People were expecting house prices to go up 8 percent a year. That would be quite possible in a society where the GDP was growing tremendously and where there were tremendous gains in efficiency and technological innovation. But we’re not having that much innovation and, because of that, the housing bubble was unrealistic. It’s also possible that the housing bubble was very deeply linked to the tech bubble. The tech bubble was about extrapolating technological gains; it turned out that the gains didn’t materialize as quickly, or at all, and then people went back to housing and back to credit to get the 8 percent returns. But housing and credit still depend on an underlying society that is progressing, and that sort of progress was not actually happening. So, if the tech bubble was fake, then the housing bubble would almost certainly have to be fake. The real root of the problem is always technology.
Income or wealth inequality is a somewhat different problem. I think it’s probably not right to blame technology or finance of any of the industries that are doing well in the U.S. It’s better to think why a lot of people are not seeing as much progress as they’d like. And that loops in all sorts of things, from the failure of the education system to the lack of technological innovation, to the closing of the frontier.
One of the factors that equalized things in the 19th century was that people could move out to the frontier. Now, the geographic frontier has been closed — outerspace is too far away, cyberspace is not quite real, the oceans may still be not quite there. Then there’s the technological frontier; there are some things there, but it’s more limited. So if you wanted to reduce income inequality in a non-confiscatory way, or in a non-redistributionist way, it has to involve opening up a new frontier.
shaffer: You’ve always been interested in Leo Strauss. Isn’t he the consummate anti-modernist, an opponent of scientism and our fixation on economic growth, etc.? What do you like about him?
THIEL: Well, there’s no two-minute answer to this [laughs]. If I had to say where I thought there was an intersection between Straussianism and the generally libertarian framework, it’s that the central problem in Leo Strauss is the problem of political correctness, which is the whole idea of Persecution and the Art of Writing — the idea that societies are less tolerant than people think, that there are truths that cannot be told and people have to disguise what they say. The problem of political correctness is a much deeper and more pervasive problem than is generally believed in the optimistic liberal understanding of the world. Properly understood, the problem of political correctness is our greatest problem — the problem of how people can think in a way that is independent of the mob. That’s what I understand as central to the Strauss corpus.
Shaffer: In 2004, liberals were distraught over the working class’s going Republican, and they asked, “What’s the matter with Kansas?” Then, in 2008, financiers and the wealthy generally went overwhelmingly for Obama. As somebody ensconced among both the financial and tech elite, can you tell me, what’s the matter with Greenwich?
THIEL: There’s a degree to which it is just a status and political-correctness issue. The debates are for the most part not about the policies or about the ideas, but what is cool, what is trendy. Take something like the climate-change debate. I think it’s an important question, and I think it’s actually quite hard to figure out what the science is. It might be something for us to worry about. But I think there’s actually no debate at all — there’s no attempt to understand the science. It’s mostly moral posturing of one form or another.
Beyond the posturing, it’s a form of cowardice that’s very much linked to political correctness, where it’s not fashionable or not cool to offer dissenting opinions. In that sense we have this problem. In a way, the Greenwich problem is the libertarian problem is the Straussian problem. They are linked in the same way.
My hope is that in some sense Obama represents the end of political correctness — in the Hegelian sense of both culmination and termination — that maybe people could sort of get it out of their system once and for all in 2008, and that at this point people are going to be somewhat more open to really thinking about our problems. That’s what I’m optimistic about.
— Matthew Shaffer is a William F. Buckley Fellow at the National Review Institute.