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Peter Thiel on Stagnation, Innovation, and What Not to Call your Company (Ep. 1 — Live at Mason)

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Mercatus Center
Apr 6, 2015 · 49 min read
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I am somewhat pessimistic about the possibility of government being a key, a place where the great stagnation gets reversed. There is a sense in which a letter from Einstein to the White House would get lost in the mail room today. You could not even do Apollo.

Even something like the SDI program in the 1980s. The debate in the ’80s was, it’s a dangerous first-strike weapon versus a great defensive technology, whereas today, people would say that SDI was just this fictional thing that would have never worked. Again, this very odd way that our expectations have been dramatically reduced.

I worry that the conformity problem is actually more acute than it was in the ’50s or ’60s, so that the category of the eccentric scientist, or even the eccentric professor, is a species that is steadily going extinct because there is less space for that in our research universities than there used to be.

I worry that perhaps, if anything, it’s a little bit the other way. It’s very hard to measure these things or calibrate them, but I think that in politics, the conventional approach is to simply look at pollsters. What are your positions going to be? You just look at the polls, you figure this out, and it works fairly well.

My suggestion is that perhaps at this point, Japan is the least conformist, the least imitative country in the world. There’s actually a lot of interesting aesthetic cultural stuff going on, there still is a lot of very successful types of businesses. There’s innovation in food production, all sorts of interesting areas.

But then it’s an indictment of the West, where I think Japan is no longer the Japan of the Meiji Restoration of the 1870s, or the Japan of the cheap plastic imitation toys of the 1950s. It’s a country that no longer thinks it can get that much by copying the West. There’s probably still some narrow interest in IT and software. Outside of that, I think they are copying the US and Western Europe less and less.

I would bet on globalization slowly being in abeyance. I think with the benefit of hindsight, we will realize that 2007 was not just the peak year of the finance boom, but also the peak year of globalization, like maybe 1913. Happily, it hasn’t resulted in a world war, at least not yet, but I think we are in this period where globalization is steadily pulling back.

And so you want to be in places or industries that are levered to things other than globalization.

PayPal was a very friendly name. It was the friend that helps you pay. Napster was a bad name. It was the music sharing site. You nap some music, you nap a kid. That sounds like a bad thing to be doing.

THIEL: It’s no wonder the government then comes in and shuts the company down, within a few years. You want to be very careful how you name companies. In the sharing economy context, I like Airbnb, way more than Uber. Airbnb sounds like this very innocent, virtual bed and breakfast. It’s [a] very light, nonthreatening company. Uber, it sounds like a bad name from Germany sometime in the 1930s.

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I would always be long substance, short status. The temptation is to try to get more respectability within an academic setting, or within some sort of a broader audience. If you try to get respectability, it will always come at a price of softening the edges, modulating what you say. You want to always put substance over status.

If that was a single overarching theme, that would be a very, very healthy one to maintain.

Q&A

AUDIENCE MEMBER: You talk about vertical progress versus horizontal progress. I’m wondering, how does one create vertical progress? Do you have any tips for doing that?

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I think money and the nature of money is somehow much less important than all the microregulations that make up the economy. If you give me a choice of getting rid of the vast bulk of government regulations and keeping the Fed, I’d much rather do that than keeping all the other zoning laws and crazy rules we have and going with PayPal, Bitcoin, gold, any sort of alternate currency one could come up with.

I’d much prefer to focus on the level of atoms, the real economy, than on the virtual level of bits, which I think of money as being linked to. My intuition, for what it’s worth, is that you’d want money to somehow be linked back to the real, in a fundamental way. This was the merit of the gold standard, that it would at least maintain this discipline that money was not something that grew on trees and could be printed ad infinitum, and so I’d want it to be linked to something real. Maybe you link it to the equity market, or something that’s somewhat more real than just fiat money. I think the much more critical thing are all the microregulations.

I think we’ve had this sort of Gresham’s law, where the bad scientists have driven out the good, or people who are nimble in the art of writing government grant applications have replaced the eccentric scientists who’ve really pushed the research. I think that’s sort of this deep corruption of the process.

It’s very hard for the public to fully appreciate it, because science is so specialized. Who am I to evaluate superstring research, or quantum computing research, or nanotech, or immunotherapy as applied to cancer? Because of this extreme specialization of science, you have these self-reinforcing expert communities that have made this process of politicization extremely opaque to the broader public.

Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages…

Mercatus Center

Written by

The Mercatus Center at George Mason University is the world’s premier university source for market-oriented ideas.

Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages with today's most underrated thinkers in wide-ranging explorations of their work, the world, and everything in between.

Mercatus Center

Written by

The Mercatus Center at George Mason University is the world’s premier university source for market-oriented ideas.

Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages with today's most underrated thinkers in wide-ranging explorations of their work, the world, and everything in between.

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