CARRIE CONKO: Good afternoon. Thank you for joining us today. My name is Carrie Conko. I am senior vice president at the Mercatus
Center here at George Mason University. Itās my pleasure, on behalf of the Mercatus
Center, to welcome you to the first of a series of conversations with Tyler. Todayās special guest is Peter Thiel. The Mercatus Center is the leading university-based
source of market-oriented ideas. Our mission is to bridge the gap between academic
ideas and real-world problems, bringing scholarly research to bear on the most pressing issues
facing our country today. This series of conversations will bring together
world-class leaders who will talk about how ideas, cutting-edge research, and applied
economics can be used to fix the problems we face in society. Iād like to take a moment to thank the members
of the media relations team and the event strategies team, who have made todayās event
possible. Iād also like to thank Tyler Cowen, whose
vision guides not only the Mercatus Center, but this series of events. Itās my pleasure to get to introduce Tyler
today. Tyler Cowen is the Holbert L. Harris Professor
of Economics at George Mason University. With his colleague at George Mason, Alex Tabarrok,
he is the cofounder of the popular economics blog Marginal Revolution. He is also cofounder of Marginal Revolution
University, an innovative space for learning and teaching economics online. Bloomberg called Tyler āAmericaās hottest
economist.ā Foreign Policy has named him to the Global
Top 100 Thinkers. The Economist named him as one of the most
influential economists of the past decade. For those of us who have had an opportunity
to have a conversation with Tyler, we know that his mind is an ever-changing kaleidoscope. We can discuss the NBA, arts, music, literature,
even economics, and sometimes public policy. Iām really pleased to share him with you
today. And with that, Tyler, Iād like to invite
you to start the conversation. TYLER COWEN: Just a minute on the premise
of this series. Itās been my view for years now that Peter
Thiel is one of the greatest and most important public intellectuals of our entire time. Throughout the course of history, he will
be recognized as such. I thought Peter would be absolutely the perfect
person to inaugurate this series. Peter himself doesnāt need an introduction;
he has a best-selling book. His role in PayPal, Facebook, Palantir, many
other companies, is well known. Peter is a dynamo. There is no one like Peter. But the purpose today is to focus on Peterās
views as a public intellectual. The way we run these dialogues are a bit different
than usual. Itās not going to be chatty and drawn out. Weāll try to replicate a kind of conversation
Peter and I would have with each other. Get right to the point, a lot of quick back
and forth, and weāll see how well we can do that in public. But Iāve watched a lot of interviews with
Peter online and weāre going to try to make this different from all those. Letās start with some questions about stagnation,
Peter. At any point, if you care to add other topics
of your own, please do so. Youāre well known for arguing, well, āthey
promised us flying cars and all we got is 140 charactersā; ātechnological progress
has slowed down.ā How is it you think that weāre most likely
to get out of the great stagnation, when that happens? PETER THIEL: Yes, I think there are, those
three separate things. Thereās the question of stagnation, which
I think has been a story of stagnation in the world of atoms, not bits. I think weāve had a lot of innovation in
computers, information technology, Internet, mobile Internet in the world of bits. Not so much in the world of atoms, supersonic
travel, space travel, new forms of energy, new forms of medicine, new medical devices,
etc. Itās sort of been this two-track area of
innovation. There are a lot of questions of what has caused
it and I think maybe thatās a good part to start in terms of what gets you out of
it. On a first cut, I would say that we lived
in a world in which bits were unregulated and atoms were regulated. If you are starting a computer software company,
that costs maybe $100,000, to get a new drug through the FDA, maybe on the order of a billion
dollars or so. If the FDA were regulating video game technologies,
and you had to do a double-blind study to make sure that the video games werenāt addictive,
damaging to your brain, etc. These things are very overdetermined. Itās driven by many different factors. My narrow attempt to get out of it is not
necessarily to come to DC and beg the regulators to be more reasonable. It is just to try to find ways for people
to succeed at the margins. Because I think the other thing that has driven
the stagnation is the hysteresis. When you have a history of failure, that becomes
discouraging and so failure begets failure. No halfway sane parent would encourage their
kids to study nuclear engineering today, whereas there are a lot of people going into software. The history of success in software is encouraging
more people to go into it and drive more innovation. Then the history of failure in these other
areas has been very discouraging. What I think would start, if you got some
signal successes in other areas, that can then set a precedent and you can somehow get
whatās been a vicious cycle into a virtuous cycle. TYLER COWEN: Then if you have to make a prediction,
which breakthrough in particular will get us out of the stagnation? Whatās your pick? PETER THIEL: I still think there areāprobably
the most natural ones are all these things that are at the boundary of information technology
on atoms, of bits and atoms. TYLER COWEN: Artificial intelligence? Biotech? PETER THIEL: AI feels slightly overhyped. Biotech, a lot could happen. It feels heavily regulated. But if youāve got self-driving cars, that
would be a significant innovation which would change a decent amount at the margins. Thereās some regulatory challenges with
it, but itās sort of right at the intersection of the kinds of things that could happen. I think the most natural hope is that information
technology starts to broaden out and starts to impact this world of atoms. Then weāre going to have this question about
whether the technology outpaces the politics or vice versa. TYLER COWEN: What number should I keep my
eye on? Letās say youāre going to take a long
nap and I need someone to tell me, āTyler, weāre out of the great stagnation now.ā Whatās the impersonal indicator that I should
look at? PETER THIEL: I disagree with the premise of
that question. I donāt think the future is this fixed thing
that just exists. I donāt think thereās something automatic
about the great stagnation ending or not ending. I thinkāI always believe in human agency
and so I think it matters a great deal whether people end it or not. There was this sort of hyperoptimistic book
by Kurzweil, The Singularity Is Near; we had all these sort of accelerating charts. I also disagree with that, not just because
Iām more pessimistic, but I disagree with the vision of the future where all you have
to do is sit back, eat popcorn, and watch the movie of the future unfold. I think the future is open to us to decide
what to do. If you take a nap, if you encourage everybody
else to take a nap, then the great stagnation is never going to end. TYLER COWEN: Is there a chance that intellectually
weāve become so complacent that our worldviews have so changed? Some writers have suggested the decline of
mainline Protestantism has intellectually changed America forever. The sense of what can be accomplished, our
unwillingness to repeat, say, the Manhattan Project, or Apollo. Is it possible weāre simply in that forever,
and itās a downward spiral and the longer youāre in it, the harder it is to get out? Itās not really about bits. PETER THIEL: Itās certainly possible that
itās something like that. But I do think that thereās certainly, at
the margins, there always are things that we can do. I am somewhat pessimistic about the possibility
of government being a key, a place where the great stagnation gets reversed. There is a sense in which a letter from Einstein
to the White House would get lost in the mail room today. You could not even do Apollo. Even something like the SDI program in the
1980s. The debate in the ā80s was, itās a dangerous
first-strike weapon versus a great defensive technology, whereas today, people would say
that SDI was just this fictional thing that would have never worked. Again, this very odd way that our expectations
have been dramatically reduced. But I do think thereās sort of a question
about where in the private sector can you coordinate things on a big enough scale. Silicon Valley start-ups have been a way to
do it, and maybe thereās some class of somewhat larger companies. My PayPal colleague Elon Musk started both
SpaceX and Tesla, which are extremely charismatic businesses, because it involved somewhat larger-scale
complex coordination, getting a lot of different pieces together to work. Not as big as we could do, perhaps, if you
had a well-functioning government. But I think thatās not really that realistic. TYLER COWEN: Given that energy prices are
now so low, are you more optimistic about peak oil than you used to be, or do you think
thatās a temporary blip on the horizon? PETER THIEL: Iām surprised by how much theyāve
collapsed. I would say, they are still higher than they
were in 2002, 2003 on the oil side. The jury is still very much out on how well
itās going to work. I think the big question is, whatās the
equilibrium price at which fracking is really going to work? Weāve had something like $450 billion has
gone into the fracking industry in the last four or five years, and thereās a question
whether at $50 a barrel oil, can you actually get a positive return on that money? The striking thing, even as of summer 2014,
when oil was still at $100-plus a barrel, was even though you had these two boom stories:
you had the Silicon Valley IT story, and you had the fracking, mid-US growth story. The striking thing was always how much smaller
the fortunes were that were being made in the fracking industry, which led me to think
that somehow, it was not as great an innovation as was happening on the IT side. Or more marginal, harder to get to work. I think if it barely worked at $100, itāll
be very interesting to see how it works at $50. [Note: The recording was briefly interrupted
here.] PETER THIEL: The intellectual question that
I ask at the start of my book is, āTell me something thatās true that very few people
agree with you on.ā This is a terrific interview question. Even when people can read on the Internet
that youāre going to ask this question to everybody you interview, they still find it
really hard to answer. And itās hard to answer not because people
donāt have any ideas. Everyone has ideas. Everyone has things they believe to be true
that other people wonāt agree with you on. But theyāre not things you want to say. TYLER COWEN: Peter, tell me something thatās
true that everyone agrees with you on. PETER THIEL: Well there are lots of things
that are true that everyone agrees with me on. I think for example even this idea that the
university system is somewhat screwed up and somewhat broken at this point. This is not even a heterodox or a very controversial
idea anymore. There was an article in TechCrunch where the
writer starts with āthis is going to be super controversialā and then you look through
the commentsāthere were about 350 commentsāthey were about 70 percent in my favor. So the idea that the education system is badly
broken is not even controversial. You know, the ideas that are really controversial
are the ones I donāt even want to tell you. I want to be more careful than that. I gave you these halfway, in-between ideas
that are a little bit edgier. But I will also go a little bit out on a limb:
I think the monopoly idea, that the goal of every successful business is to have a monopoly,
thatās on the border of what I want to say. But the really good ideas are way more dangerous
than that. TYLER COWEN: Let me give you my take on how
Iāve tried to fit different parts of your thought together. And again, for all you listeners, this doesnāt
have to be true. Itās just my mental model of Peter Thiel. That youāre one of a lot of thinkers who
takes the idea of original sināit doesnāt have to be a theological commitmentāseriously. Tocqueville wrote in the 19th century that
America eventually would evolve to be a land of complacent people who were going to stop
believing in original sin and stick to a kind of conformist mediocrity. So you have taken this to heart. The world out there is deeply weird. Even though there appears to be free entry
into ideas production, because of RenĆ© Girardālike ideas, the people who deviate, someone comes
down on them pretty hard. So thereās excess conformity, the original
sin in peopleās motives gets magnified at the social level. So basically, there are distortions out there. And everything we can see, itās a gnostic
theology, and a relatively small number of people who can see through those distortions
can be great entrepreneurs, or can tell the truth about politics. And itās all ultimately some kind of bundled,
implicitly theological, but not necessarily involving belief in God, but theological perspective
about the nature of people. And it ends up spreading to all the different
parts of society and that, to me, has been what ties your thought together. But thatās a hypothesis; letās hear your
reaction to that. PETER THIEL: Letās see. I think the way original sin normally works
is that it resides in individuals, in one way or another. And so theologically, I would place it much
more in society. And so I think society is both something thatās
very real and very powerful, but on the whole quite problematic. We always run the risk of losing sight of
that. I donāt know if itās strictly the awareness
of it that solves it. Certainly, there probably are some people
who are just vaguely oblivious to it, so in Silicon Valley, I point out that many of the
more successful entrepreneurs seem to be suffering from a mild form of Aspergerās where itās
like youāre missing the imitation, socialization gene. TYLER COWEN: And thatās a plus, right? PETER THIEL: It happens to be a plus for innovation,
and creating great companies, but I think we always should turn this around as an incredible
critique of our society. We need to ask, what is it about our society
where those of us who do not suffer from Aspergerās are at some massive disadvantage because we
will be talked out of our interesting, original, creative ideas before they are even fully
formed? Weāll notice thatās a little bit too weird,
thatās a little bit too strange. Maybe Iāll just go ahead and open the restaurant
that Iāve been talking about, that everyone else can understand and agree with, or do
something extremely safe and conventional, and therefore hypercompetitive, and probably
not that great as an idea. Iād say a lot of these people may not understand
this larger theory about society, but they are somewhat oblivious to it, and it pushes
progress. Now, certainly my own experience would have
been a little bit more whereāI grew up in Northern California. It was this hyper-tracked process, where my
eighth grade junior high school yearbook, one of my friends wrote in, āI know youāre
going to get into Stanford in four years.ā Four years later I got into Stanford, then
I got into Stanford Law School. You won all the conventionally tracked competitions;
you ended up at a big law firm in Manhattan. From the outside, it was a place where everybody
wanted to get in. On the inside, it was a place where everybody
wanted to get out. You ask one of the people down the hall from
me, said that it was great to see me leave. I left after seven months and three days,
it was great to see me leave. It was like āI had no idea it was possible
to escape from Alcatraz.ā TYLER COWEN: What did you learn there? PETER THIEL: I learned that I was incredibly
prone to this problem of social convention. If you want to give it a religious terminology,
the psychological terminology would be that I had a rolling quarter life crisis in my
mid-20s. The religious terminology, I had a quasi-conversion
experience where I realized the value system was deeply corrupt and needed to be questioned. I do think that one of the ways of challenging
convention, one way, the Aspergerās way, is just to be vaguely oblivious to it all,
and continue apace. Then I think there is another modality where
you just become aware of how conventional our conventions really are, and then that
becomes sort of an indirect route of trying to start thinking for yourself. TYLER COWEN: In your view, perhaps the contemporary
world is becoming, I donāt know what the word would be, stranger, or weirder, or more
shaped by individuals who are different, precisely because conformity is being piled on other
places. So if the movers and shakers would be people
who are in some way neuro diverse, then overall, the world is becoming more surprising in a
way, right? Thatās what we expect at different margins,
at different corners. This will accumulate. It may not ever feel like weāre getting
out of the great stagnation, but each bit of change we get is in a way a more different
change than we would get, say, in 1957, where everything was done with guys with white shirts
and starched white collars, hoping they would be able to buy a little pocket calculator
someday. PETER THIEL: I think the innovation that we
are getting is driven in strange ways. I worry that actually the conformity problem
is actually more acute than it was in the ā50s or ā60s, so that the category of
the eccentric scientist, or even the eccentric professor, is a species that is steadily going
extinct because there is less space for that in our research universities than there used
to be. I worry that perhaps, if anything, itās
a little bit the other way. Itās very hard to measure these things or
calibrate them, but I think that in politics, the conventional approach is to simply look
at pollsters. What are your positions going to be? You just look at the polls, you figure this
out, and it works fairly well. At the end of the day, thatās probably not
how the system really changes. It probably will be changed by some idiosyncratic
people who have really strong convictions, and are over time, able to convince more people
of them. But whether this means that we have more or
less change is hard to evaluate. It always comes from these somewhat nonconventional
channels. TYLER COWEN: Letās say youāre trying to
select people for your Thiel fellowships, or maybe to work for one of your companies,
or to start a new company with. Just you, Peter Thiel, as a judge of talent,
what trait do you look for in that person that is being undervalued by others? The rest of the world out there is way too
conformist, so there must then be unexploited profit opportunities in finding people. If youāre less conformist, which Iām very
willing to believe, indeed would insist on that being the case, what is it you look for? PETER THIEL: Itās very difficult to reduce
it to any single traits, because a lot of what youāre looking for, are these almost
Zen-like opposites. You want people who are both really stubborn
and really open-minded. Thatās a little bit contradictory. You want people who are idiosyncratic and
really different, but then who can work well together in teams. And so, this is again, maybe not 180 degrees
opposite, but like 175 degrees. TYLER COWEN: This is why you like Hegel? PETER THIEL: I donāt like Hegel that much. [laughter]
PETER THIEL: I think if you focus too much on one or the other end of it, you would tend
to get it completely wrong. I like to get things where you get these combinations
of unusual traits, so if you have people with some really interesting, very different ideas,
that suggests weāre in the idiosyncratic category. Then the important question becomes, OK, would
they actually be able to function socially and execute? Then maybe the teamwork question youād ask
would be, whatās the prehistory of this company? How did you meet, how long have you been working
together, and if thereās a long prehistory, that would be good on the other side. I think itās always getting these combinations
right. TYLER COWEN: Thereās an interview with you
when someone asks, āWhatās the Straussian reading of your book, Zero to One?ā You say something like, āThe Straussian
reading is donāt be an entrepreneur.ā Yet at the same time, society has this problem,
which many of us would recognize, that too many people go down tracks of conservative
career choices. You work for a consulting firm, or you go
to finance if you come out of a top school. Itās now become a new kind of conservative
choice, maybe, to go to Silicon Valley in certain ways. Given the difficulties of becoming an entrepreneur,
and the pull of conformity, how is it actually, socially? What kind of intellectual or ideological reconstruction
do we need to get people out of so many of these conservative career choices? PETER THIEL: Itās hard to say. I think āentrepreneurā is one of these
very odd terms people will sayāwhere youāll ask somebody, āWhat do you want to be doing
in five, ten years?ā āOh, itās very clear, I want to be an
entrepreneur.ā Itās just this vague, empty term. Itās like āI want to be richā or āI
want to be famous.ā I am actually quite skeptical of that as a
term, so yes, I think I did say the Straussian reading of Zero to One, was that perhapsāI
had the adverb inābut perhaps you should not be an entrepreneur. It was because on one level, the book is advice
about how you would go about building a business, but then on some level, you could also read
every single chapter as discouraging people from going into business potentially as well. If you give the core advice that you should
start a business thatās going to be a monopoly, and then you say, well thatās really discouraging
a lot of people who donāt have an idea for a monopoly, so maybe they shouldnāt be starting
businesses. My view is we should be starting more good
businesses and fewer bad ones. Not more businesses in the abstract, not more
start-ups in the abstract. Yes, there is always this psychosocial bubble
question. I donāt think weāre in a tech bubble today,
like we were in ā99, 2000. I actually do not think the public, as a whole,
is involved in quite the same way, and so Iām not worried about it like I would have
been in ā99, 2000. TYLER COWEN: I had some[one] email me a question;
let me read it off and tell us what you think. This is a quotation. āWhat do you think a well-educated but zero
marginal product worker in his mid-30s should do to remake himself for the next 30 years?ā PETER THIEL: Iām always super hesitant to
answer questions that are so abstract. If there was some general answer to the question,
it would almost certainly be wrong. TYLER COWEN: Correct. PETER THIEL: If I give you some general answer,
and everybody could follow it, then if everybody followed that answer, it would be the wrong
thing to do. Certainly, there still seems to be strangely
a shortage of people in IT, broadly. If youāre reasonably talented, you can get
training in software and coding in a fairly short period of time, and get in an employable
job. Itās sort of an odd cultural thing in our
society where we still think of computer programming as such a geeky, bad career choice for people
that even after a decade in which itās worked surprisingly well, there probably are still
far too few people going into it. I think thatās a safe general one. Petroleum engineering, thatās the other
amazing one that has not yet attracted more people into it, in spite of a decade-long
boom. TYLER COWEN: If you think of the cultural
achievement of mankind, or at least the United States, or maybe just your own California,
and you asked the question, has that too seen a great stagnation, or is artistic creativity
still reaching new and higher peaksāwhatās your view there? Just how general and pervasive is this phenomenon
of stagnation? If itās intellectual in its roots, you might
think that itās applying to everything. PETER THIEL: I think itās very hard to measure
in a number of these dimensions. I think artistic things, things of a very
qualitative nature, are hard to measure. I certainly think Hollywood is producing fewer
great movies relative to 20, 30, 40 years ago. On the other hand, there are a lot of good
TV shows. TYLER COWEN: Whatās your favorite TV show? PETER THIEL: Itās all sort of this crazy
schlocky stuff like Game of Thrones. I donāt watch that much TV, but I think
there are a lot of things like this that work. Itās hard to measure that. I think the technology and science questions
are ones that I find very interesting. I think they are somewhat more measurable
than a lot of the qualitative social ones. I suspect weāre not innovating as much in
those dimensions, either, but I think that one, youād just end up projecting your own
biases onto society. TYLER COWEN: In the back room, we were talking
about Japan, and a recent trip of yours to Japan. Maybe you would like to relate some of what
you were saying? PETER THIEL: They always want you to say things
that are sort of contrarian and surprising, and so they asked me at this discussion I
was giving in Japan. And the answer that I came up with, which
was both flattering to the audience, but somewhat disturbing from our perspective, was I think
we always think of Japan as this hyper-imitative, noncreative culture of extreme conformity. My suggestion is that perhaps at this point,
Japan is the least conformist, the least imitative country in the world. Thereās actually a lot of interesting aesthetic
cultural stuff going on, there still is a lot of very successful types of businesses. Thereās innovation in food production, all
sorts of interesting areas. But then itās an indictment of the West,
where I think Japan is no longer the Japan of the Meiji Restoration of the 1870s, or
the Japan of the cheap plastic imitation toys of the 1950s. Itās a country that no longer thinks it
can get that much by copying the West. Thereās probably still some narrow interest
in IT and software. Outside of that, I think they are copying
the US and Western Europe less and less. People arenāt even learning English that
much anymore. Theyāre speaking less English than they
were 15, 20 years ago. The golf courses are all getting shut down
and converted to solar farms or something; people donāt even want to play golf anymore. I think we need to take this as a real critique
of our society, very seriously, that theyāre finding less thatās desirable to imitate
in the US or Western Europe. TYLER COWEN: Iāll name a few items, and
you tell me, just if you think this is overrated or underrated. John Maynard Keynes, overrated or underrated? PETER THIEL: Still massively overrated, but
perhaps not as much as he used to be. TYLER COWEN: New York City, overrated or underrated? PETER THIEL: Thatās massively overrated. TYLER COWEN: Why? PETER THIEL: We had a 25-year boom in finance,
from ā82 to ā07. I think thatās slowly ebbing, slowly abating. Itās going to be increasingly regulated,
and so if you want a long/short blue state trade, you want to be long California, short
New York. The long/short red state trade, by the way,
is you want to be long Texas, short Virginia. If you ask, what do Virginia and New York
have in common, and what do Texas and California have in common? Both Texas and California are very inward-focused
places. California, both the Hollywood version and
the Silicon Valley version, are very focused in on themselves. Texas is also a very inward-focused place. What Virginia and New York, or letās say
DC and New York City, have in common is that theyāre centers of globalization. Finance is an industry thatās fundamentally
leveraged to globalization, and DC is fundamentally leveraged to international geopolitics. I would bet on globalization slowly being
in abeyance. I think with the benefit of hindsight, we
will realize that 2007 was not just the peak year of the finance boom, but also the peak
year of globalization, like maybe 1913. Happily, it hasnāt resulted in a world war,
at least not yet, but I think we are in this period where globalization is steadily pulling
back. And so you want to be in places or industries
that are levered to things other than globalization. TYLER COWEN: I tend to agree with that. As you may know, before 2007, trade is going
up at a rate three times higher than world GDP. Post the crisis, trade and world GDP are going
up at about the same rate. I think in rate terms, that has peaked. So you see California and Texas, in a way,
as being like Japan. Youāre long Japan, also, but thatās underrated. PETER THIEL: Iād be relatively long Japan. I wouldnāt be long France, but maybe thatās
even underrated because itās probably still somewhat antiglobalization, and the marginal
tax rates probably will go down in France at some point. But yes, Iād be long the things that are
not as levered to globalization. I would be skeptical of London, New York City,
places like that. TYLER COWEN: How about China? PETER THIEL: China is hard to evaluate on
this globalization metric, because on some level, the growth story is linked to exports
and globalization. Then at the same time, it has these capital
controls and all of these ways that itās somewhat separate. I find it always very hard to evaluate. I do think itās interesting that the questions
about China are being asked less often in the US today than they were a decade ago. In 2005, it was a very widespread question,
in what year will China overtake the US? A decade later, itās reasonable to think
that itās a decade closer to when this will happen. Itās a much less commonly asked question. At the end of the day I suspect we are underestimating
China, but it may be very hard to invest. Iāve always thought that you could only
participate in the Chinese boom if you are a well-connected, card-carrying member of
the Chinese Communist Party. Iām not, and so itās not been a place
that Iāve really focused that much. TYLER COWEN: Think of a place like Brazil. I tend to think of Brazil as fairly inward-looking. If youāre on a bus in Brazil, you hear Brazilian
music typically, not American pop music. You think Brazil is underrated, or overrated,
economically? Do you agree with my characterization of it
is as relatively inward-looking, and if itās an exception, what would account for that? PETER THIEL: Itās relatively inward-looking. Actually, one other metric for inward- versus
outward-looking is which countries were first taken over by Facebook, how Facebook spread
all over the world. It started with the US, other English-speaking
countries. Then it went to all the small European countries
where people spoke English: Switzerland, Holland, Scandinavian countries. The ones that were the hardest to break into
were the ones with the very separate language groups. Brazil was much harder than the rest of Latin
America, it sort of had this Spain to Latin America aspect, whereas Brazil is a self-contained
country where most of the people in the world who speak Portuguese live, and Portugal barely
counts. I do think it qualifies on the inward-looking
piece. If you look at the history over the last 150
years, I think there have been four points where people were hyper-bullish on Brazil. Iām not going to get them exactly right,
but there was one in the preāWorld War I. There was one in the ā60s, in the ā50s,
in the ā70s . . . TYLER COWEN: Thatās right. PETER THIEL: . . . there was one, again, in
recent years, and they all turned out to be false dawns. They were all linked to Brazil being tied
into globalization. The optimism about Brazil, was always from
all the potential that will happen, when it became linked to globalization, and then the
disappointment happens when it turns out it doesnāt work. There was this giant energy company called
OGX. The guy who started it was worth $30 billion
in 2011. Heās now worth ā$1 billion. You met with him in Rio de Janeiro. He had a McLaren parked in his living room
in the villa, on a pedestal. He had just divorced his wife. He told me, āI can now park my car wherever
I want.ā [laughter]
PETER THIEL: They had all these offshore oil concessions theyād gotten from the government,
in relatively shallow water. It seemed like a fantastic investment. Then, it turned out you could only get Brazilian
oil service companies to develop it. There were no Brazilian oil service companies. Maybe the oil didnāt exist at all. Maybe the whole thing was a giant fraud. Very hard to tell. These things work when people are bullish
about integration, and globalization, and then the reality sets back in. It could be the case that itās fairly decoupled,
and the excess optimism came from people thinking it wasnāt. TYLER COWEN: You mentioned Facebook a few
minutes ago. In the back, we were talking about good and
bad names for companies. If you could tell us your view on this, how
important is the name of a company? What are a few good names, and why, and what
are a few bad names? PETER THIEL: A slight aesthetic thing I believe
in very strongly is the names of companies are often very predictive of future failure
or success. PayPal was a very friendly name. It was the friend that helps you pay. Napster was a bad name. It was the music sharing site. You nap some music, you nap a kid. That sounds like a bad thing to be doing. [laughter]
PETER THIEL: Itās no wonder the government then comes in and shuts the company down,
within a few years. You want to be very careful how you name companies. In the sharing economy context, I like Airbnb,
way more than Uber. Airbnb sounds like this very innocent, virtual
bed and breakfast. Itās [a] very light, nonthreatening company. Uber, it sounds like a bad name from Germany
sometime in the 1930s. [laughter]
PETER THIEL: What are you exactly above? Maybe the law? [laughter]
PETER THIEL: This is probably something that, again, from government regulatory perspective,
Airbnb is a vastly better name than Uber. On the social networking side, I would say
that I actually think Facebook was a very good name. MySpace was a more problematic name. You can say that all these social networks
involve both reading and writing. Unlike real life, you have to write, before
you read. You first have to write some things about
yourself, then you read more about other people. Over time, reading dominates writing. Facebook was about learning about people around
you. About the real identities at Harvard. MySpace started among wannabe actors in Los
Angeles, and it was about them coming up with fictional narratives around themselves, and
then a lot of other people in LA, who are generally like that. Because reading dominates writing, Facebook
would ultimately dominate MySpace. Thereās a certain version where the whole
product arc was implicit in the names. TYLER COWEN: How about United States? Overrated or underrated? And consider the name. [laughter]
PETER THIEL: Itās hard for us to have good intuitions about this, because we are so used
to it, and so embedded in the history. Certainly, this is all atavistic and way too
old-fashioned, but Iād be sympathetic to the 19th century spelling, where the U was
lowercase. TYLER COWEN: In chess. First move. E4 or D4. Which is better? PETER THIEL: Itās probably the case that
D4 is marginally better at this point, because it looks like there are certain defenses to
E4 that are very hard to break, like the Berlin defense. But I still always play E4. Itās what Iāve gotten used to. TYLER COWEN: Because itās the attacking
move, right? PETER THIEL: Itās the attacking move, and
if youāre short of world champion level, I always enjoy increasing the risk involved
and volatility in the game. TYLER COWEN: You were born in Germany. You are fluent in German. Thatās part of your background. How do you think thatās influenced your
worldview, what I would call your implicit theology, how the different pieces of Peter
Thielās ideas fit together? Whatās the role there, and do you still
sometimes dream in German? PETER THIEL: We spoke German at home. We moved to the States when I was a year old,
and we spoke German at home for the first 12 years. My parents didnāt have a TV set. We got a TV set at age 12, and then the English
language overtook everything. Itās hard to generalize. California and Germany are extremely opposite
kinds of places, in certain ways. I think of California as both very optimistic
and somewhat desperate. You have 20,000 people a year move to Los
Angeles to become movie stars, maybe 20 of them make it. All of California has a super-optimistic,
but somewhat desperate . . . TYLER COWEN: Itās like Beach Boys music. Sounds optimistic on the surface but itās
deeply sad and melancholy. PETER THIEL: It may be something like that. [laughter]
PETER THIEL: I think of Germany as always incredibly pessimistic, but very comfortable. It is this very big contrast. Iām not sure pessimism is generally that
helpful an attitude to have, but the German pessimism is probably a helpful corrective,
in the midst of the hyper-optimism that permeates Silicon Valley. If you are a mildly pessimistic person, you
might do well in a place where people are insanely optimistic. If you are a mildly optimistic person, you
would do well in a place where people are insanely pessimistic, like say Germany. TYLER COWEN: So maybe you are this mix of
German pessimism and California optimism. Just like you said for Thiel fellowships,
you look for people who embody these Zen contradictions. Maybe thatās one of yours: that the extreme
pessimism has to do with the weirdness of the world, and the difficulty of breaking
through the conformity, but at some level, you think it can be doneārightāand youāve
done it. PETER THIEL: I always think extreme pessimism,
or extreme optimism on their own terms, are not terribly healthy attitudes to have, because
extreme pessimism tells you thereās no point in doing anything. Extreme optimism tells you there is no need
to do anything. They converge on doing nothing. A healthy attitude is always either something
thatās milder. Mild optimism, mild pessimism. I average out to a mild version, even though
maybe the components are extreme. On average, it comes out somewhere in the
middle. TYLER COWEN: I was emailed this question. What is your maximum likelihood estimate of
when you will die? At what age? PETER THIEL: It depends a lot on what we do
about this stuff. Again, itās not as though the future exists
on its own . . . TYLER COWEN: But you are forecasting you. PETER THIEL: It depends on what I do, and
what I get other people to do in the next few decades. These things can go in very different directions. Whenever I look at the signs on these areas,
I think there are many innovations that could happen, and then I think itās incredibly
slow. If I had to make a straightforward forecast,
I would do a straight-line extrapolation, where life expectancy has gone up something
like, 2.2 to 2.5 years per decade, since 1840. That would probably get me into my early to
mid-90s. Then, you add maybe 10 years, so somewhere
100 to 110. That would be a pretty good upper case. Thereās a lot of variability. If things end up stagnant, itāll be not
much more than what people would expect today. If things accelerate, it could be a lot longer. TYLER COWEN: A lot of those gains in life
expectancy have come from people younger than 80. People who reached 80 in, say, 1870, did only
marginally worse than people who reach 80 today. Thatās since I tend to be more pessimistic
about many people reaching 100, though I would give you, in relative terms, perhaps the best
chance of anyone in this room. PETER THIEL: That was true in the first half
of the 20th century. In recent decades, more of the gains have
come from somewhat older people, not necessarily from people who are 80 and up, but say people
who are 60, 65, 70, of being able to live significantly longer than they were in the
past. But you are right. We are not going to get than many gains from
reductions in infant mortality, or things of that sort. It will come from people who are somewhat
older, hopefully living both longer, and hopefully healthier, lives. TYLER COWEN: Whatās your favorite novel? PETER THIEL: The classic one I always give
is Lord of the Rings. If you want something a little more intellectual,
itās probably the Bulgakov novel The Master and Margarita where the devil shows up in
Stalinist Russia, and succeeds, and gives everybody what they want, and everything goes
haywire. Itās hard, because no one believes heās
real. TYLER COWEN: New Testament, or Old Testament? Which has influenced you more, and why? PETER THIEL: Iād have to go with something
like the New Testament. These things are always subject to so much
interpretation. I donāt think something like any of these
holy books stand on their own. If they did, thatās always an antireligious
argument at the end of the day. TYLER COWEN: The Hebrew Bible, to me, has
more of this dialectic that we found in a lot of the other topics. Mix of optimism and pessimism. Much more irony, multiple voices, varying
perspectives. My answer would be Hebrew Bible has influenced
me much more than the New Testament, which has hardly influenced me at all. You are different in that way, but what is
it in your character, intellect, or background, do you think accounts for that difference,
given some of the other things youāve said? PETER THIEL: I would disagree with that characterization
of it. I think Christ is a very complex, very ambiguous
figure in many ways, which makes the interpretation quite difficult. I think almost everything that Christ said
could be described as an answer to something thatās true, that most people did not agree
on. And I think for the most part, it was necessary
for Christ to be very careful how he expressed himself. It was mostly in these extremely parabolic,
indirect modalities, because if it had been too direct, it would have been very dangerous. It was John Locke, in The Reasonableness of
Christianity, said that Christ obviously had to mislead people, since if he had not done
so, the authorities might have tried to kill him. TYLER COWEN: Thereās a kind of Straussian
Christ here? PETER THIEL: Thatās the Straussian interpretation
of Christ. It didnāt end in a particularly Straussian
way, but it was at least true for most of his ministry. TYLER COWEN: What do you hope to spend the
next year thinking about, ideas or questions you havenāt thought through already, that
will be your focus in the next year or two to come? Things that we havenāt talked about already. PETER THIEL: I donāt know if itās ever
really this top-down agenda that I try to set. A lot of what I end up doing is somewhat serendipitous. You talk with a lot of interesting people. You try to figure out what are some great
technologies, great entrepreneurs to work with in different ways. Thatās how you end up getting very interesting
perspectives, and how you change your mind on things. The overarching agenda is always to try to
figure out some way to get out of the stagnation by literally helping people to start companies
that will change the world. TYLER COWEN: Before we get to audience Q&A,
final question from me. Youāve done many start-ups, funded many
others, youāve written Zero to One on start-ups. If you think of the Institute for Humane Studies
and Mercatus Center as a kind of start-up: we are together in one location. We have a critical mass of people here, studying
notions of liberty and individual responsibility. We have, more or less, a common intellectual
background in some ways. I wouldnāt say we have a monopoly, but the
space of doing liberty-oriented ideas in a university setting is by no means what everyone
is jumping at doing, to say the least. If you think of us as a start-up, embodying
at least some characteristics which have something to do with what youāve praised, what advice
would you give us at the margin, for being successful in the future? PETER THIEL: All those elements are quite
good. I think that itās always a mistake to be
too focused on prestige and status. This is always the great temptation in many
areas. Academia is one thatās extremely prone to
this. I would always be long substance, short status. The temptation is to try to get more respectability
within an academic setting, or within some sort of a broader audience. If you try to get respectability, it will
always come at a price of softening the edges, modulating what you say. You want to always put substance over status. If that was a single overarching theme, that
would be a very, very healthy one to maintain. AUDIENCE Q&A
AUDIENCE MEMBER: You talk about vertical progress versus horizontal progress. Iām wondering, how does one create vertical
progress? Do you have any tips for doing that? PETER THIEL: Thereās no straightforward
formula for innovation. Itās much easier to do horizontal progress,
which I describe as globalization, copying things that work going from one to n, versus
vertical progress, technology, doing new things, going from zero to one. Globalization, I think there is actually a
formula. You can copy whatās working, try to mechanically
apply it. Thereās something scientific about globalization. Thereās something deeply unscientific about
the history of technology itself. Science starts with the number two, whereas
every moment in the history of science, technology, business, I believe, happens only once. The next Mark Zuckerberg wonāt start a social
network, the next Larry Page wonāt start a search engine. Itās always some idiosyncratic thing. Itās good to be passionate about something
that you are good at, that other people are not doing. If you get those three things lined up, thatās
a very good start. AUDIENCE MEMBER: In order to go from zero
to one in a nonprofit organization, or a political advocacy group, what would one have to do? What would be a key differentiator, or angle,
to approach with it? PETER THIEL: The contrarian business question
is what are great businesses no one has started, the contrarian investor question is what great
investments does nobody likeāthe contrarian nonprofit question is what great causes are
deeply unpopular? This is how I always deflect requests for
money, is I ask people, āWhy is your cause popular? Why is your cause unpopular?ā Because I only want to fund unpopular causes. I assume popular causes are funded relatively
well. Relative to good, unpopular causes. If you are able to push unpopular causes,
thatās very good. Then, the Zen-like problem, the paradox, is
that you have a lot of impact, if you are able to push a good, worthwhile, but unpopular
cause. The Zen paradox, is that itās very hard
to market it and get money to do it. Thatās the tension that itās worth thinking
through really hard. I think most nonprofits fail at this, where
they end up supporting things that are super conventional, they can get funding for them,
but if they didnāt do it, thereād be 100 other people doing it. Always having a counterfactual sense of mission
is important. If we werenāt doing this, nobody else in
the world would be doing this. To the extent thatās not true, you want
to make that more true. Maybe itās a spectrum, but you want to always
tilt more in that direction. On the business side, on the nonprofit side,
I always differentiate mission-oriented businesses, which have this counterfactual sense of importance,
from social entrepreneurship. Anything that has a social element to itāthe
word social is very ambiguous. It can mean, number one, good for society. It can mean, number two, good as seen by society. In practice, the second meaning always ends
up dominating the first. Then, you end up with the āme too,ā lemming-like,
sheep-like clones, where you lose every raison dāĆŖtre. AUDIENCE MEMBER: In an age increasingly dominated
by intellectual ability, what should a person of modest cognitive ability do with his life,
to find meaning or make a contribution? Related to that, what person of average, or
modest, intelligence do you admire most? [laughter]
PETER THIEL: Iām not going to answer the second question, because Iām always nervous
that Iād be insulting people if I did. There are a lot of things that people can
do, that are strikingly underexplored. There are certainly all these vocational careers
where people can do quite well. They are somehow considered not cool, not
prestigious. The average plumber makes about as much as
the average medical doctor. I do think this idea of whatās unfashionable
is very important as an initial anchor. Thereās no reason that people of average
ability are going to be more pushed towards whatās fashionable than people who are very
smart. I think often the smarter people are more
prone to trendy, fashionable thinking because they can pick up on things, they can pick
up on cues more easily, and so theyāre even more trapped by it than people of average
ability. AUDIENCE MEMBER: Iām going to take you on
in your challenge about sharing something we know to be true that everyone disagrees
with, and then ask you a question about it. The truth that I know to be the case is that
the future of human evolution and how we think about how we structure society lies in privately
funded, managed, for-profit cities built in partnership with, but independent from, governments
today in the world. My question to you, and then also I have a
follow-up for Dr. Cowen, is āWhat do we need to do to enlist your powerful support
in that view, in addition to getting introduced by someone in your inner circle?ā Dr. Cowen, my question to you is, āWhat
do we need to do to be on that stage, having a similar conversation with you and the crowd
that you have managed to get out here?ā PETER THIEL: I think there are many things
that would be incredibly terrific to do. The business version would be āIs this important?ā If we could reopen the frontier in geopolitical
terms and find a way to really innovate on society, I think this would be a terrific
thing to do. Then the question āHow does one actually
do this?ā is very tricky. All the surface area on this planet is occupied. It seems very hard to get this to work. I know Romer had this experiment with these
city-states in Africa. I think it was prohibitively expensive. It could never really quite get started. You need to have some version of where this
would work and you could get started with a budget of letās say less than $50 billion. If you could give me a convincing way it would
work for $50 million instead of $50 billion, Iād be interested. TYLER COWEN: Your question addressed to me. I have a graduate student and also a colleague
who are working on the economics of private cities. Not private cities being completely separate
from larger political units, but largely private cities with mostly private infrastructure
nonetheless. If youāre talking about private cities truly
independent of government, I would call those ācruise ships.ā [laughter]
TYLER COWEN: We do have many of them. I think they work fine, but I donāt view
them as a significant blow for liberty. In fact, when I go on a cruise ship, I actually
worry about some of the liberties Iām signing away. I know I do that voluntarily. Itās fine. I donāt object to that. I tend to favor larger political units and
to think that human freedom will be found by the wealth and diversity within larger
political units giving people pockets. Iām not sure weāll ever have a bottom-down
creation of a lot of micro-units which compete very intensely and through exit give people
true liberty. Iām more optimistic about the larger political
unit vision, but maybe thatās a matter of taste. In terms of these events, you or anyone else
feel free to write me. AUDIENCE MEMBER: In a 2009 Cato Unbound article,
you discussed your disillusionment with democracy as a source of innovation and change in government
and politics and expressed your interest in cyberspace, outer space, and seasteading. Is there a 2015 update on how youāre feeling
about government and politics and innovation? PETER THIEL: Writing is always such a dangerous
thing. [laughter]
PETER THIEL: I remember a professor once told me back in the ā80s that writing a book
was more dangerous than having a child because you could always disown a child if it turned
out badly. [laughter]
PETER THIEL: You could never disown anything that youāve written. The Cato Unbound article, it was a thousand-word
essay. It was late at night. I quickly typed it off. I sent it to someone else to review, who said,
āThereās nothing controversial in here at all.ā My retrospective was that if you actually
ask someone to double-check things for whether or not itās controversial, you already deep-down
know that you should double-check it yourself. My updated version on it would be thatāI
made the case that I thought democracy and capitalism werenāt quite compatibleāthe
updated version I would give is itās not at all clear that weāre living in anything
resembling a democracy. Weāre living in a representative republic,
but then thatās modified through a judicial system. Of course, thatās been largely superseded
by these very unelected agencies of one sort or another, which really drive most of the
decision-making. I think calling our society a democracy, whatever
may be good or bad about democracy, is very, very deeply misleading. Weāre not a republic. Weāre not a constitutional republic. We are actually a state thatās dominated
by these very unelected, technocratic agencies. The very difficult political question is,
āHow can you get an advanced, technological society to function in any way thatās more
republican or more democratic at all?ā Not at all sure how that is, but I think the
challenge is that a lot of these agencies have become deeply sclerotic, deeply nonfunctioning,
even though the alternatives to them, politically, often seem to be even worse. The Federal Reserveālots of things they
do, I donāt like, but then once you get people in Congress involved in dictating Fed
policy, that always seems even worse. TYLER COWEN: A follow-up on that, Peter. New Zealand arguably is the most democratic
country in the world, I would say, or very close to the most democratic. Given that, New Zealand, overrated or underrated? PETER THIEL: Again, I think itās more like
a representative democracy or republic. TYLER COWEN: Thereās no constitution. Thereās close to only one branch of government,
very little federalism. PETER THIEL: I think a lot of these smaller
countries are somewhat underrated generally because you have an adaptability, an ability
to change things that can move a lot faster. Again, I donāt think itās the form of
government that matters so much. I think itās often the culture . . .
TYLER COWEN: The size. PETER THIEL: . . . how well things work, to
some extent the size. I think those are elements that are very positive. In a world where globalization is going in
reverse, one rough approximation is you want to go on a place on the planet thatās as
far away from the Middle East as you can get. If you do that on a physical globe, itās
somewhere in the southern hemisphere. Itās basically halfway between New Zealand
and Tahiti. If you had to pick them, Iād go with New
Zealand over French Polynesia, which is where the people in France go, who find the work
hours in France too onerous. [laughter]
TYLER COWEN: Tonga. AUDIENCE MEMBER: How would you evaluate the
government of the United States as an investor in innovation and technology? Perhaps you would consider referring to rockets
to the moon, the transcontinental railroad, drug development, and solar energy. Or any other innovations you care to stress. PETER THIEL: These are all obviously quite
different. Thereās a libertarian perspective which
I have, which is that itās extremely bad, but thatās present tense. I think the nonlibertarian perspective that
I think we always should think about a little bit harder is that thereās also also been
a tremendous decline. I think in the 1930s and 1940s you had a degree
of technocratic competence that was quite significant. Today, a letter from Einstein would get lost
in the White House mail room. The Manhattan Project would be unthinkable. Apollo would be unthinkable. I think the first signal one that really went
wrong was Nixonās war on cancer. I always do think the 1970s were this decade
where many of our institutions, especially our governmental institutions, started to
work much less well. That was perhaps the signal one where things
went badly wrong. In terms of investing in science and technology,
it seems to me that the minimum criterion for doing it is to have some understanding
of these things and some ability to evaluate them properly. In a government in which two-thirds of the
representatives are lawyers and in which . . . Again, just using the House and Senate as a proxy
for our government, by generous count, no more than 35 have degrees in engineering or
science or anything like that, or any technical field, very generously defined, both the House
and Senate. Perhaps these are not the right people to
be driving these investments. I think we, again, should have much more of
a focus on substance, much less on process. I always use the Solyndra bankruptcy as an
example in this question of what went wrong. Thereās a Republican process critique. The process was screwed up. There were kickbacks. Somehow, there was this corruption. They could never quite prove it, but that
was the intuition. The Democratic defense was, āWe had a process. We had a portfolio, a financial process where
we gave money to lots of different things.ā You let 100 flowers bloom or something like
that. A mathematical objection to it was that a
cylinder has 2Ļr the surface area of a flat panel, which would be 2r and therefore is,
by definition, 1 over Ļ as efficient as a flat panel. You could just use ninth-grade, high school
geometry to show that this was a demonstrably inferior technology. It was never going to be commercially viable. You have a Nobel laureate, Steve Chu, running
the Energy Department who is not allowed to use ninth-grade high school geometry in evaluating
what to do. That sort of a society, that sort of a government
is one that should not be allowed to make any investments in these areas whatsoever. AUDIENCE MEMBER: In the libertarian utopia
that you will build, what will you use for money? Will it look more like Bitcoin or more like
PayPal? PETER THIEL: Iām not exactly sure that Iām
going to succeed in building a libertarian utopia. I actually do think that thereās a little
bit too much of a fixation on this monetarist level, and not enough on the underlying real
economy. I think that, for example, we have a lot of
these debates about Fed policy. Are they printing too much money? Are they not printing enough? What should the Fed be doing? Somehow, do you decentralize that? I think money and the nature of money is somehow
much less important than all the microregulations that make up the economy. If you give me a choice of getting rid of
the vast bulk of government regulations and keeping the Fed, Iād much rather do that
than keeping all the other zoning laws and crazy rules we have and going with PayPal,
Bitcoin, gold, any sort of alternate currency one could come up with. Iād much prefer to focus on the level of
atoms, the real economy, than on the virtual level of bits, which I think of money as being
linked to. My intuition, for what itās worth, is that
youād want money to somehow be linked back to the real, in a fundamental way. This was the merit of the gold standard, that
it would at least maintain this discipline that money was not something that grew on
trees and could be printed ad infinitum, and so Iād want it to be linked to something
real. Maybe you link it to the equity market, or
something thatās somewhat more real than just fiat money. I think the much more critical thing are all
the microregulations. AUDIENCE MEMBER: I work for the Indonesian
government as an advisor. I have two questions for you. The first is, do you think Indonesia is underrated
or overrated, and number two, what would you recommend for my government to fight off terrorism? Because you talk a lot about monopoly in your
book. Is it possible for my government to monopolize
information security, yet at the same time, respect the individual privacy of our citizens? PETER THIEL: Wow. Again, Iām not totally sure if I have a
great answer on that off the top. I think that I donāt know if the right question
for many of these countries is what to do on the level of the country itself. Indonesia has 200-plus different islands,
itās extremely heterogeneous as a place. I think that if things were somewhat more
decentralized, that probably would be the direction that one would be tempted to go
in. I donāt know all about the details of the
terrorism issue in Indonesia; my sense is that a lot of these national security debates
have involved these fake tradeoffs in many different places. Itās always you do more with more, or less
with less. You have more security with more privacy invasionsāa
more centralized, powerful state. Versus, you have less security with more privacy. Itās almost like the NSA versus the ACLU,
and I think this is a very fake dichotomy. The technological solution I would like is
where you do more with less, where we have more security with fewer invasions of privacy
and we try to find ways to actually do things that are much smarter. Thatās what I would define as actual innovation
in a space. We can always do more with more, versus less
with less, and thatās the boring ideological debate weāre always stuck with. AUDIENCE MEMBER: Why do you have an appetite
to live longer, and whatās your lifeās mission? Have you fulfilled your lifeās mission yet? PETER THIEL: I think itās somewhat independent
of a life mission. I actually think life is something thatās
worthwhile in and of itself. Death is kind of a bad thing, in [and] of
itself, so even if I was adrift and had no sense of what I was doing at all, I would
still all else being equal, hopefully prefer to live a lot longer. I always think itās very odd how weirdly
strange the anti-aging, life extension idea is. I always think, āWhy would people think
that you would need a life mission or some extraordinary reason to want to live longer?ā Part of it goes to these very strange psychological
ways we deal with mortality, through a combination of acceptance and denial. We accept that weāre all going to die, and
so we donāt do anything, and we think weāre not going to die anytime soon, so we donāt
really need to worry about it. We have this sort of schizophrenic combination
of acceptance and denial, like extreme pessimism and extreme optimism. It converges to doing nothing, and Iād like
us to just fight it a little bit more for its own sake. TYLER COWEN: Over here. AUDIENCE MEMBER: If you accept for the moment
the premise that in general, the sort of free-market system we have has done a pretty fair job
on the production side, but that there may be a secular threat to its success on the
distributional sideāin other words, increased concentration of wealth, perhaps due to technology
changesāis there a way to substitute something on the distribution side without harming the
effective progress performance on the production side? PETER THIEL: Iām not sure I agree with all
those premises. That would be point number one. I always think on this inequality debate,
you have to always separate into three separate questions. One, is it even going up? Itās probably going up in the US, not going
up globally, so the Gini coefficient of the world, not even clear thatās going up. Letās grant number one. Then you have a second question, why is this
happening, and then a third question, what to do about it? I think these things are very different. Why it is happening: I tend to blame it more
on globalization than technology. I think itās very overdetermined by many
different things that are very hard to solve, and then I think what to do about it: many
of the remedies are actually worse than the disease. If you come up with higher marginal tax rates,
for example, you probably will just incent people to come up with more loopholes; maybe
it hurts the middle class more than the wealthy. If you actually look at societies with officially
very redistributionist policies, they seem to get more and more static the more redistributionist
the rhetoric is. You have to go very far left before you actually
get to effective redistribution. Venezuela is not left-wing enough to get the
redistribution. You have to go probably all the way to Cuba,
Soviet Union, things like that. France, not nearly far enough. Iād rather go in a very different direction. My sense is always that itās basically that
the issue is not inequality, the issue is much more stagnation. Thereās a sense of peopleās living standards
are generally not improving that much, and then, what can you do about that? What are the microsolutions for that? In Silicon Valley, San Francisco, where I
live, I would say the single biggest variable that makes people feel the stagnation is the
sense in which housing costs, rental costs, are through the roof. The political fix I would be tempted to pursue
would be trying to find a way to break the unholy alliance between urban slumlords and
pseudo-environmentalists that sort of prevent any new urban development. But I think itās always much more a problem
of stagnation than inequality. TYLER COWEN: Letās try to squeeze three
more questions into the last five minutes. Next. AUDIENCE MEMBER: A few years ago, I came up
with a proposal that debuted a human physiological simulator after the Human Genome Project to
further push the IT and the life science revolution forward. I managed to talk to Dr. Collins from the
NIH, who was the director then, and his answer was, āGreat idea, but itās too hard to
do.ā I wanted to get your response to that. PETER THIEL: Yeah, Iād probably agree with
that. That seems a little bit hard to do. I generally find myself a bit skeptical of
all the AI-themed discussions that we have at this point. I think itās still quite a bit further away
than people think. It feels like a bit of an extreme consensus
that AI is just around the corner, itās about to happen. It would take a lot longer to explain all
my misgivings about it, but I think it fits a little bit too much into this conventional
inequality narrative, that we have rapid technological progress, and the only problem is that people
wonāt have jobs, theyāll be replaced by computers. I suspect thatās not quite correct. I think the whole AI story is, if anything,
happening more slowly. The data point people always give is self-driving
cars. The fact that they always come up with the
same example suggests that maybe thereās not that much to it. Even if you gotāand I think self-driven
cars would be significantāit might replace at most 1 percent of the workforce, it might
increase productivity by a few percent in the economy. If you phased them in over a decade, it would
not be that transformative. AUDIENCE MEMBER: What do you see as the biggest
changes in the practice of science, say, over the last 50 years, for better, for worse,
from the perspective of innovation, and whether you think that the public consciousness or
concept of science has matched those changes? PETER THIEL: Itās gone dramatically for
the worse. The basic narrative I would give is that we
had this preexisting ecosystem of idiosyncratic scientists who were driving research in all
sorts of independent ways. You could dramatically accelerate it by giving
them a lot of money, which is what we did in the 1930s to 1960s, but it came at this
price of suddenly politicizing the system. The problem is that a good scientist is very
much the oppositeānow, this may be more like 180 degrees, not 175 degrees, itās
179.5 degreesāthe opposite of a good politician. Itās like, a scientist is someone whoās
interested in the truth, a politician is someone who has a very troubled relationship with
the truth. I think weāve had this sort of Greshamās
law, where the bad scientists have driven out the good, or people who are nimble in
the art of writing government grant applications have replaced the eccentric scientists whoāve
really pushed the research. I think thatās sort of this deep corruption
of the process. Itās very hard for the public to fully appreciate
it, because science is so specialized. Who am I to evaluate superstring research,
or quantum computing research, or nanotech, or immunotherapy as applied to cancer? Because of this extreme specialization of
science, you have these self-reinforcing expert communities that have made this process of
politicization extremely opaque to the broader public. Iām very much in favor of science, but Iām
skeptical of people who excessively invoke science as an incantation of sorts. When you use the word science itās often
a tell, like in poker, that youāre bluffing and that no science at all is going on. We have political science, we have social
science. We donāt have physical science or chemical
science. There are just physics and chemistry, thereās
no debate. If you think about other areas where people
use the word science excessively, I think those are areas that we should perhaps be
a lot more skeptical of. AUDIENCE MEMBER: How happy are the super-rich? [laughter]
AUDIENCE MEMBER: First-hand experience, or all the super-rich people you know, or both? PETER THIEL: Iām not sure this is a terribly
easy thing to measure. I think itās extremely, deeply subjective,
that people probably have fewer worries about money. They have a lot of worries about how excessive
money screws up relationships in different ways. I think there probably are plusses and minuses. But Iāve always questioned the premise of
the question. Iām not sure whether subjective happiness
should be the most important metric at which we evaluate things. Thereās many other metrics we can use. TYLER COWEN: Peter, thank you very much. PETER THIEL: Thank you very much, thanks.
[removed]
This is ideology mascarated as science.
We were able to miniaturize things to make exponentially more in the world of information.
In the world of engines, we have maximum efficiency, and when you have a 30% engine efficiency, at best you could make x3.3, and realisticly it is very very hard to move up thanks to the second law of thermodynamics.
This is why standard engineering is stagnating. It is very hard to slightly improve efficiency, and we have a hard time producing more energy.