Peter Thiel: There Are No Good Bets Against Globalization
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However, the man seems to have no patience. Jumping from one idea to another like an adolescent trying to figure out what to do with himself. Grand claims, without explanation or elaboration, merely statements. We have lost the way of the ancients. By ancients we are probably led to believe the innocence of Aristotle.
A complete mess. Examples selected. A very narrow argument. Not a person engaging, not really a person communicating, but, possibly, a person with an agenda, someone who is trying to "school" the great ignorant public, to fill the place of the ancient medieval priests.
That is my impressions. Of which I might be entirely wrong. I must however say, his world is dark, made dark by limitations of his imaginations, by loss of hope in the human spirit, by lack of understanding of the human resilience.
Europe has free trade, it has too a fairly similiar ideologies of democracy and capitalism, yet each country in europe is as different as China and America. Globalisation in practice is much different from the globalisation of rhetoric. No need to use the bible. Nor repeat the term apocalyps on and on in the introduction, to present an impression of something really serious, deep and secret being told.
Tell what the world is, we have the brains to understand what it should be.
Though this I should not say - I am frankly disappointed in the consciousness of Hacker News who allowed this article to get sufficient point to make me force myself to read a most ghastly article.
Although I agree with you, I did enjoy Theil's essay. I think it really captures and explains the desperate and almost suicidal mindset that is so common. You put it well. His is a dark world of little imagination and not much faith in humanity.
The world's a really complex system, even limited to just the human-systems part of it, and the <50 miles from satellite orbits down to deep-sea drilling that concerns said humans. So in forecasting and speculating on the future, we can't help but project our own fears and hopes - in this case, Thiel is a capitalist/investor who makes a long case for going long on the world economy, with some Biblical quotes and economic history to make it interesting, if not quite convincing. Too many false dichotomies are given - I think it's a good bet the future will not run like a decision tree.
In particular, Thiel wrestles with the fairly old internal contradictions of capitalism that many other thinkers have, some much more in depth. To use one more Biblical reference, the Rapture for globalization is a totally "flat" world of complete freedom for labor and capital (and technology, but presumably not land). Global capitalism runs, shuffles, or stumbles towards that end, with much of its participants heedless of the journey, never mind its destination.
For example, since capitalism's purpose is to accumulate capital for its own sake, it cannot help but be global (early on, slave trade/colonialism), and it cannot help but work against itself in the long run (We'll up profit margins by outsourcing! But wait, then those outsourcers will get richer, and compete to squeeze our own profit margins. Yah, but then they'll outsource too! But wait, the planet is finite...). While it is a very resilient economic system, what might follow it as its contradictions come fully into play is far from clear.
As an aside, here's someone else who's view on the current globalization situation is, I've found, comprehensive and coherent:
That said, I don't find Wallerstein's work to be particularly convincing. A good deal of his theoretical position is predicated upon Braudel's Annales school historical work and Andre Gunder Frank's dependency theory (a kind of warmed over Leninism applied to Latin America). As it turns out, dependency theory is more or less wrong on the facts — it was a plausible sounding theory, but didn't have much of an empirical basis.
Wallerstein's work is an expansion of Braudel's work on the Mediterranean-as-an-economic/geographical-system and on A.G. Frank's dependency theory. Wallerstein posits that the entire global economy grew out of the European/Mediterranean system, and that there's a dependent relationship between the core states (First World industrialized countries) and periphery states (Third World raw materials suppliers). This is basically an updating of Lenin's essay "Capitalism: The Highest Stage of Imperialism", buttressed with a great deal of historical narrative.
If you read Wallerstein's short introduction to WST, World-Systems Analysis: An Introduction, you'll get an idea of what a theoretical spaghetti his thought is when pressed to put it down simply and briefly on the page. And the last third of the book is devoted to a kind of 1960s-counter-culture burnt-out-hippie wishful-thinking about the potential of anti-globalization movements.
If you're really interested in Marxist International Political Economy, I would skip Wallerstein and try Giovanni Arrighi and David Harvey instead. For the more historical stuff, Braudel, Abu-Lughod, and Frank are awesome.
I liked the World-Systems Analysis book - compared to most social science, it was at least readable and truly interesting in many parts. He's not so cagey, hedged, and recalcitrant a writer that one can't filter out his opinions, like the "burnt-out-hippie wishful thinking" parts. :)
Thanks again for the references. The future will be interesting.
Don't get me started on Thomas Friedman. As a TA, when I have to teach Friedman, I usually just instruct my students to go into it realizing that everything he says will be so wildly overstated, baselessly enthusiastic, or anecdotal that it will invariably be wrong. I really hate that people feel smarter when they read him.
That, I think, is why you see internal contradictions. You're pointing out that the best capitalists do stuff that harms the average capitalist; if Myspace is making money, there's always a Zuckerberg waiting to ruin things. But of course, there is no "Capitalism" that encompasses all of the goals of Myspace's owners and Facebook's.
That also takes care of the apparent contradiction of outsourcing. The capitalists who lose to outsourcing don't like it; the outsourcers do. There's less money made (since the outsourcers charge less), but the economy is more efficient. That's capitalism--the net result of lots of self-interested people, who often act against one another's interests. It's not the vision of capitalism in which the rich, as a group, make consensus decisions to advance their collective interests.
Thus, that version of capitalism is wrong.
Oh, and slavery and colonialism are much, much older than capitalism as we understand it today. In fact, one can make the case that slaves are the oldest form of property. Certainly, I've never heard of a civilization that advanced at all and never had slaves.
And of course the startups that became possible because Sun equipment was much cheaper than IBM's thought this was a pretty good thing too.
Nah, the best way is to prey on vice. Weight loss pills, get rich quick schemes, porn, 0 interest ARM loans, etc.
I don't disagree with your general arguments, but this bit is factually wrong. IBM's problems in the late 80's and early 90's were to do with the rise of the PC industry, not the Unix workstation. Yes, IBM had a dysfunctional Unix strategy during that period, and yes it lost sales (some to Sun) but it wasn't Sun that was killing it, it was the rise of client server computing. If Sun hadn't been there then Apollo (remember them?) or HP or maybe even SGI
Capitalism works because of increasing productivity and because it is a more efficient method of allocating resources than a planned economy.
Globalization is not a two-way street, and while it would certainly be foolish to bet against it when it means American jobs being shipped to other countries where labor is cheaper and the cost of living is lower, betting against consumers being able to import goods from those same countries where multinationals sell their products for cheaper seems, for the time being anyway, to be a pretty safe bet.
I am curious about why others downvoted my original post; do people here really think this sort of protectionist price discrimination is OK?
It is undesirable for technology to advance at a slower pace than would be possible if people were expected to pay market prices for the products the technology would help to improve or create. If you value future advances in technology, you should want your government to minimize manipulation of the markets for such technologies. If, on the other hand, you'd like as many people to benefit from current technology as cheaply as possible, you should want your government to force prices down as much as possible.
It is horribly unjust for Americans, many of whom have no or poor health insurance, to be forced to pay more money than anyone else on earth for prescription drugs. If Big Pharma, which spends disproportionate amounts of money on direct marketing to consumers, can't produce the medications we need cheaply and efficiently, that represents a market failure, and the government should step in and take the lead role in drug development. Research could be done through the NIH grant system and the results could be given away, unpatented, to the entire world. We could get the same results for less money, as the NIH doesn't need to make a profit and has no stock holders to answer to. It could even serve to improve our global reputation, showing the US to be a force for good in the world.
As I mentioned, both of those options would make drugs less profitable, which would lead to fewer advances in technology. Prohibiting the reimportation of drugs can be a sensible policy.
> It is horribly unjust for Americans, many of whom have no or poor health insurance, to be forced to pay more money than anyone else on earth for prescription drugs.
Unfair, perhaps, but unjust? Fixing this problem would either require selling to everyone at American prices (which could also be described as unjust), or selling to everyone at the lowest prices available. Both options would be less profitable that the current system, which would slow the rate of advancement in drug development.
> [Maybe] the government should step in and take the lead role in drug development.
That can also be a sensible policy, and the American government already does fund a considerable amount of drug development.
They do, however, have free health care. You do understand the difference, right?
No, it isn't as good as most paid care. So what?
> Pharma, which spends disproportionate amounts of money on direct marketing to consumers,
What's "disproportionate"? You do know that marketing includes free drugs for poor people, MD education, and the ads that tell people that there are treatments for their illnesses/conditions, right? Which of those do you find objectionable?
> can't produce the medications we need cheaply and efficiently, that represents a market failure,
Does it? I'd like a pony, but the fact there isn't one in my front yard isn't actually a market failure.
If you think that you can develop anti-biotics for less, go for it. You'll get rich, you'll save people's lives, and you'll drive those evil drug companies out of biz.
You were planning to go through the FDA right? (Of course, if you can fix the FDA, then all new drugs become cheaper.)
> and the government should step in and take the lead role in drug development.
What rational govt that has pension/retirement obligations would spend money on a drug that significantly increased lifespan?
> the NIH doesn't need to make a profit
The NIH has no skin in the game. If it screws up, no big deal. In the rare cases where someone finds out, NIH defenders will swing into action. If Merck screws up, folks lose their jobs, stock value goes down, etc.
The NIH is driven by interest groups. Pharma is driven by what folks will actually spend money on. I know which one I think accurately represents what people value....
Insurance companies are somewhat driven by what their customers want. If 20% want something, it tends to happen. Govt bureaucrats, not so much, and Congress rarely passes laws for 20% of the population.
Thiel isn't arguing that globalization is a done deal. If anything, he agrees that what we have is astonishingly incomplete: "we stand at a level of globalization that compares with the previous peak year of 1913". Rather, he's asking whether the economic world as we know it could withstand true globalization.
But to answer your question: yes, I think it's only to be expected that corporations will seek to maximize their profits through price discrimination. And also to be expected that true globalization will make this more difficult to do. But while it's clear that those paying the higher price would benefit in the short-term from paying a lower price, it's not clear to me who would benefit in the long-term from forcing companies to choose a single set price somewhere in the middle. It probably depends on how this would be enforced.
Our healthcare industry is psuedo-nationalized, in the sense that we have an inefficient domestic market in order to subsidize our ridiculously expensive regulatory approval process, all of which provides enough excess cash flow to fund lots of good research. Things would be different with fewer trade barriers, but the main result is that either a) the FDA would get weaker, or b) our domestic pharma industry would look a lot like that of e.g. India (cheap stuff derived from other people's research, not as much new stuff). I guess we'd buy the next generation of Lipitor, Prozac, and Viagra from the Swiss.
With other words: What does "globalization" really mean?
Empirically, it appears to mean a global market for land, labor, and capital with national and regional markets for consumer goods.
It's meaning in the propaganda domain means breaking down of boundaries between nations, free trade, exchange of knowledge, culture, the world becomes a more connected, and of course, a better place for everyone.
It's actual meaning is that large corporate entities only get to freely move across national boundaries in order to exploit market (consumer or labor) inefficiencies. China was a boom for a cheap labor market. It will become less so as the standards of living rise. So some companies are eying Vietnam. If Africa stabilizes, it might be next.
In fact, in the real sense globalization usually means anti-globalization. In its best form it is using governments in order to set tariffs, international trade restrictions, copyright agreements, immigration policy and so on. The "free trade" is usually the free trade imposed on other, weaker, countries by the corporate of the stronger countries.
The propaganda meaning of globalization is very useful in discrediting any of its opponents. The "antiglobalization" protesters are apparently "anti" friendship among nations, "anti" free trade, "anti" cooperation, how silly of them.
Best case, resilient communities can mitigate the harmful effects of globalization, improve local quality of life and dampen the magnifying network effects (whether financial, political, or natural). They can provide a "monkeysphere" that members can care about and be held accountable to, an excellent alternative to all the divisive, useless rhetoric and posturing in the MSM.
Worst case, they're the ones still eating and recovering ground after the the zombies/terrorists/enemy paratroopers/global pandemic/massive earthquakes strike.
Fair enough, Thiel, but aren't your doomsayer projections also a direct form of thought experiment, based on extrapolation just the same?
He goes on to outline what he thinks are three defining markets (or distortions thereof) that could utterly define the future ("China", "Internet" and "hedge funds"), and claims that the markets are woefully out of alignment with reality. I think we have to take his view with a large grain of salt here, considering his bias: he's a global macro hedge fund manager who also invests in Internet startups.
I think he's probably right about a lot of the distortion and possibly right about some of the importance of these markets, but he doesn't even mention any other possible contenders (energy industry transformation? nanotech? biotech? government competition?). I think it's a mistake to assume that any one or three factors will determine the mid-term future when there are literally trillions of factors in play. Then the logical conclusion is that we can't really know or predict anything about the mid-term future, which may be largely right, but I think there is possibility to predict with narrow foci, like "What will happen in transistor design?" or "What will happen in nuclear reactor design?"; though those too will always be hampered by revolutions that we never see coming.
Overall, I hope Thiel is wrong about a lot for the reasons that he so adeptly explains: there's not much else to hope for if the alternative to what you want is total destruction and nonexistence.
He's good on the financial advice but bad on everything else. Why would you promote Defense technology if you think the biggest risk in the future is war? Shouldn't you be promoting peace?
2) If you do post a link to something, use the full link. Link shorteners like bit.ly are frowned upon at HN. This isn't twitter; characters are not at a premium, and many of us prefer to see the real destination of the link.
http://gawker.com/5231390/facebook-backer-wishes-women-could...
"Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of “capitalist democracy” into an oxymoron."
In essence, this appears to be the claim that women are by and large not libertarian voters, and less so than men. This is a mere statement about the world. Believing this statement does not commit you to believing Women Must Not Be Allowed To Vote.
If you object to the statement then you are committed to Women Are Just As Likely To Vote Libertarian As Men; I'm guessing Thiel has some actual empirical data to suggest this isn't so.
It's possible that he really thinks, instead: while those two things have rendered "capitalist democracy" an oxymoron, which I dislike, I nonetheless must agree that those two things happening was a good idea (for other reasons, presumably). But that certainly isn't the connotation of the words he chose. One could be forgiven for reading him to imply that he was at least not a big fan of either the expansion of welfare or the granting of women's suffrage.
That is definitely complaining about women being able to vote.