shaffer: Is the Thiel Fellowship mostly about promoting technological entrepreneurship, or is it about helping to pop the education bubble?
THIEL: The specific context of the Thiel Fellowship is somewhat anathetical to becoming an entrepreneur — taking risks, thinking about what you want to do, not having a tremendous amount of debt. It’s mostly about entrepreneurship and getting people to create something new. The place where we can help people the most in that respect are technology-venture companies. We certainly would be open to people doing entrepreneurial ventures that are not technology-related, or even not-for-profit things. The main goal is to identify very talented people who could do a lot better without college than with college. As a society, we should not be waiting for them to get a college degree and be burdened down with enormous debt to the point where they can no longer take any risk.
As a society, we do not take enough risk. And high debt is very inimical to risk-taking, which is an extremely important component of progress. Beyond the 20 people that are going to be chosen for the fellowship, we hope it will encourage a broader conversation about whether college makes sense or not. This is where the elite bias comes in. The elitist view in the U.S. is that even if people concede that college is not for education, the caveat will be that, well, surely it’s for all the smart people. What we want to suggest is that there are some very smart and very talented people who don’t need college.
shaffer: You once said that the tech bubble of the ’90s migrated into an entire financial-services bubble. What does that mean?
THIEL: There’ve been a whole series of these booms or bubbles in the last few decades, and I think it’s a very complicated question why there have been so many and why things have been so far off from equilibrium. There’s something about the U.S. in the last several decades where people had great expectations about the future that didn’t quite come true. Every form of credit involves a claim on the future: I’ll pay you a dollar on Tuesday for a hamburger today; I’ll buy this house, and I’ll pay off the mortgage over 30 years; and so you lend me money based off expectations on the future. A credit crisis happens when the future turns out not to be as good as expected.
The Left-versus-Right debate tends to be that the Left argues that the expectations were off because of ruthless lenders who sold a bill of goods to people and pushed all this debt on people, and that it was basically the problem of the creditors. The Right tends to argue that it was a problem with the borrowers, and people were sort of crazy in borrowing all this money. In the Left narrative, it starts with Reagan in the ’80s, when finance became more important. The Right narrative starts in the ’60s when people became more self-indulgent and began to live beyond their means.
My orthogonal take is that the whole thing happened because there was not enough technological innovation. It was not really the fault of the borrowers or the lenders; the problem was that everybody had tremendous expectations that the country was going to be a much wealthier place in 2010 than it was in 1995, and in fact there’s been a lot less progress. The future is fundamentally about technology in an advanced country — it’s about technological progress. So a credit crisis happens when the technological progress is not as good as people expected. That’s not the standard account of the last decades, but that’s the way I would outline it.