happens what's happened instead has been a lot of missing bust Minh and stories of growth and so the tech bubble in the 90s it was unfortunately more fraudulent than real and it but people bought into it because they believed we lived in the age of miraculous progress of the housing bubble of the last decade similarly had this element where people assumed that things would relentlessly get better in our society therefore housing prices had to go up and and so again a belief in progress in a world which was not progressing that combination helped sort of create these bubbles and I think I think one of the questions one has to ask is why have there been so many bubbles and I wonder diagnosis I have on it is that people have believed in a very rapid progress even though not as much has been happening as advertised and that combination is led to all this malinvestment I think we have at this point you know a very very serious bubble in education where people are told this is a great thing to invest in that that you know human capital is the the best thing one can invest in and of course we are immediately forbidden to ask what the returns on these investments are how to measure it that sounds like an incredibly crass sort of a thing sort of a thing to do and I think very much like the the housing bubble it probably has many similar parallels probably the subprime part of Education is the worst now I'm sure not valid - to Harvard or sterile well it's it's um but but I think that but I think and then I think how it all ends is is quite hard to say how these bubbles normally end is there's less that goes into a sector and people start thinking for themselves and so you know the education bubble is driven by something that's overvalued and intensely socially believed as the be-all and end-all as the magic solution to all of our problems and and it probably will end when people start thinking for themselves and so my somewhat abstract advice is that you should think for yourself I think when I look back on my own my own trajectory the mistake that I you know it's hard to know whether I would do differently I might still go to college and and law school but a mistake I made was never thinking about what the purpose of it was or why I was doing it it was just this automatic thing that you did because you were told if you did it you'd have all these options that would get created and it would salt or salt all sort of automatically work out on its own and in retrospect I would have tried to think harder about why I was doing it and and where where I saw it going because this would be a familiar story if you had dropped out of Stanford and become a billionaire but you kind of played it much straighter than Steve Jobs educationally was there a moment when you sort of accumulated two or however many degrees when you thought it's all completely pointless did you did you have a moment of doubt about the education that you had excelled at well I think I think the you know I think there was a moment of doubt at the point when I got onto Wall Street and you realized that that that it was basically like this never-ending tournament and the tournament just keeps going on and on and and when once you realize that the tournament's not over in high school and it's not over in college it's not over after that you start it it forced me to ask more questions about was this the correct tournament was there time to do something different and I do think that's that's one of the misconceptions so one of the big questions about education is what sort of a good is it is it an investment decision a consumption decision and I think most people think of it as an insurance product where it's you're buying insurance to protect yourself from falling through the cracks in our society and I think even that's problematic because we should be asking why there's so many big cracks rather than how do I protect myself from it but the reality is that it's mostly just a tournament and you have to win the tournament you have to be realistic about winning the tournament and the kind of the kind of speech that people probably do not give it Harvard and this is where I think even Harvard is is probably wrong would be ort Brown or any other university would be you know freshman orientation you know congratulations you won the last round of the tournament and now it's going to just get much harder and and you better redouble the effort because there are a lot of people who are ahead of you and if you can't see them they're so far ahead of you that you can't even see them and and if you were to try to give a version of that speech I don't think you would last very long as a president of any any University even a much lesser version that would probably get you booted I want to hear that speech in full but let me take another question good evening Tony Wagner the first innovation education fellow at the technology and entrepreneurship Center at Harvard so follow up to the last conversation I've just finished researching and writing my fifth book called creating innovators the making of young people who will change the world so I want to press you for a little more depth on response to that last question what are the most important things we can do as parents as teachers as mentors and as employers to encourage and incentivize well I would say we just didn't the educational question I would say is is the people you know the most the best reason to learn is because you're interested in the subject matter and and there's some some value in it and so intrinsic intrinsic motivation so I think one of the very interesting things with this program we started with the 20 under 20 students under 20 was that a number of them had actually already finished college and they'd actually skipped a number of grades and so I think the the test for parents who have talented students is whether they would encourage their students to skip as many grades as possible and if you think of education as a tournament then you're not going to have your kids skip grades because you want your kids to knock out the other kids on the Harvard application process if you think of it as learning you will encourage your student to skip as many grades as possible so that would be educational advice would be to the extent you're able to skip grades you should skip as many as possible and encourage them to play chess you know it's it's I'm not I know I would you this Ken Rogoff I'm kind of intimidated by all these great chess players I always was battered chess is dangerous you know it's probably there all these things that are dangerous people are good at it sure I like chess do you still play chess I still still play some probably too much you know not enough and too much at the same time well let me let me take another question from this microphone here yes sir hi my name is Jeff angler from Harvard Business School many libertarians would believe that government agencies like the Environmental Protection Agency should be abolished number one is this your view and F yes whose job it is it to steward the environment if anybody if any for the next generation well I think you know I do think environmentalism has played an incredibly important role in in in regulating you know a number of these sectors I don't I don't um you know and I think you know the challenge is that there obviously are some very real environmental issues there are some ways in which things have gotten meaningfully better so you know the air pollution in the u.s. is much less than it was 40 years ago and was probably on a trajectory or was going to become become intolerable on the other hand I do think there is there is something about a lot of the regulations where they just sort of build up they build up and the cost benefits are never thought about and they're never quite evaluated and and the the cost is this very high cost that there are many kinds of careers that are no longer options for for people to pursue and and so I think a great deal more honesty about that would be desirable and more honesty about what the real alternatives in many of these areas are so for example I believe that the US should be encouraging a crash program to build a lot more nuclear power and there is an environmental justification for this because if you take the climate change issue seriously this may be the the most likely way that you could produce power that has no carbon footprint but you have to make some trade-offs and debate about how likely that is versus how likely some technologies that may still be a lot more fictitious are that could be and so I think a lot more realism on the part of environmentalism would be good and I think a lot of it has become this sort of politically correct posturing where everyone tries to be more environmental the next person which is not necessarily the right way to get to the best answers yeah you prefer nuclear part of the the renewables the the fashionable green technologies wind and hydro biomass and so I prefer things that work and and I think I think we I think we should you know I think the the test for all these things is can you get it to work at a lower cost than than existing existing technologies and and there is a very serious people have badly underestimated the challenge of creating alternatives and so I'm somewhat pessimistic about the prospects for the science and the technology and that's why I think we should put a significant amount of resources towards things that may not be perfect but can probably work work quite well versus all of our hope on something that may not work at all I press you a bit on this and ask a lot experiment question in a totally deregulated energy market in a in a in a niche market without any government agencies let let's just imagine would there be a host of new nuclear power stations built as opposed to coal burning I don't I don't think nuclear power can be completely deregulated you know you you obviously have issues of nuclear waste you have even thorne your questions about military uses of nuclear power so there's a global regulatory framework you need for for nuclear power so it is something that requires at least some level of regulation but there are very important questions about how heavily it gets regulated and if you could have a single Senator in Nevada stop the creation of any nuclear waste disposal site that effectively can block it in very powerful ways if it takes 20 years to build a plant instead of four years that's a regulatory thing that makes an extremely big difference and you end up with you know nothing getting built and that's why we're on a trajectory the alternative you know expensive oil is even more expensive oil and the alternative that will be even more expensive oil and you know we can serve maybe a miracle will happen and maybe not let me take a question from up yet hi Vedanta Mishra I'm a researcher at the New England complex systems Institute you invested in Palantir personally and in kwid through the founders fund and both companies focus on extracting insight from open information my question is where do you think there's room for innovation in open intelligence and in particular do you think it can be directed towards making things for the populace at large instead of for just enterprise consumers let's see this is sort of very broad question I think that I think that one of the one of the areas of the computer revolution that we are we've spent a lot of time looking at it and in recent years is what's been sort of relabeled is the big data problem and so there are enormous amounts of data people are overwhelmed with information they do not know what to do with it and their questions whether you can bring computers to bear on on helping helping solve a number of these big data problems there probably are there are consumer versions of this term 8 there there may be a lot of enterprise solutions it's a lot of comes up in an enterprise context where companies or governments do not actually know what's going on and it would help you know it would help to have something where you know what is what is going on the the consumer version would be could you tell somebody could you tell somebody things about you know maybe it's a product they'd like to buy that they don't already know and so if you had a computer that knew more about what someone wanted then than they do that would be there would be a powerful consumer application Palantir which is is a name not everybody will have her but is one of your current it is a it's a it's a software company which you know it's it's had its genesis and in trying to bring their some of the technology we developed at PayPal on solving the fraud problem in into a national security context and the question was were there ways to look at the large amounts of data that you have to do something on the high-tech site to prevent terrorism conspiracies various other forms of criminal activity and so it had both has both a governmental side and a large company side of fraud against banks things of that sort and it turns out there there is in fact a great deal that one can do with the data that we have and people do not know what to do with the data you know it's if you sort of think about the picture of the world it's like if you have like maybe a million books in the main library at Harvard it's really more like a trillion books and there's a book and every every building in Boston and Cambridge is full of books and there's no card catalog and their buildings where you just have manila envelopes with papers and their buildings where you have papers strewn all over the floor and their buildings with locked doors nobody can get into and there are very powerful things that can be done if you are able to combine some of this information and data in in different ways and and we think that's we do think this is going to be a critical problem to solve in the decades ahead do you as a libertarian worried that you might inadvertently empower governments with tools of this sword in other words if you can solve the problem of how to manage all this data and please could you do my email inbox right there at is we solve this problem but the wrong people have the tool this is Big Brother isn't it an omniscient state could be accidental byproduct of your of your innovation well I think the I think the alternative is is that you will have another terrorist attack on the US and then you'll get a draconian response all on Big Brother and I think to some extent the absence of a technological solution means that you will get much cruder and non technological solutions so to the extent you think that the security problem is a serious problem and you outlaw technological solutions and you have a Luddite approach and say we're just going to break all the computers and turn them off you will probably end up with with a much more draconian type of a situation and and I think that from libertarian perspective when I would say that the aftermath of 9/11 in terms of reduction in civil liberties was was much greater than had you had some software that would have been able to connect some of the dots and help prevent those attacks and so I think that's a that seems to me to be you know not just morally the right thing to have this sort of software but also the right utilitarian cost-benefit calculus somebody's been very patiently waiting at that point for not there I've been worried about the gender balance issue ever since this Q&A began so please help us thank you hello I'm Curran Kersey I'm a freshman at Harvard College so earlier you mentioned the the need to have unique businesses and unique investments created and that that that was the only choice of for people who have had such homogenized thought because of their education and you really need like these unique businesses for four important innovations but then you also mentioned how in terms of health care you could have someone who is an engineer for example be appointed as a government head to to solve the problems in the healthcare form so where do you see the balance and that's kind of is there any strain between where you would have a government more tournament side to these issues or where you would have the private and innovative unique kind of thought where do you see that straight and how do you how would you balance that well I you know as a libertarian I prefer private sector solutions on but I you know fundamentally would prefer more technological progress and so if we had a government that was aggressively pushing Science and Technology and prioritizing that over other things I think there'd be a you know there would be a number of things that would be said could be said for that the the reality is we have no such government at this time in this country we haven't had such a government in a long time you know if Einstein were to send a letter to the White House it would just be treated as a joke and would get lost in the mailroom you could you know the New York Times op-ed the day after Hiroshima basically it was sort of like well the people who believed in the privates her phrase in this part they have a lot of explaining to do because you know the army organizing and directing scientists was able to achieve something the private sector could not have done almost verbatim quote now would be and the result question mark and invention the nuclear bomb was given to the world in three short years that it would have perhaps taken pre-madonna scientists half a century left to their own now that is the scientific pro government perspective and that is one that no one believes in anymore and so well I think it's an interesting theoretical question whether that can be reclaimed or how you would go about reclaiming it I think you know it simply is nowhere near the set of priorities you have today or if you were to say within the the John F Kennedy School you know where Kennedy pushed the space program in the early 60s but didn't really care about health care could you imagine anyone setting the opposite priorities where you say we're going to cut this much money from health care to revitalize the space program or any kind of trade-off of this sort from away from the welfare state and towards technological innovation everything is horizontal it's all global it's copying its make its taking things that work and sort of giving them to people who don't have them and there's very little that's vertical that involves doing new things and the the government bias is is incredibly powerful in that in that respect and this is both Democrat and Republican and Republicans want to basically cut the spending Democrats want to do more but it's all it's all about the horizontal piece not about any horizontal versus vertical trade-off to go back to the man after who this institution is is named you said earlier that it took a cold war just as taken World War two to produce a man hot project it it took a cold war to produce the space race are you saying that without that kind of of conflict there just isn't a way for the federal government to be truly innovative to encourage technological innovation is it just that peace Purdue is welfare and that you need warfare for innovation because that's a pretty pessimistic thought well that's see that is a pessimistic thought and I I certainly hope that we can find a way to motivate technological progress where it does not require war in some ways you know given where technology is today war has become so unthinkable that it may not you know it may not really act as a motivator anymore you know can you build bigger nuclear bombs not clear this would still really motivate people but I do think I do think the question of how to how to motivate this is a very is a very important question that's not been tackled because we do oh you do have friends they may not be threats from totalitarian states but you mentioned earlier the terrorist threat and there's also the threat of extreme climate change why do you think the federal government isn't able or indeed any major government isn't able to respond to those challenges with the kind of really extraordinary path-breaking innovations the government's produced in the face of Nazism or all Soviet Communism is it government that's changed rather than the threats well that the white white questions are always much harder to answer why and what and so III I would I would observe that they have not been able to my in my first cut on it would be that it's these are not seen as the priorities it's not seen as a problem technology is seen as something that works on its own these problems will solve themselves you know if you look at the the climate change and the clean energy investments which would seem like you know maybe there's a public good in this and there's a role for government to subsidize clean tech the approach has been that we simply invest in many different companies and don't pay too much attention to the details so it's been sort of very much of a financial portfolio Theory approach and not one where you substance really think about what might actually work or what might not work and so you know when Obama has been criticized for the Esalen Rhoda's aster it seems to me that the response Obama should get should be here are three clean tech companies that are doing great and let me tell you about them and this is if you get if these you know because I think these will work um it makes it all worthwhile that response never gets made there's a bad reason for this which is that no such companies exist um and there's a worse reason which is that nobody in the government actually even thinks about what's going on it's not interested in substantive issues and this is not just a democratic thing you know the Republican critique of Solyndra was not that the technology didn't work it was that there were various ethics violations and how the money was apportioned and so again the substantive question of what worked is too hard a question to tangle with you know you're a lawyer if you're a you know if you're a your average congressman and so you're much you much prefer focusing on some procedural violation rather than a substantive issue and you know the ethics problems well unpleasant wouldn't be decisive if the technology worked a transcontinental railroad there were lots of ethical violations when that got built but at least it got built all right let me take it let me take a question from this microphone here Manuel Lopez have a question do you think this the slowdown talk about taking the long run picture is that just a blip since looking at from this point of view we know the true source of wealth and when you mention to them passing Einstein you know one Einstein pushes Science and Technology by such a leap and but leaps and bounds that outweighs almost any other consideration but we have so we know that Einstein we know that intelligence is genetic we know more and more about that we have and we're starting to be at the very cusp at the very beginning of the possibility of manipulating the genome and and in whatever way we we want and if we imagine using that to boost a cube generation after generation wouldn't that mean not over the long run a thousand years a thousand thousand years we're talking about a species where the the lowest level of intelligence would be someone like Einstein or in fact that but the lowest level of intelligence might be you know many levels higher than Einstein and wouldn't that mean that we would be able to unlock you know all the walls of the universe I mean we would have thing our disposal and went that no so don't we see ourselves at the very beginning of a huge boom looking at from that point of view so can we genetically engineer a perfect human race what is that I do unfamiliar not for Neil you'd be a big fan of that but I think that I don't think that idea would be a very popular one um I think that and not sure it's a good one either but I think that I think that you know I would say that the history of most of the world has not been a history of relentless progress you know most people in most times and places have lived in societies that were essentially static in when Malthus wrote his book and you know 1798 looking back the reality was that he was more right than wrong and he was now he was wrong the next hundred seventy years because you had this incredible and maybe had already been wrong with the start of the Industrial Revolution 1750 but you know but the the sort of exponential technological progress we've had in in recent centuries has been has been the real exception and so so if it is coming to an end or if it's decelerating this is a you know a serious problem to to think about it doesn't automatically default to something else well I was told to wrap all of this up at 7 o'clock it's past 7 o'clock now but I don't detect an enormous desire to flee to the nearest pub so I'm gonna take a couple more questions this has been a fascinating discussion I want more of it if you agree with me stay in your seats yes sir I am John McCleary I'm the head of a large charter school here in Boston you mentioned that there's been a lot of progress in the world of bits not much in the world of stuff I would I would add to that that there hasn't been much progress in the world of innovation in the provision of k-12 education 5060 years what do you think of the current trend in terms of charter public schools school choice tax credits all the things all the ferment there to bring really to bring more of an entrepreneurial spirit I think a much needed entrepreneurial spirit to the world of k-12 the foundational education yeah well there's probably you'd have a whole discussion on education on you know all these you know college versions in the K through 12 version on you know just the narrow technological prism if you define education as if you defined technology is doing more with less the educational direction would be how do we get a few talented teachers to teach a much larger number of students than than before and that problem has not been solved you know if anything the direction has been towards smaller class size is not not larger ones which maybe that's the right way to go but there's been there's been very little technological innovation in that area and it's it's definitely worth thinking very hard about what what one can do giving technology can be a part of the answer I mean there's clearly a massive discrepancy between what goes on in higher education where we have for the world's best universities as well as some pretty bad ones and what goes on at the high school level where it seems to me the United States has a major problem right across the board in terms of the quality certainly measured in in terms of teenage educational achievement is there a technology solution to to teaching people in public schools well the prior are a lot of areas of government which could be could run better so probably the lowest hanging fruit in the u.s. is in general to get the government to be more efficient and the political debates we have in government are all do we do more with more or less with less and we don't ask very often how do we do more with less which is the technocratic version you know I think Clinton at least paid some lip service to it with sort of the reinventing government idea we have no such idea at all so I think it's it's it definitely seems like a very worthwhile question ask there's a healthcare version of it there's an educational version so probably our you know questions the military many other areas let me take this question up here this will be our last question with apologies to those who are at the microphones looking for yes hello my name is Sarah Lam I am an HBS I'm here for the Alumni Leadership Conference I am from Palo Alto California and I also a co-founder of a small technology company based in Sunnyvale and it seems to me that the most difficult part of being an entrepreneur is when to relinquish control and to decide to sell your company because this is something that you work with love passion you know for so many years and I would like you to share that experience at the point you sold PayPal were you advice was recommended by VCS and why did you decide to sell at that point well we were up against monopoly competitor in the form of eBay and a monopoly competitor in the form of Visa and MasterCard and there was a worry that they only need to figure this technology out once and and we would be out of business and so there was there was a lot of debate debate around these these things I tend to think attending it was the right decision in PayPal's case to sell but I do think that whenever a decision gets made to sell a business you are often making the decision to stop the innovation cycle in it and and one of the questions are that I spent a lot of time thinking about as a venture capitalist is is how these companies get founded how long's the founding period lasts and I think the founding period is the period when you have you have innovation and once that's over it sort of becomes a normal business that runs in a bureaucratic mechanistic sort of the way it's a very important question how long can one enable the founding in these companies to last the the the classic example where people sort of cut the founding off too early I would argue would be would be Apple we're on the judgment call the board at Apple in 1985 made was that computers were like Pepsi it was just a marketing thing was no more innovation in the computer industry you could get rid of the founder and you could replace the founder with with sort of a some someone who'd run the business a much more predictable mechanistic sort of a way and that turned out to be a bit of a mistake so it's unusual for the founder ever to come back once these mistakes are made sort of miraculously jobs came back and and did and then you saw you know another 14 years of innovation at least through 2011 in the case of Apple and so I do think the businesses that are led by founders are the ones that are able to innovate the ones that are not led by founders are generally not able to innovate and and if you are in favor of innovation you have to figure out ways for founders to stay in control as long as possible and to avoid selling a business or or substituting someone other than the founder in a CEO well founders need to know when to sell and moderators need to know when to wind up a conversation and although I could happily carry on talking at Peter and I'm sure you could happily carry on asking questions I think he's yeah he's done plenty of work tonight and I'd like you to join me in thanking Peter till very much indeed thank you

Channel: Harvard University

Views: 25,217

Keywords: peter, thiel, paypal, niall, ferguson, facebook

Id: tw-rxtwhzcY

Length: 73min 21sec (4401 seconds)

Published: Tue Feb 14 2012