The World According to Thiel

[Music] welcome to uncommon knowledge I'm Peter Robinson my guest today the investor and philanthropist and possessor of an unusually interesting mind Peter teal you'll notice that Peter teal and I are having our conversation in front of an audience this is a meeting of the Mont Pelerin society the organization founded in 1947 that brings together nobel laureates and government officials and investors such as peter himself to discuss economics and the state of the world and when it comes to the state of the world as you will see Peter teal has opinions we discuss China and the United States under Donald Trump and his own world Silicon Valley which he talks about as this is his word deranged uncommon knowledge with Peter Thiel born in Germany Peter Thiel moved to the United States with his family when he was a child he graduated from Stanford and then from Stanford Law School and after deciding not to practice law he co-founded PayPal and Palantir made the first outside investment in Facebook funded companies such as SpaceX and LinkedIn and started the teal fellowship which encourages young people to drop out of college to start their own businesses mr. teal remains a very active tech investor now based in Los Angeles ladies and gentlemen Peter Thiel chyna the late economist and foreign policy analyst Hoover fellow Harry Rowan writing in 1996 quote when will try to become a democracy the answer is around the Year 2015 this prediction is based on China's steady and impressive economic growth which in turn fits the pattern of the way in which freedom has grown in Asia and elsewhere in the world worked in South Korea worked in Taiwan economic growth leads to democracy in China what went wrong well Oh Peter this is always a set up for me to start by both flattering you and criticizing you a little bit since there was that very famous Reagan speech you gave that you wrote wrote for Reagan where it was you know tear down that wall mr. Gorbachev and it was very effective but it was perhaps it was not only in the West that we learned lessons from it the Chinese Communists also paid very careful attention to it and they learned that you had to have you know you had to have perestroika without glasnost you had to get rid of the Marxism without getting rid of the Leninism and and and they learned somehow the very opposite lessons of that fateful year in 1989 they you know Tiananmen worked in China and and that that is what that is what what continued to work so I think that's that's sort of a a a simple first cut there was nothing about history that is automatic or predetermined it's always a question of agency of people and and unfortunately you know China took took the lesson very much to heart and has stayed on this trajectory as per capita you know GDP is close to ten thousand dollars which was sort of the point where you know democracy was supposed to start taking over and it seems to if anything then been going the opposite direction or there's you know there's another there's another sort of historical riff I have on this that I was thinking about the other day where it was this famous this famous interview with Chow and why and and the early 1970s where they asked him about the French Revolution and what did he think of the French Revolution and he said you know it's too early to tell which was which was seen as sort of a funny diplomatic answer at the time but I've come to think that there's sort of a very sinister way of thinking about that answer which is that you know in some sense the French Revolution it ended it ended in 1794 when the insanity burned itself out and you had Thermidor and then of course you know when you had the Russian Revolution one of the promises Lenin had was that the Russian Revolution communist revolution would never have a Thermidor but it took a little bit longer than five years as did in France but I'd argue you know you had something like Thermidor 1956 when Khrushchev gave the Anti Stalin speech certainly by the time of Gorbachev China what Chou Enlai was saying in that speech was that China is the one country that is still true the spirit of the French Revolution it is the one country in the world in which there will never be a Thermidor and and that is that is and that and then of course you know the way this this manifests is that it will still you know continue in the sort of revolutionary communism that that will have you know one genocide 'el thing after another and that that that continues under G still China three quotations I mean two of them from heroes of the Mont Pelerin Society Friedrich Hayek in 1982 the mere idea that a planning authority could ever possess the information necessary to run the economy is a somewhat comic fiction what prices ought to be can never be determined without competitive markets close quote if you want economic growth you must permit free markets quotation to Milton Friedman 1991 when the regime in China introduced a greater measure of economic freedom that generated pressure for more political freedom and that led to Chen on men's square if you permit free markets sooner or later your people will demand political freedom and they'll be hard to handle quotation number three Peter teal speaking last November artificial intelligence is the big eye of Sauron watching you at all times in all places close quote will artificial intelligence overturn Hayek and freedom will it enable China to achieve sustained economic growth without economic political freedom well let's let's let's not be too dogmatic and answering this so you know I certainly um I certainly think that it's possible that the totalitarian formed the form that totalitarian has in China will will exhaust itself that it will hit some kind of crisis at some point you know China does have you know some some very serious demographic challenges you know maybe it's sort of like you say it's a revealed preference that people don't want to have children because it's very cruel to allow a child to be born into such a horrible Society so I think you know there are there are ways that we can speculate on how how it might ultimately exhaust itself but but I think but I think we should not be dogmatic on the other side and assume that it automatically will and that you know perhaps perhaps it can sort of develop perhaps it can sort of catch up you can sort of get things to work and and you know there are probably certain parts of the economy where you don't need to be that free or that creative or that innovative there is just sort of copying things that work just you know copying the West and you can maybe you can't get quite the our standard of living but maybe you can get to you know a half our standard of living or something like that but you're not a thing yeah you're not singling out AI as a game changer here you tend to poopoo the notion that AI will change things uh well I think if it if it's it's unclear I think there's always a lot of propaganda around all these these buzz words and so I I think it's it's some it's somewhat exaggerated but but but yes of course there's there's sort of a continuation of the computer revolution where you'll have you know more powerful Leninists controls and you can have certain you know maybe the farmers can sell you know the back the cabbages in the market and and you can still have you know face recognition software that attracts people in all times in all places and so there's sort of a hybrid thing that that might work for you no longer than we'd like okay so you touched on this a moment ago but let let's bear in on it two competing narratives one is the president she is centralizing power more tightly and with the help of technology more successfully than any other central authority has ever been able to do in all of human history he is the most successful dictator the world has seen the other narrative is that the Chinese population is growing old its economy is slowing its one-child policy has produced 40 more 40 million more men than women and that the freedom movements in Hong Kong and Taiwan have placed Beijing seriously on the defensive so well let's um you're gonna choose one or the other well let me um let us are we Telegraph I'm gonna I'm gonna give you my speculative conspiracy theory on how China the Chinese Communists are trying to psychologically undermine the West all right and I believe they are inducing two perspectives on China about in in the West one perspective is that China is very far behind us that it's still a very poor backward country it even in 20 49 even on a hundred year anniversary it will still only be a middle-income country and it's it's so far behind that we don't need to worry about it and we can be in denial about China and the other one is that it's so far ahead of us that there is no way that that we can ever that we can ever catch up it is you know it works better there's certain things where can it can you know build skyscrapers super fast there's certain things where it works so much better that we have to just accept that we are really far behind you know denial is extreme optimism acceptances extreme pessimism but extreme optimism and extreme pessimism converge to doing nothing and I think there were there was for example I think there was this there was this a question about Taiwan and how protected Taiwan was and I believe it was in a single month in the year 2005 where the US strategic assessment shifted from Taiwan would be safe for decades because of our you know aircraft carriers and what not to know Taiwan was already lost because you know they had all the China had all these missiles that they could knock all our defenses out overnight and so it's it's somehow it's always so the fact that it gets framed in these two extreme terms I'm wondering if you're sort of a mouthpiece of the Chinese Communist Party and and it's always extreme acceptance and extreme denial and the realities actually no it's it's closed and there are strengths the US has and their strengths they have and it's a fight and it's gonna be a fight for a very long time and even if China in some ways gains ground in that fight it will be strategically close for a long time because as China gains ground other countries will get more scared of China and they will they will they will work more closely with the US Japan was toying with the idea of being of shifting its alliance from the u.s. to China this is always the DPJ line in Japan in the late 90s early 2000s under obey that's definitively over Japan is back firmly on the side of the u.s. Vietnam you know much more on the US side in the China side this is very different from Vietnam of you know 40 years ago and and so even if China you know sort of gains ground in certain things I think the the the the strategic picture will stay you know very even for for a really long time it's the exact talk so somehow it's in the in between is is probably the truth and it will be the truth for a long time so the notion is the Chinese want us to believe two statements one is there's nothing to worry about the other is resistance is futile well it's both votes and both are frauds its China is super weak and China is super strong and I've been in meetings in China where in some sense you heard you got both messages within twenty minutes of one another and it's it's it's like logically inconsistent but psychologically it doubles up all right the United States is the center of the resistance let's take a moment or two considering what we need to resist right here zombie socialism socialism rising from the dead again a couple of quotations the first from a history of the Mont Pelerin Society in the 1980s and 90s members of the Society had the exhilarating feeling that things were at last going their way several countries starting with Margaret Thatcher's government in Britain were privatizing their state industries governments from China to India to America to France were liberalizing retrenching or cutting taxes and then in 1989 with astonishing speed the iron curtain fell here's quotation number two this is Bernie Sanders he's speaking in night 89 the year the Berlin Wall came down quote in Vermont everybody knows I'm a socialist and that many people in our movement are socialists and I think there's been too much of reluctance on the part of progressives and radicals to use the word socialism close quote as we sit here this evening the self-avowed socialist Bernie Sanders is tipped by many to win the Democratic caucuses in Iowa on February third from the triumph of Democrat Democratic capitalism and all that the Mont Pelerin Society stands for to the re-emergence of socialism how did this happen these are I guess these are like sweeping questions are all these different answers one could one could give but but let's three let's let's just challenge a little bit the premise that question um you know I I don't think he's really a socialist in the sense I mean there's no five-year plan he doesn't he doesn't actually claim that he's gonna make the post office or the DMV work better if he was promising things like this it would just be it would just be completely completely ridiculous and you know the way in which socialism works is it's just this thing that's really different and it's different it's meant in opposition to the zombie institutions in our society and and there is a problem that we have you know I you know we don't have a very well functioning capitalist society you know there's a generational problem where it is difficult for young people to to acquire capital and you know I say there's sort of two if I give sort and that's you know the young people that are supporting Bernie Sanders and we and you know there's sort of the two simple political things that you know one should one should really think about are the the runaway student debt in colleges you know it's 300 billion dollars in student debt in 2000s up to 1.7 trillion dollars today and if you start your life in debt that can never be discharged in bankruptcy you know it'll be much harder to accumulate capital and you might be less friendly to capitalism so that's that's a that is a big problem and you know I think I don't think we should socialize the student debt but we should deal with it any non soul way we should internalize the costs on to the universities we should redo the bankruptcy laws yes you can discharge the student debt and when you discharge it it's the college that gave you a bad education that gets a that gets um stuck with a bill that's for the non-socialist alternative and and then and then you know I think the other the other basic problem of a lack of capital or inequality is that it's very hard for people to get onto the onto the housing ladder you know the main way that the people in the middle class in this country accumulate capital is through owning real estate through owning your house and and if it if through a series of urban zoning laws and bad planning and impossibility of building things it has become impossible for people to get onto onto that and if you could find ways for for people to own more houses you would have much less of these sort of millennial craze socialism so I think I think you know we should we should try to understand where it's coming from which we need to try to try to solve it but but you know at the end of the day I think it will be pretty weak because it's mainly a critique it's a critique of of bad institutions and if if Sanders become serious I think it'll be it'll be as scary as Corbin was in the UK and obviously um you know what we'll be talking about the post office and the DMV and it'll just be ridiculous Bernie Sanders cannot get elected any more linked it it cannot write the universities you touched on this enormity go again a couple of quotations Michelle Obama the one thing I've been telling my daughters is that I don't want them to choose a name University there are thousands of amazing universities in this country quotation number two Peter teal of course we knew she was lying yes this was this was an interview that they gave just before their eldest daughter Molly it was was thinking about what what university to go to and this is we sort of it I sort of raised this it was heard in the context of I've always the sort of question of fact checking and you know politicians lying and I think the the facts we need to check the most analyzed we need to call people out on the most are the really big lies that everybody tells and so you know I added that it was it was actually it was very reassuring disturbing if they weren't lying I mean like if they if they actually believed that nonsense that would been really disturbing and where did Molly end up going to Harvard but it's always you know this is a theme that you know and you can go on all these all these critiques at the universities but basically you know the basic problem is if you think of it as an economic good you know is it a consumption good is an investment good so as a day is it an investment where you're investing for your future is it a consider before your party okay that hybrid is pretty weird but I think it's actually a hybrid of a on a an insurance policy that people buy to avoid falling through the big cracks in our society and a tournament a zero-sum tournament where the elite universities like Harvard and Stanford are basically on sort of a studio 54 night club with a long line and a big velvet rope and and if you were you know if you were the president of Stanford or of Harvard and if you had some kind of crazed martyr complex where you wanted a mob of students faculty and alumni to come after you should give a speech saying this University is offering a great education and you know Harvard you know it used to just educate the 200 million people who live in the US states educating the eight billion people in the world and so we should increase the enrollment not by factor of 40 but let's say two or three over the next 20 years and you would just get lunched because you're running a studio 54 nightclub you shouldn't forget it political correctness at the universities if this is you I'm quoting you once again if you have a majority of the vote that's good if you get 70 percent that's even better and if you get 99.99% of the vote you're in North Korea in 2016 how many professors at the top five law schools endorsed Donald Trump zero and and the law school examples interesting because you would think it's one where if you took the control law a lot of academic fields are more internal to academia but law is one that sort of cashes out in a governmental political context and taking a contrarian position in theory is quite valuable you know if you're a tenured law professor at Harvard and you're the only law professor to top law school to endorse Trump o'madden I think there would be like a 50% chance you would have gotten nominated to the Supreme Court or something like that and that that seems so it seems like it's the sort of thing where the contrarian the contrarian thing is is quite would be quite valuable and then when if nobody takes that bet I mean wow there must be some unbelievable enforcement mechanisms and it's you know it's not it's sort of like a gentle version of North Korea but it's it's like you know even though you have tenure it's like wow they can they can relegate you to some broom closet and play loud music or something I mean they'll figure out something some way to punish you Silicon Valley we've discussed this a number of times when you were starting PayPal you have said many times the whole valley felt as if it was truly dedicated to free markets and entrepreneurship and if you talked about politics you were wasting your time today it feels woke more than woke I'm going to quote you again in recent years Silicon Valley has become completely deranged close quote what is the nature of that derangement and how did that happen well this is what this one's actually hard for me to explain because it's it's it's it's it's it's it's quite uh it's it's a it's a remarkable shift certainly from from 20 years ago I I would say that there is a question how much how much innovation is actually happening and that's that I always come back to where I'm somewhat on the sort of side that we've we've had you know generally sort of limited progress and technology and science the last 50 years there was you very big exception and computers software internet mobile internet the last quarter century this was sort of this narrow cone of progress in the world of bits that that really drove things and and I sort of wonder if if there's actually less innovation possible even in those areas at this point so if you if you look back over the last five years let's say there have been fewer new consumer Internet companies that have come out and sort of maybe the easy ideas have been picked maybe we need to move on to other areas but the other areas are regulated and difficult so biotech or you know um all kinds of futuristic science areas are deceptively hard and and we're in a zone where you know the returns accrue to the larger companies and so if you say if you're sort of an early innovative boom face like the dot-com boom in the 90s it's all startups it's some small companies that you start new things um you know when I when I started PayPal in 99 one of the questions I was always asked was why can't a big bank just do this and I never really had a good answer to it I I now think the answer is roughly that most big corporate institutions are very political they're very slow they're not actually good at innovating and and that's that's why you have startups that's why you have small companies that's why you're able to emerge and the big banks are too political to do anything new and so if you can do something anyone can do reasonably quickly there's their space to do this and I think that the ratio of these bigger to smaller ones has shifted a lot and it is probably just a less innovative place and so in this cash is out you know in all sorts of in all sorts of ways in all sorts of ways in all sorts of ways politically there's of course you know these things are always over determined you can say it's it's it's linked to California California was you know a 50/50 Republican Democrat state forty years ago now it's a d-plus thirty it's the second most democratic state in this country and so there's sort of a way in which the environment pushes it there's probably there's probably a degree to which Silicon Valley the work force in Silicon Valley is the most educated in the country has most you know advanced degrees college degrees in advanced degrees and from the elite universities and maybe the more education you have more brainwashed you are and and so there's sort of just sort of a version of that so so I think it I think it's sort of um you know I but but I think I think there are parts of it that just seem that seem you know completely unhinged you know Elizabeth Warren has taken out these uh these banners I'm saying that you know she she would on in Silicon Valley's billboard saying that she would break up Facebook Google Amazon for antitrust and I believe maybe it's shifted a little bit but the first two three quarters of 2019 among Google employees I think Google's the craziest of the other big tech companies um Elizabeth Warren got a plurality of the donations she got more donations than anybody else and so you know if she were by some miracle to get elected I think you know I think she would be able to argue that even the people at the big tech companies think they should be destroyed and and so there are there are parts of it that seem seem just completely deranged in ways I can't fully explain visions of the future during a trip to Europe last year you realize that at least in Western Europe there are really only three visions of the future on offer vision one accommodation more or less in one way or another with Sharia explain well well I would say that I think in in politics or culture for the future to have power over the present me start with the general point it has to it has to be different from the present the future has power because it's a time that will look different from the present and and and so it can't just be an endless Groundhog Day if it's just always the same it's just always repetition then the future does not have any appeal and that's not part of a political agenda and so if we if we look at Europe and we say well how will Europe be different from from from the way it is today in the future I think there's sort of three pictures of a very different future and sort of behind door number one is Islamic sharia law and if you're a woman you'll be wearing a burqa so that's a very different picture of the future it's very concrete behind door number two is the Chinese Communist a I and it's the big eye of Sauron that we're watching you at all times in all places that's a door number two for the future and door number three is the green movement and you will be puttering around in an East scooter and you'll be separating out your garbage and recycling can and and and then and then I think the the challenges that there are no other doors those are the three options and this is a even though I'm you know I'm not I'm not a crazy environmentalist this is this is this would be my sort of our argument for why the green stuff has so much traction in Europe it's if those are the only three options you know I mean I'll go with greater so but so but there are two places maybe I'm putting this to you to see what you think of it where there is a fourth vision of the future that involves economic growth a reassertion of economic growth a reassertion of national sovereignty and a reassertion of cultural self-confidence and those two places would be the United Kingdom of Boris Johnson and the United States of Donald Trump you're going to go for that I I would go with much more much more than you know well the UK is sort of you us much more than the UK but I'll drop out Lee I'm just what your vote for I'd go with Israel over the UK before of course me to listen to but but sure let's say let's say US UK Israel I'll go with those three okay okay that's that's that's usually try to ask questions you pay sort of halfway between it's halfway between the US and Europe so it's you know it's it's a it's better than Europe it's worse than the US all right Peter according you again last November I would encourage us and you were talking to a conservative crowd like this crowd I would encourage us to rethink the doctrine of American exceptionalism what did you mean by that well it's it's um it's it's it's it's again it's it's this question of how you know how we're stacking up as a as a as a country and and I think the you know the the analogy that I have made to exceptionalism is is that it's it's like it's like the radically monotheistic God of Islam and Judaism where it's so one-of-a-kind and so radically different that it can't be compared or measured in any way and so when we say that we are exceptional we are often saying that we're so different that we can't even make sense of how we're doing and then one gets the suspicion that there's a way that exceptionalism can degenerate into a cover for all sorts of things that are exceptionally out of kilter and so we have a society in which people are exceptionally addicted to opioids we have a society in which people are exceptionally overweight or we have a society in which people are exceptionally unselfish and and the alternative that I would that I would pose is something more like greatness where it is it's a comparative function and we would ask questions you know how are we stacking up how are we stacking up compared to our past how are we stacking up compared to other countries and and that's where there all sorts of questions that would come to the fore you know I think I think coming back to the the stagnation one you know one of the things that I would want to quantify more is you know we in the world of science we can quantify things to annex credible degree of Avogadro's number the fine structure constant physics all these things are precise to many significant figures but the question about the rate of progress of science of innovation is incredibly unquantified and it's just sort of hand waving and if you sort of have service Pangloss Ian's hand waving where everything's exceptional and we're accelerating at the fastest pace possible and it's not measurable my my sort of suspicion is that these are sort of the ever narrower communities of sub experts the string theorists the cancer researchers telling us how great other strings there is some cancer Searchers respectively are it's a it's a place where there's no outside check no reality check no no ability to really keep score and you are you are certainly not exceptional and you're not even great once again from the history of the Mont Pelerin Society quote the original members shared a common sense of crisis a conviction that freedom was being threatened and that something should be done about it they concluded that the threat arose from erroneous Theory so they committed themselves not to political action but to winning the intellectual battle of ideas close quote here are some members of the mount Pelerin society over the years Milton Friedman Friedrich Hayek George Stigler Gary Becker James Buchanan and others have won Nobel prizes has the intellectual battle been won such that we should all shift our attention to political action well it's um I don't I don't think the intellectual battle is ever fully over because I don't think history is over alright and I I would say um I would save anything if I if I had to sort of characterize the the intellectual landscape you know we've been in a world for a very long time in which somehow the range of intellectual debate has gotten more and more narrow and you sort of know the Overtoun windows shift to the left but generally in an ever narrower way and you could sort of say that we've been in a bear market for ideas I think for something like the last 50 years and so you know a lot of people you cited I think of as pre the late 1960s and and that in the last 50 years if you had crazy ideas he could ideas that were outside the box those were always bad and you got clobbered and you couldn't get tenure you couldn't even you couldn't get funding because everything was peer-reviewed up the wazoo and and and I think we're now at a point where we've been in such a long bear market for ideas and the Overton Window is so uncomfortably narrow that I would I would be long ideas more than any other point in the last 50 years I think I think we're not going to find solutions inside the intellectual straightjacket in which our universities in our society put us and I think I think there will be positive returns to ideas greater than there have been in the last 50 years last couple of questions one this one begins again by quoting Milton Friedman I believe a relatively free economy is a necessary condition for a Democratic Society but I also believe there is evidence that a Democratic Society once established destroys a free economy close quote do we really have any reason at all for optimism or is the whole magnificent project doomed I just I just um I you know I'm not I'm not sure like I think always extreme optimism extreme pessimism are both equally wrong it's always you know as a libertarian we should always the libertarians we should always come back to the question of individual agency and it's it's it's not these these large historic forces and there are there are libertarian or pseudo libertarian narratives in which there were these large historic forces and we sort of definitively won these battles but that's that's not even true to to the spirit of free markets or belief in individuals there's always room for history there's always room for new ideas and these things are are never definitively decided one way or the other all right last question and this touches on the notion of greatness that you were discussing a moment ago George Kennan the issue of soviet-american relations is in essence a test of the overall worth of the United States to avoid destruction the United States need only measure up to its own best traditions and prove itself worthy of preservation as a great nation Kenan writes that in 1951 if we replace the reference to the Soviet Union with a reference to China would you subscribe to that statement today yes and I I don't I don't know I always I'm always uncomfortable with saying it's a simple template though so so if we just go with the simple template it's to automatic and then if it's to automatic we're back in your in your berlin tear down this wall speech and then we've replaced the reference and we're you know we we know china's a soviet union and because we say it's the soviet union we don't need to do anything else because we knew that just all happened on its own and you know in practice you know the Cold War was one and you know in you know very specific ways that was sort of there were sort of a whole series of concrete situations that you had to deal with and and the rival with with China it's it's somewhat different that's happening in an Information Age not industrial age it's happening it's you know there's sort of a there's sort of a global a global competition question there's a there's sort of a way in which the two economies are very deeply connected we weren't deeply connect to the Soviet Union so there are sort of a lot of things about it that are are very different and and I think yeah we have to you know it's not like 2020 is like 1951 or like you know 1989 2020 is like 2020 which is much less helpful but much more accurate peter thiel thank you [Music]

Channel: Hoover Institution

Views: 370,105

Keywords: Peter Thiel, Mont Pelerin Society, Silicon Valley, American exceptionalism

Id: IXG2F0a6I28

Length: 36min 8sec (2168 seconds)

Published: Tue Feb 11 2020

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[u/Beofli]

https://www.hoover.org/research/peter-thiel-straussian-moment-0

I think this one is more clear. Same topics.