I don’t agree with everything Peter Thiel has to say. But I think he gets a lot of the big things right. Thanks to Gary Wolf of Wired for conducting the interview, which you should read in its entirety. I’ve added emphasis and comments below.

Wired: You say that we have big problems in the US economy and that investors have unrealistic expectations. We’ve certainly been through a major crisis, but over the long term the stock market seems to grow fairly reliably.
Thiel: People take it for granted that their retirement funds can earn 8.5 percent a year. That’s what their financial planners tell them. And sure, you look back over the past 100 years, the stock market has generally gone up 6 to 8 percent a year. But in a larger historical perspective, that kind of growth is exceptional. If you had done the equivalent of investing in the stock market from, say, 1000 to 1100 AD, you would not have made 8 percent a year. During the fall of the Roman Empire, you’d have been lucky to get zero. We’ve been living in a unique period of accelerating technological progress. We’ve gone from horses to cars to planes to rockets to computers to the Internet in a very short time. It’s not automatic that that continues.

On the question of whether we’re living through an innovation slowdown — I think the answer is probably yes — check out Brad Plumer’s fascinating essay on whether we need technological breakthroughs to address large-scale environmental challenges.

In 2005, Jonathan Huebner, a physicist working at Pentagon’s Naval Air Warfare Center in China Lake, California, published a controversial paper looking at the rate of U.S. patents awarded over time. He argued that the rate of technological innovation has actually been slowing since around 1873–the age of Edison–and that the world could be entering a new Dark Age of innovation by the 2020s.

Back to the interview.

Wired: What happens if we don’t get the growth everyone expects?
Thiel: If it doesn’t happen, people will go bankrupt in retirement. There are systemic consequences, too. If we don’t have enough growth, we will see a powerful shift away from capitalism. There are good things and bad things about capitalism, but inequality becomes completely intolerable to society when everything’s static.

One could argue that this is already happening. This is part of the reason I agree with Jeffrey Sachs and Carmen Reinhart and Kenneth Rogoff on the dangers posed by extremely large budget deficits and mounting public debt: over the long-term, a heavy debt burden will stymie growth, thus exacerbating the serious social problems that derive from joblessness.

Wired: You’re worried about economic stagnation, but you’re optimistic about artificial intelligence and space?
Thiel: I think we have to make those things happen. We should be looking at technologies that might lead to really big breakthroughs. As a starting point, let’s just go back to the science fiction novels of the 1950s and ’60s and try to run the past 40 years again.

This sounds right to me.