A Conversation with Peter Thiel and Niall Ferguson
- 1990’s: The pace of technological change is getting faster! and the pace at which it’s getting faster is getting faster!! Soon we’ll all be cyborgs and live for 1000 years in the post-singularity!!!
- 2010’s: Things haven’t really gotten much better. Other than the Internet. In fact for poor [Americans] they’ve kind of gotten worse. Well, at least all those people who worked in finance got super rich. And Silicon Valley seems pretty hot … for a few people.
- Sounds like extrapolating from current market conditions, to me. Although Thiel does cita cifras to make it sound like non-progress has been not-progressing for decades.
At minute 12, Thiel says petroleum engineering and chemical engineering have not been good fields to go into. I’m not sure where he gets that idea because those are the two highest-paying college majors (even above computer science) one can currently choose.
Sure, electrical engineers got hired for Quant roles in the past. But I wouldn’t measure value as mean of the top 10% of earners, I would measure it as the trimean. (BTW, how are your quants doing, Peter? Edwin Chen left to be a data scientist at Twitter so…I would guess not that well)
Minute 17, Ferguson highlights Thiel’s push/pull critique of rocket scientists going to Wall Street: that regulation of rocket science / pharma / nuclear / extraction pushed the engineers to Wall Street, as much as money (financial deregulation?) pulled them there. “Engineers pushed to less productive areas.”
But … how could the returns to the financial sector have been so high if finance weren’t earning supranormal profits? I still buy the deregulation → synthetic assets → people who can synthesise the assets (lawyers and Monte Carlo programmers).
A lot of focus on the choices of exceptional individuals here. My bias is to view history as driven by normal people, not geniuses.
Minute 19, “root-canal Republicanism”. Hasn’t the American Republican party changed too much since the 1930’s to use this term? Compare Teddy Roosevelt (progressive) and Newt Gingrich (cheerful).
Things in Peter Thiel’s history of progress:
- green revolution (50’s)
- emergent aerospace industry (30’s)
- emergent Hollywood industry (30’s)
- 2 years’ improvement to life expectancy per decade
- faster transportation
- cheaper energy
A debate over whether technological slowdown means the US can’t borrow money to finance a Keynesian fiscal expansion (“smoothing”, if the future is up).
Minute 25. The superior technological functioning of the NHS as compared to US healthcare (US has cheaper computers and higher computer literacy): is this a question of public vs private provision of care? About deregulation? Maybe it’s not about such a grand narrative from the newspaper op-eds, but rather about boring details of the management of many firms. Thiel’s off-the-cuff idea is to appoint a health czar with an engineering degree. (What?) Or who has run an engineering firm. (How about someone who has run hospitals?)
- A very nice extemporaneous answer to the luck-vs-skill question.
- Europe’s lost generation. What about the US’ lost generation or Japan’s lost generation?
Minute 33. ”The US has had a lot of bubbles. But not a lot of growth. People have this cornucopian view that growth automatically happens.”
Higher ed bubble
- It’s impolite to point at the poor college graduates and ask “Where’s the return on human-capital investment?”
- The high school → Harvard → Wall Street Tournament
- Kids skipping grades (gee, lots of focus on geniuses)
- Brilliant teachers teaching the masses. Again, focus on geniuses … and hasn’t this already been tried, like in the 70’s to have master teachers record videos and teach thru broadcast? Anyway, MIT OCW has been around for a decade now and nobody uses it as a substitute for school — at least nobody’s talking about it.
- Peter, how can you base national education policy on what’s best for the most academically talented .00001% of students?
On chess: “Chess is dangerous. I, um, I still play. Probably too much. Well, not enough and too much, at the same time.”
Government investments of the “spray ‘n’ pray” variety. The cornucopia of given growth (S&P 500 average = 7%, therefore this company “is expected” to make 7% — at least if we spread our money out we’ll find some J curves!”
Apropos of his answer to the luck-vs-skill question. Thinking about why something is going to work. Thinking hard about what might happen and what might go wrong. (viz., Charlie Munger’s use of decision trees)
Minute 55. Someone from the audience also claiming lone geniuses push society forward. Einstein as an example. To my knowledge, Einstein didn’t build or design any power plants, didn’t even hold patents. As far as the 20th century’s technological progress, we can thank IBM and the chemists who worked on semiconductors and transistors, as well as all of the “little” engineers who made incremental improvements to battery life, turbine design, shaping cooling towers as a hyperboloid, building oil rigs that don’t break, and — oh yeah, the fatcats and morons who finance and actually make stuff.
Neal Stephenson, writing on the American West Coast in the 90’s, saidthat the wealth of a nation was in its people. (Postwar Japan being his example: from rubble to corporate samurai.)
But George Buckley, CEO of 3M, says that manufacturing, mining, and agriculture are the cornerstones of wealth.
“Most people, at most times and places, have lived in societies that were essentially static.” e.g., Thomas Malthus
Minute 61: “The low-hanging fruit is making the government more efficient.” Well, there are certainly government employees wasting their time on emails and talking by the water cooler in my city’s government. But HR costs ($30mm) aren’t a big fraction of the city economy ($6B) — and every bureaucracy has such lazy people. Now maybe he just means making smarter decisions, like investing in the right thing instead of the wrong thing. Well, somehow I don’t think that will be solved by just putting an engineer in the room or throwing technology at the problem.
Then again, maybe he’s just talking about Sarbox.
“The conversation in government is never about how can we do more with less.” Wow, what a clueless statement. Everyone wants to spend more money and tax less. That is exactly trying to do more with less. Or how about Harrisburg, PA’s bankruptcy case? They tried to do more with less. (They tried to power the city at a tiny fraction of the cost—and hired a Colorado entrepreneur—with an engineering degree!—to get it done.)
Not to mention: regarding the US Federal government, they most certainly do focus on using technology and reducing wastage. Witness data.gov (I think this was an Obama initiative, although I don’t follow US politics closely enough to be sure). And witness, um, the GAO = Government Accountability Office. Just a brief look at gao.gov shows reports on:
- streamlining government
- measuring wastage
- improving physical and technological infrastructure of government
- convincing government to actually adopt their recommendations
- how’s the TARP going? “exposure to AIG lessens”
- Did departments follow our advice? (“5% of our 176 recommended actions were followed, 74% were partially followed, 21% were not followed”)
- Because the US Congress members individually have the incentive to waste as little as possible on other constituencies, they’ve given the GAO the power to look into what the executive branch (probably minus the military) does with its money and even go so far as to protest specific bids.
- http://gao.gov/products/GAO-12-342SP#mt=e-report&st=2 There’s their report on this supposed “low-hanging fruit”. I’ll leave it up to you how low it’s actually hanging.
Not surprising that a libertarian holds naive views on governance. I would be interested to see how his views would change if he served in government for a term.
Minute 65: On the transition from innovative original founder to mechanistic bureaucracy. Back to a field where Thiel knows what he’s talking about.