Hope in the Valley? A Conversation with Peter Thiel
The offices of Thiel Capital are nestled in the quiet enclave of the Presidio in San Francisco, a former Spanish military base that is now a national park—a bucolic green zone that can almost make you forget you're in the heart of the city. I waited briefly for the eponymous Peter Thiel in a conference room furnished in Danish accents, with views of the Golden Gate Bridge and the Palace of Fine Arts. There are worse places to wait.
Thiel, of course, needs little introduction: co-founder of PayPal, first outside investor in Facebook, he is a philosophically inclined, theologically astute venture capitalist and a notorious libertarian in the land of Nancy Pelosi. Thiel's recent bestseller, Zero to One: Notes on Startups, or How to Build the Future, with Blake Masters, is a widely celebrated manifesto for entrepreneurship as a way to change the world.
A few moments later, Thiel veritably bounded into the room, smiling, friendly, dressed casually in a white polo, bleached jeans, and Asics joggers. Eager to dive into conversation, he grabbed some dry-erase markers, turned to a white glass wall in the conference room, and unleashed a world-historical take on the cultural moment in which we find ourselves.
"The premise of your questions," he said, "is that we're living in an age of revolutionary technological change. My view is that's just not true." Instead, "the big question is, are we living in an age of very rapid technological and scientific progress? Depending on how one answers that question, you end up with very different perspectives on what's going on. It's a question of acceleration or stagnation." Where are we on the curve of progress, and where is it headed? Is it skyrocketing? Or has it plateaued?
Thus begins the sketch of his mind map on the glass wall: On the one hand are those who see our age as one of acceleration. Exhibit A, Thiel says, is Ray Kurzweil's 2006 book, The Singularity Is Near: When Humans Transcend Biology. And he can't resist taking a shot at Google's CEO: "I had a debate with Eric Schmidt on this stuff in Aspen back in summer of 2013, I believe. He started with a bunch of platitudes, just exuding this 'we're-making-the-world-better' message, and I started my reply by saying, 'You're doing a great job as Google's minister of propaganda.'"
Many in the "acceleration" camp are also utopian in their outlook. But there are also dystopian versions of the acceleration story. "Most Hollywood sci-fi illustrates this," Thiel observes. Terminator, The Matrix, Avatar, Gravity—they're all versions of a deep worry about the threat of runaway technologies. But they still assume the acceleration story. The arrow of progress is curving upward—we're just not sure if it means salvation or doom.
On the other side of this map of cultural mythologies is what Thiel describes as various "stagnation" accounts. There is a "general stagnation thesis," he says—that the younger generation has lower expectations than their parents, for example, or that we have stagnant wages. But Thiel subdivides the stagnation theorists into supply-side and demand-side versions.
In demand-side theories of stagnation, there is stagnation because there is not enough demand— á la Larry Summers and Co. "Within this context," Thiel says, "the basic thing is to regulate growth. Maybe you have to slow things down a bit." But "we also need an increased demand. Consumers are tapped out; businesses aren't going to do it; so you have to have fiscal deficits." So what we get are political solutions, as if "you're trying out to be Hillary Clinton's treasury secretary in 2017."
Others also say we're in an era of stagnation—they see that the curve of progress and growth has flattened out.
In contrast, others also say we're in an era of stagnation—they see that the curve of progress and growth has flattened out—but they think the solution is found on the supply side. This, Thiel says, is where you tend to find confidence in technology and innovation: we'll invent our way out of this problem.
But, Thiel emphasizes, a lot depends on what you think "technology" means. "If you lived from 1870 to 1950 you lived in a world where you saw shifts from horses to cars and jet airplanes and then you have innovations in so many different dimensions. Oil and the fossil-fuel industries emerged; you had plastics, you had household appliances; indoor plumbing . . . the list goes on. Whereas over the last forty-five years we've had progress mostly around the world of bits—computer, software, Internet, mobile Internet."
The result has been an odd narrowing of the very definition of "technology." "If this was a conversation in 1965 or 1968, what 'technology' included would have been broader—not just associated with computers but also aerospace, rockets, supersonic airplanes. It would've meant green revolution, agriculture, probably more in medicine. It would've meant all sorts of futuristic underwater cities, reclaiming the deserts for reforestation. 'Technology' was a much more all-encompassing kind of thing."
"You could say that the word 'technology' refers to that which is changing," he suggests. "Cars were technology in the 1920s or airplanes were still technology in the 50s and 60s. But we don't think of airplanes or cars as 'technology' anymore. For the most part we don't think of them as technological today because they haven't changed in a while." So if technology just means that which is changing, then what counts as "technology" has narrowed because we don't see much change. "Video games are still technology, since they've changed a lot in recent years." The problem, Thiel argues, is the narrowness of our definition. Technology isn't simply synonymous with change.
But on this "demand" side of the stagnation ledger, Thiel points to a more fundamental disagreement. Even among those who agree that we find ourselves in an era of flat growth and stagnation of all sorts, and who see technology playing a key role in the era of growth from 1870 to 1940, there can be very different takes on just why things have slowed. Thiel sees this as a "nature-versus-culture" argument, or a "nature-versus-nurture/culture" argument.
On the "nature" side is someone like Tyler Cowen, whose 2011 pamphlet, The Great Stagnation, outlines its thesis in a subtitle: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. "What these people tend to say," Thiel summarizes, "is something like: the reason that it's decelerated is that the low-hanging fruit has been picked. What was readily accessible has already been done. In the nineteenth century, anybody could be an inventor and come up with new things. Now all the low-hanging fruit has been picked and the cupboard is bare." So what do we do? "It's unclear exactly what the policy prescriptions of this are," he remarks, "but I think it somehow ends up with something like austerity: you have to adapt to the realities." Thiel would locate both Trump and Sanders in this camp: "It's either 'There are only so many good jobs to go around, so we can't let immigrants in' [Trump] or 'There is only so much wealth, so we have to redistribute it because it's not going to grow' [Sanders]. You end up with different versions of austerity."
What Thiel describes as the "nature" school of thought about stagnation is not just about having exhausted easily plundered natural resources. Rather, it's about bumping up against what Marilynne Robinson might call "the givenness of things": "It's like there is a world out there that we can discover things about and there's a hardness to discovering things. In the nineteenth, early twentieth century it was not that hard to discover things in many fields. It's gotten a lot harder and that's why the discoveries have become more sparse, ever further in between." While people like Cowen try to talk in terms that are inspiring, it's hard not to feel the despair just below the surface.
This brings us, finally, to the last sector of Thiel's conceptual map, what he calls the "culture" or "nurture" account of our stagnant age. And not surprisingly, this is where he locates himself.
On this account, it is not some objective "law of nature" that has brought about stagnation; the change is in us. "It's more a set of cultural changes that have happened," Thiel suggests, citing Edmund Phelps's 2013 book, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change. When I ask for an example, Thiel points to Phelps's focus on risk aversion as a recently learned behavior that didn't hamper pursuits in the late nineteenth and early twentieth centuries. "We're too scared of things going wrong. You couldn't get the polio vaccine approved today because when they first tested it out in the 50s, they accidentally misdosed and killed like fifteen or twenty people. If that happened today you'd never get the opportunity for another twenty years." A penchant for security induces its own kind of austerity. But Thiel also recognizes a certain, even legitimate, fear of technology as another cultural factor. Consider nuclear weapons, he says: it took us a while to realize just how dangerous this technology was. And so the learned aversion is understandable.
On the one hand, this cultural account of stagnation is still somewhat pessimistic compared to the acceleration story of Google propaganda. Thiel recognizes this is a minority view, though he thinks people are coming around. "I think there's been some shift from acceleration to stagnation in the last four or five years, where it's gotten a lot more traction because of the extreme difficulty of recovery since 2008, not just in the United States but in many other developed countries. I think people are much more on the stagnation side than they were: it's like 60/40 versus 85/15. When I was making the stagnation arguments in 2011 it seemed crazy. But now people are coming around to thinking this is kind of true."
The acceleration propaganda machine is sputtering a bit, even in Silicon Valley.
On the other hand, if stagnation is the result of cultural shifts rather than reaching the end of some cosmic cupboard, it also means we can imagine things being otherwise—not because the world is without limits but because our cultural systems can be re-jigged. If the problem is culture rather than nature, then even this rather pessimistic account of stagnation carries within it the seeds of a certain hope. "These are really different pictures of what's going on," Thiel says. "If you're in the culture/nurture cross-trend, it's pessimistic but it also means we could be doing something better."
You might miss it in the pessimism, but there's a hint of hope there. However, Thiel's hope is not in machines or the abstraction of "tech." In fact, if there is hope, he says, it will be found on a human scale. The question of "human agency" is very important. And the solutions won't happen on the gargantuan scale of the state: "nurture," he says, "is a little bit more local, a bit more individual." Indeed, at this turn in the conversation, Thiel the twenty-first-century entrepreneur starts to sound a little bit like the eighteenth-century Edmund Burke.
To read more of Jamie Smith's conversation with Peter Thiel, check out "Welcome to the Desert of the Real: A Conversation with Peter Thiel."