Zero to One notes, part 1
As of this writing, I’m roughly halfway through Zero To One by Peter Thiel. So far, I’ve found a lot to agree with, some to disagree with, and a pile of things I desperately want to agree with, but cannot; the evidence contradicting those things is simply too strong.
The optimistic/pessimistic definite/indefinite classifications are very useful, and his examples are largely apt. It’s easy to point to exceptions to this, but I think the broad idea holds up: societies have different collective behaviors depending on whether they are optimistic or pessimistic, and definite or indefinite about them. It explains individual behaviors with regards to education, skill acquisition, savings rates, business creation, and several other important things. The ‘mood’ of the society both influences, and is influenced by, government policies related to this mood.
Indefinite optimism, which Thiel rightly cites as the mood of the modern United States, is a focus of a good chunk of the first half of the book. He attempts to explain just how we went from a society of definite optimists to indefinite ones. Here, the explanation falls down somewhat. He cites Nozick and Rawls as exemplifying the philosophies of both right and left with regards to our lack of grand plans, which is close to the mark. His main criticism is towards the idea of process legitimizes outcome, also known as “the means justify the ends.” As Paul Treanor explains:
- “process legitimizes outcome”
This is an underlying belief in all forms of liberalism. All liberal societies include some form of interactive process or procedure. In turn, that has an outcome, which at least partly shapes the society: liberals see this shaping of society as legitimate. Libertarians emphasize this principle primarily in their rejection of (government-enforced) distributive justice. To libertarians, there is no such thing as distributive justice in the usual sense, what Nozick calls a ‘patterned distribution’. To them, the outcome of a fair and free market is just. In fact, most libertarians believe that it derives this quality of justice, from its being the outcome of a special process (the free market, or a comparable process).
The difference here is that the American left are not content with the outcome of the (fair) process; they actually look at outcomes (‘justice’) and say “OK, that didn’t work out perfectly. Let’s step in to try to correct it.” So you can pin some of the blame on Rawls and the left, but most of the blame should be apportioned to those who are content with leaving outcomes as-is, i.e., the market fundamentalists — the economic right.
Another issue here is more subtle, and it’s about the idea of ‘justice’ itself. One of the earliest depictions of justice, one that lives on today, is a woman holding scales. The scales have several different interpretations (like ‘weighing’ of the evidence), one of the most important of which is the idea of balance. Thiel’s criticisms of the veil of ignorance views on justice, especially distributive justice: that it is less important than dynamism. This is a romantic idea, but in practice leads to incredible cruelty. The Just World Fallacy is a fallacy for a reason: it’s wrong. When we abdicate society’s responsibility toward those born with less, we do cut off their opportunity. Thiel derides the statements of Buffet, Gates, Gladwell, and several others in regards to the role of luck when it comes to success. He is unable to accept that they have realized and internalized something that he doesn’t, and hasn’t. That’s the fact that the birth lottery really does matter, and study after study backs it up. Your parents wealth strongly influences whether you’ll succeed along a number of dimensions. It determines whether you’ll get high quality education, good nutrition, adequate play time, lack of exposure to violence, tutors, test preparation, and all the rest. Your parent’s wealth level strongly influences whether you too will be wealthy (or least not destitute), what kinds of friends and contacts you’re likely to have, and what status of job you get. It may offend the sensibilities of some that these facts are true, but mountains of evidence bear it out. He’s correct that a lack of planning is hurting us at both the individual level, and the societal. He’s also correct that indefinite optimism has shuttled many towards finance and law as a way of dealing with an indefinite future. However, making what’s left of the welfare state and the penurious existence it gives to people the scapegoat for our innovation problems is wrongheaded at best. Helping those with little is an attempt to restore at least some kind of balance.
Blame is better put on a culture of short-termism, and the oft-ignored dark side of transparency, accountability, and demands for immediate ROI. We like to pretend that the latter three come with no costs, but they have many. I think there’s a kernel of this in his argument about the advantages of monopolies. When you’re a monopoly (as governments are supposed to be), you can afford to take large risks partially because you are not subject to immediate consequences. This is double-edged sword itself (bad policies and projects can continue for long periods), but the good side can give us missions to space and the Internet. Thiel is arguing, as I myself have argued, that this tradeoff is worth it; many of his ideological allies are the ones who forced the current state of affairs on us. If you make everything subject to the logic of the market and a slave to ‘investor ROI’, you only get to think about the next quarter. Does that sound like the work of the (1970s and 1980s) left? It wasn’t.
The other thing about ‘luck’ is that it takes multiple forms. One I discussed above, but the other is just as important. Luck is a secret ingredient. You do need good planning, skills, and all the rest, but even with all that, you can fail without luck. It isn’t luck like ‘lottery winner’ luck. Instead, it’s more like gas, or salt. Critical ingredients that make a thing run. You can have the best designed ‘thing’ in the world, but without that special ingredient, nothing happens.
He also decries the value of formal education and underplays the benefits it bestows. This is one of the arguments that I’d like to be sympathetic to, but lived experience and evidence makes it very difficult. As I discussed at length in Why Software Developers Should Still Choose to Go to University, the advantages are seriously underrated by many of the new crop of the “you don’t need college” movement. He also celebrates contrarians, iconoclasts, outsiders, and those who take the unbeaten path. This is another thing I’m very sympathetic towards. Related to the Character Hypothesis, a lot of the argument is that people who choose the traditional path (today due to indefinite optimism) are ill-prepared for a world that needs dynamism, creativity, new ideas, and unconventional approaches. Here I agree with him, and like his argument, but lived experience forces me to give it some caveats.
Taking the unbeaten path and going against the grain does give you a perspective that is unconventional, does force you to be creative, and does give you that much vaunted ‘grit’, absolutely no question about it. It’s far from a silver bullet for success, though. I long ago rejected the institutions of marriage (marriagefree), reproduction (childfree), religion (atheist), and family (most of mine are deceased, and the distant ones who are alive I have no contact with — the idea of treating people specially because of their genetic distance is something I find completely outmoded and at odds with a voluntary society.) I wasn’t able to attend college. I substituted hard work, persistence, grit, and long hours for specialized knowledge and connections. I have heterodox political opinions. I was forced to leave home and work as a teenager. I’ve been an autodidact my entire life. I spent a great deal of my free time self-studying everything from computer science, to philosophy, to economics. While others spent their times partying or creating families, I read and programmed. I never smoked, drank, or did drugs. I was (and occasionally still am) an artist. I started life in a comfortably upper-middle class household, and wound up in poverty by the time I was 10, and stayed that way until my early 20s. I worked my way up from tech support and junior systems administrator making $10 an hour to (eventually) making a decent, but not amazing, salary as a senior developer. I took about as unconventional a path as you can take in America short of escaping a war-torn country in a far-flung area of the world or growing up in a violence-wracked, institutionally-discriminating environment and then achieving some success (Thiel uses the examples of bomb-making immigrants.) All this does get you some very useful skills: hustling ability, the ability to find jobs, mental toughness, creativity, and adaptability (this way of living may breed good generalists.)
What it does not get you, and what it has given so many (including Thiel himself, though he seems to deny its usefulness altogether to focus (deservedly) on the ugliness of rote learning and hypercompetition) is immersive learning and powerful networks. Thiel correctly points out the value of extreme specialization (the “monopoly of one” and “focus relentlessly on something you’re good at doing, but before that you must think hard about whether it will be valuable in the future”), but neglects to think much about how such specialization is acquired, and part of that is an immersive learning environment and personal safety nets not available to many (like familial support.) If you’re in a position (as I was) where you have to take jobs that don’t allow you to specialize much (smaller companies in particular) because you have to make enough money to keep your head above water, you never get into a position to become a monopoly of one. Instead, your free time is spent filling in the many gaps in your knowledge (that you probably would have acquired in an immersive learning environment — I suppose that it’s easy to underestimate what having 4–6 years of doing nothing but learning can do for a person, but it shouldn’t be), and teaching yourself things to stay ‘current’ because of employer demands. So there’s a bit of contradiction to this logic: don’t go to college, but somehow find the resources to become a specialist with an edge (proprietary technology or insider knowledge) while working for other people. So this is an area I badly want to agree with Thiel on — that being on the extreme ends of the founder distribution makes you far more likely to succeed — lived experience tells me that Thiel underweights much of the power of some of the traditional tools, especially university attendance. This is an area I would much rather be wrong about.
So you become an adaptable generalist: the very thing Thiel denounces as an enemy of innovation today. His examples are at the schooling and subject-level — people taking useless extracurriculars, getting a very general education, etc., but it applies just as much to individual fields like software development. Thiel doesn’t seem to realize that this reaction to indefinite optimism (which I would argue can easily start turning to definite pessimism) is completely rational given the state of society and world. The disappearance of jobs for life and company loyalty; offshoring and outsourcing; stagnant wages since the 1970s; wave after wave of layoffs; a rapidly shifting technological landscape where people feel that they may be replaced by a machine as soon as it becomes cost effective; industries upended or erased.
Is it any wonder at all society and people become ‘indefinite’? Is it any wonder that dystopian and apocalyptic fiction have become such a staple of mainstream entertainment? We have an undercurrent of eschatological feeling for a number of reasons (some would cite high-profile terrorism or residual fears of war), one of which is that you have no idea if your skills will be needed tomorrow or if you’ll be needed at all. Generalizing, then, is a rational response. You become good at surviving, but probably not innovating. You try to be prepared for as many possible futures as you can. Again, this is probably bad for innovation and technological progress, but forces that, much to Thiel’s dismay, are actually beyond our control are at work. He actually unknowingly bolsters this argument when he argues for lack of knowledge of power laws and success rates (“you can’t afford not to think hard about where your actions will fall on the curve.”) People don’t see it, he claims. I’d argue exactly the opposite. If you know that 20% of the winners take 80% of the returns or that you only have a tiny chance of succeeding (and a high chance of winding up in debt or homeless), why would you take a chance on a risky venture, especially if you have no personal safety net? Instead, you may veer towards definite pessimism and save all your money to weather your next personal crisis or the next recession; or indefinite pessimism and just party like it’s 1999. This, as an aside, is one of the reasons why things like the basic income are so appealing today. You want people to take more risks? Make failure less punishing (reinforce the Peltzman effect.) Make it so that you are not one job loss or other crisis away from homelessness, and maybe, just maybe, you’ll see ten million entrepreneurs bloom. Maybe you’ll see people reaching for the stars again.
Some of this also comes through in today’s use of language. Why has ‘kind of’, ‘sort of’, ‘in a way’, ‘kind of like’, and other terms become so prevalent? Why have definitive statements been subtly pushed out of modern speech? Why do we so often hedge our statements? Add disclaimers and prembles to our arguments? This is part of our ‘indefiniteness’ today. It’s not just about fear or ‘lack of planning’, though that is surely part of it. It’s also about having less hubris. When you’ve seen many grand plans of the past fall on their face, it can be quite humbling. You cannot blame people for becoming less definitive. This is another area I personally wish was different. We could use more confidence, more planning, and more dreaming big. People have become chastened by one thing after another, so you cannot blame them for thinking and speaking in ways that imply hedging — for reaching for safety.
Finally, there’s the argument that “you should not necessarily start your own company, even if you are extraordinarily talented”; that you’d be better off finding a rocketship and riding it. What exactly do you do if you are a rational person and say “he’s probably right, I shouldn’t start a company because my chance of failure is high” — which is exactly what I have done up until very recently — and you cannot identify, or simply are not qualified for those rocketships? When Google launched, I knew they were going to be huge. If I had investment capital instead of just some emergency funds, I would have invested. If I had the skills, I would have joined. What would his advice to someone like that be? Content yourself with crappy jobs and keep trying to specialize in your very scarce free time, and maybe by the time you’re in your 50s you might have enough skill to start an innovative company? That’s the reality for many line-of-business, workaday software developers today. You might have ambition and big dreams, but lack the vaunted specialized skills, deep knowledge, and strong business network to build the kind of company Thiel correctly identifies as necessary for forward progress. His view, which is popular in some ideological circles (and which I think has a good deal of merit) is that progress is largely pushed forward by bold, visionary individuals with specialized skillsets.
For me, the answer has been ‘spend all free time reading and programming.’ I have argued that this is no longer optional if you want any kind of progress. The approach of hypercompetition means we’ll all have to collectively and individually work harder not just to innovate, but to stay afloat. The divide here is between those who already have significant resources (who will have to work much harder to innovate), and those without (who will have to work much harder to survive.) I would love to know what Thiel thinks about moving the latter group into the former; it’s not going to happen by itself — and Thiel’s 100k prize doesn’t exactly scale.
So that’s it for part one. Read part two.