The Agenda

Peter Thiel and the Why-Things-Have-Slowed-Down Question

In an interview with CNET’s Declan McCullagh, an underappreciated journalist, Thiel discussed his technological slowdown thesis, among other things:

As soon as you get to the “why” question, it gets much more controversial. It makes people lose sight of the what, which is the thing I want people to pay attention to. I think that if we could get people to agree that there’s a really big problem in innovation, then we can have a constructive conversation on what to do about it. As soon as we fixate people on why there’s been an innovation slowdown, if you’re on the right you can blame environmentalism, if you’re on the left you can blame Reagan and financial engineering. And we don’t even get to the question of whether a slowdown has happened. That’s why I’m somewhat resistant to going straight to the ideological or political question. …

The question about a tech innovation slowdown, the remarkable question is really why this question is not at the surface. If you were to take a very simple Socratic method, and start with just what are the common opinions people have, not in Athens but in America, the common opinion is that things are on the wrong track. That their kids, that the next generation, will not be as well off as the current generation. These common opinions, while they may be right or wrong, are completely at odds with the sort of techno-optimism that is so prevalent in these discussions. And it’s at least worth asking why are people wrong to think this.

Thiel also explained to McCullagh why he thinks it’s wrong to describe Barack Obama as a socialist:

 

You once told The Wall Street Journal, referring to President Obama: “I’m not sure I’d describe him as a socialist. I might even say he has a naive and touching faith in capitalism. He believes you can impose all sorts of burdens on the system and it will still work.” Is that still true? 

Thiel: Yes. I think there is an incredible faith in capitalism–that you can put any burdens on business, and people will just work. It’s like people are hardwired to make money and there’s nothing you can do to change that, irrespective of politics. In that sense it is an incredible faith in capitalism that I don’t quite share.

I think it’s also that the left in the U.S., the Democratic Party, is not socialist in the other sense in that there is actually no plan for the future. What socialism and communism was characterized by were five-year plans, these development plans of what you’re actually going to do. What’s remarkable is how little of a plan there’s going to be.

I don’t think most of the economy should be planned. But I think to the extent you’re going to have large government, it would be good if the government should be planned rather than unplanned. If you’re going to invest in alternate energy, you should have a plan of what kind of alternate energy you should be investing in, and you shouldn’t be randomly buying lottery tickets. Planning is preferable to buying random lottery tickets or politically motivated lottery tickets, which is the concern with the clean-tech stuff. That’s levels worse than having a rigorously centrally planned economy a la Krushchev. [Emphasis added]

Intellectually, what we’re seeing is a mix between a lack of faith of planning — hence randomly buying lottery tickets — and a conviction that spending enough public money on a wide enough array of bets will somehow yield a good outcome. 

Thiel also offers thoughts on politics:

 

You can be pretty libertarian without being a purist. The question is not whether we’re going to privatize roads or prisons or the military or things like that. It’s directionally, there’s a directional question. Is there too much regulation, is there too much government, is there too little freedom?

You can believe that the role of government should be reduced without going anywhere near the extreme point that it should be eliminated altogether. We have so much government in our society that you can reduce it a lot. Hong Kong’s not really libertarian in the purist sense but from a 15 or 18 percent marginal tax rate, (going in that direction) that would be a very different country from what the U.S. is today.

He maintains that while many non-technical professionals in Silicon Valley are conventional liberals, a large number of engineers are of a libertarian bent:

 

I don’t know the politics at Google specifically, but I suspect that most of the people on the engineering side would be quite libertarian. They might be Democratic in terms of political party affiliation but ideologically they’d be libertarian. The nonengineering people would mostly be party line Democratic, with all sorts of exceptions.

It’s also that a lot of the libertarians tend to be socially liberal, fiscally conservative, and so if you’re in that quadrant, which set of issues do you prioritize? If you prioritize social issues, you tend to become Democratic. If you prioritize economic issues, you tend to be Republican.

There is a way in which a lot of libertarian Democrats and libertarian Republicans may not disagree about specific issues, but disagree about how heavily to weight various issues. It’s more of a weighting disagreement than an issue-by-issue disagreement. This issue, this civil liberty issue, gets a weighting of 10. The marginal tax issue gets a weighting of 1.

This reflects many of the disagreements I have with friends and acquaintances in New York, and I see it in other domains, e.g., the economics profession, finance, etc. 

Throughout the conversation, Thiel makes clear that his focus is on the very long-term, and that our political system has a strong bias towards near-term outcomes:

 

If you want to segue back to the political economy of it, it’s that people are too focused on the economics question and not enough on the technology question. So we have lots of debates in the U.S. about what’s going to happen to the economy in 6 months, 12 months: Are we going to have a double dip recession? Are we going to have a recovery in 2012? Is there not going to be? But not very much about what’s going to happen over the next decade, which is more of a tech question.

There’s a question of how important is macroeconomics as a category independent of everything else. What’s very different today from the ’30s is we believe in macroeconomics as an unbelievably important independent category. And it’s not clear that’s true.

All the Keynesian kind of thinking suggests that macroeconomics is important independent of the micro stuff. So it doesn’t matter what the regulations are–it matters what’s necessary to get the animal spirits back. It matters to print the right amount of money for the monetary policy. Get the fiscal stimulus right.

I think this is also true on the right, where most of the thinking is around the economy, and it is about reducing marginal tax rates, and things of that sort. And much less on, say, the micro, on all the regulatory issues, which are perhaps much more serious, and will have much more of a tech impact over the next decade.

Though I’ve shared lengthy excerpts, there is much more in the interview, particularly on clean technology. I strongly recommend that you read it. 

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