Peter Thiel on the Future of Innovation
medium.com
medium.com
"Often the smarter people are more prone to trendy, fashionable thinking because they can pick up on things, they can pick up on cues more easily, and so they’re even more trapped by it than people of average ability"
I mean, for instance he's very much into medicine, including anti-ageing medicine. And it seems that the slow pace of progress in this area, when compared to progress in IT, frustrates him. Me, I don't care much about medicine. Maybe it's because I'm relatively healthy, but I believe it's also because most people are healthy, so if suddenly everybody was, it would only be a quantitative change, not a qualitative one. A healthy human body is not something new. So, staying young and healthy until you reach say 100? Meh.
If the goal is to improve life, there are other ways to do that rather than waiting for technological miracles. Money, for one. I mean, the life of a wealthy person nowadays is, I suppose, absolutely awesome, and it does not require very advanced tech to be so.
- We want competition because it allows nefarious monopolies (and other companies) to be overtaken by better companies.
- We don't want to discourage companies from attempting to obtain monopolies in their markets, since this gives them to opportunity to capture monopoly profits. Monopoly profits are not inherently bad. If a company becomes a monopoly, we want them to be a creative monopoly.
- A competitive market in the sense of having low profit margins is very different from a competitive market in the sense of whether or not new entrants can come in and compete.
- It is a bad thing if a company has monopoly power through something other than being a superior company, is capable of preventing new entrants, and is uncreative. We want to preserve the ability of new entrants to come into the market with superior products and overtake monopolies.
(edit: formatting)
[1] To use Thiel's terminology, it matters how quickly the market moves back into equillibrium, and that is dictated by the same forces that give rise to static monopolies.
Distinguishing between "good" and "bad" monopolies is sufficiently complex to deserve more in-depth exploration. Thiel is smart enough to realize that which is why I consider his point to be misquoted. Unfortunately, his view is oversimplified so as to be readily consumed and debated.
He lists characteristics of a monopoly in his book: proprietary tech, network effects, economies of scale, and branding. First mover advantage is mentioned as a "tactic, not a goal" - a chapter is even called "Last Mover Advantage." Google, for one, was clearly not a first mover in the search space.
I'm pretty sure we all agree that standard oil and internet explorer were not of great benefit to society.
Because from your business' perspective, you want a monopoly to have the greatest potential success. This doesn't preclude competition; your competitors are also trying to build a monopoly.
And personally, Peter is just very likable. I'm always happy to listen to him talk even when I know what he's gonna say.
I don't see that as a problem, but I also don't see it as a sustainable process. Maybe that doesn't matter since VC fund performance is such a hall of mirrors that having the magic investment criterion is better than having the best numbers.
There is certainly nothing wrong with prompting entrepreneurs to aim for that kind of a business.
What is the "game"? Are we trying to build great products to "change the world" (aka another anon msging app or "Uber for X") as so many proclaim or are we just here to get rich quick - adopting the previous generation's mantras to fit in and get funding.
Why are you here? Why did people come in the early ninetees? We should live our rhetoric and stop mostly aiming for money. Sometimes they go hand in hand but what is our primary motivation these days?
Sorry this is not aimed at your response in particular, I just think we as a whole have lost our way and our former identity with startups becoming the new Wall Street.
EDIT: made less ranty
And maybe I used the wrong word - rules suggest something positive - maybe I should say 'mechanics' or something.
Take Machiavelli - did he make politics worse by describing how it works?
His views on technology are a breath of fresh air. He is one of the only SV figures who seems to care about building technologies with the next century in mind rather than the next three years.
"Something that’s true that very few people agree with you on." I read this and my mind immediately tried to come up with such truths so.. interesting.
"The goal of every successful business is to have a monopoly." What's interesting about this idea?
Monopolies are profitable. Companies like that. They're big, they like that too.
A 'Differentiation' strategy is a way of creating monopoly-like microeconomics for your business. Differentiation is usually the dominant strategy in technologically new industries while its opposite (penetration strategy: high volume, low cost) is usually the dominant strategy in mature industries like supermarkets, auto components and canned beans. That's interesting.
Full-blown monopolies often arise at the centre of disruptive new industries. Rails, energy, computing. Patents were originally created give monopolies as a reward for innovation. That's interesting.
So far, this monopolies thing seems to be an interesting idea.
Other than that, he does interesting things and says interesting things about them: Philanthropy, Seasteading, dropping out of college, anti-aging, book writing...
That's a common misconception. The original reasoning for patents was to provide a limited (in time) monopoly to inventors in exchange for sharing (and describing in detail) their invention with the whole of society.
Interesting anecdote, afaik Gore & Associates, Inc.'s Goretex patent expired before it was universally used for outdoor clothing, thus any brand coukd release their own unlicensed goretex-like material. They have since stopped patenting many of their inventions afaik.
Some of the apparent ancient predecessors of patents may have been on this basis, and clearly that's the theory of the modern patent system in some parts of the world. But the origin of letters patent was really the whim of the monarch, and they may have been granted for sharing information, or just for sharing the proceeds of the monopoly with the crown.
"work for his lifetime more or less guaranteed"
I don't want to sound sarcastic, but what kind of life span expectancy is implied in this kind of job?
What do Cowen and Thiel mean by this distinction? What does it mean to be "inward-looking" in this context, and how will it manifest itself in an edge over outward-looking/"leveraged to globalisation" places?
Palantir simply makes overpriced software for groups to do complex network mapping and connection extraction from raw data - other companies then do analysis with on their own data sets with the software.
In the last chapter, he says that AI is overrated and it's 22nd century threat. He underestimates Power Law.
It's clear that he wants to think critically but he's somehow not able to bring himself to his own conclusions.
"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,"
The guy implies the world would be better off if women couldn't vote, and you're surprised people hate him?
I realize this is nowhere near his intended reading of his own statement, but if the shoe fits, wear it!
http://en.wikipedia.org/wiki/Capitalist_realism#Mark_Fisher
A few simple questions:
* If capitalism is as inevitable and natural as evolution, why did it take until the late 18th century and require the Enclosure and Poor Laws to appear?
* If capitalism is good, such that even Communists need to ape it, why does it result in massive deflationary panics which leave entire nation-sized regions stripped of their wealth and utterly impoverished?
* If capitalism is useful, why does it only seem to be working for manufactured-goods exporters and bankers? Why have growth rates dropped since the Bretton-Woods system and social democracy were abolished? Why has productivity growth been so terribly low despite the computer revolution?
In short: if capitalism is so great, why all the problems we see in actually-existing capitalist countries?
Values are subjective. Resources are limited.
Capitalism is one way to choose who's values are satisfied.
It does this (in general) by giving points to people who satisfy other people's values and proportional to how much they satisfy them. These points can be used to satisfy their own values after and this creates a feedback loop of value satisfaction. IMO a very good thing.
Of course there are problems, every system has winners and losers and thats why we have taxation and welfare, to smooth out some of the issues. (perhaps not enough but thats another debate).
If you have another system in mind, I'd like you to think about who the winners and losers are and talk about the alternative system in those terms.
How can you show that the goal system you described in your post actually describes actually-existing capitalism?
You have described how you imagine capitalism is supposed to function or should function. You have not described how the real-world system known as "capitalism" actually behaves. You have not made a prediction.
(Further, the entire "values are subjective" premise is just plain wrong. Value is objectively psychological: different individuals have different minds, but the workings of those minds are just as amenable to objective investigation as anything else. Oh, and the agents involved are bounded-rational, and competition is not perfect, and information is nowhere near free...)
I agree, but if you go down that path you realise that morals are objectively psychological too and in which case why do people have different ones? are they just broken? and according to what standard?
Its not that you can't predict someones morals/values from a copy of their brains, its that you can't rank them objectively, i.e. not using your own morals/values as a basis.
> You have described how you imagine capitalism is supposed to function or should function. You have not described how the real-world system known as "capitalism" actually behaves. You have not made a prediction.
I'm talking about capitalism as a system, its implementation has flaws and winners and losers and I think its important to fix them. But, I do think its a good system. I think it makes sense to start with an ostensibly good system than any other without very good reasons not to.
> strange in-group buzzwords like "values being satisfied"
chuckle why yes, I do read SSC but I picked that up from http://www.amazon.com/Lessons-Young-Economist-Robert-Murphy/... many years before I ever heard about Scott Alexander.
Just because you are not currently a moral realist, doesn't mean there's no such thing as moral realism. Case in point: http://fas-philosophy.rutgers.edu/chang/Papers/Railton-Moral...
>I'm talking about capitalism as a system
And here we've reached the heart of the disagreement: I don't think you are. You're talking about an imagined capitalist utopia. It no more resembles real capitalism (that is to say, the common features and behaviors we can generalize from all actually-existing capitalist systems) than "From each according to his ability, to each according to his needs" resembles Soviet Russia.
>I think it makes sense to start with an ostensibly good system than any other without very good reasons not to.
Why should you try to solve an optimization problem by examining only one proposed solution, and then simply apologizing that all real-world systems with the same name as the proposed theoretical solution are terrible, while not even examining the degree of resemblance between the proposal and the actuality, and never examining alternative hypotheses?
After all, it's not like anti-capitalists lack for proposed utopias (see list of citations at the bottom). In fact, our proposals nowadays tend to have worked in experiments far better than the proposal of "Implement the capitalist utopia of Austrianism/libertarianism" has actually worked in experiment -- starting with the triumphs of the social-democratic era and going from there!
http://www.nybooks.com/articles/archives/2010/apr/29/ill-far...
https://www.jacobinmag.com/2012/12/the-red-and-the-black/
http://grist.org/article/upgrading-capitalisms-operating-sys...
http://www.cornellpress.cornell.edu/book/?GCOI=8014010023835...
And this is all, of course, before we start addressing techno-utopian or techno-socialist proposals that run off the basic concept of, "Well, resources aren't that scarce..."
This is very important, more in a bit
> You're talking about an imagined capitalist utopia.
I really don't think I am, all I've described is the basis for the allocation of resources, not even a mention of how it will eventually lead to a Utopia.
But this basis depends on moral/value subjectivity (which as an aside is also the basis for democracy).
If that is not the case, then a command and control system which allocates resources based on that set of values and enforces laws according to that set of morals will be objectively better than anything capitalism can come up with.
> And this is all, of course, before we start addressing techno-utopian or techno-socialist proposals that run off the basic concept of, "Well, resources aren't that scarce"
As far as I can tell they are, at least for the moment, once we start hitting whole numbers on the http://en.wikipedia.org/wiki/Kardashev_scale we can talk about this practically. I do love Dyson Spheres.
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I will read this paper on moral realism and get back to you.
There is a false dichotomy between "capitalism" (ie: your imagined utopia of perfect markets that increase the subjective value of rational agents) and "command and control".
What I have been trying to say, despite your visible and extreme prior inability to hear it, is that there are far more alternatives than "something resembling American capitalism" and "something resembling the Soviet command economy".
If you can imagine a civilization hitting Kardashev Level I, you ought to be able to imagine their doing so in a way that isn't designed to rationalize 20th-century party politics!
In this entire conversation
Imagined Utopia of Perfect Markets, not mentioned once American Capitalism, not mentioned once Soviet Command Economy, not mentioned once
Lets assume for the moment that I am talking about a system and how it should allocate resources. Can there be other systems? yes, can there be better systems? also yes.
Now, based on objective vs subjective morals and values (which is a dichotomy as far as I can tell), we have two types of systems.
1) Given objective values/morals => There exists an objective best allocation of resources and laws governing people and we need to find a system to achieve this.
2) Given subjective values/morals => There is no objective best allocation of resources and laws and we need to find a way to reach consensus on what is produced and what laws are enforced.
Capitalism is a type 2 system, it might be terrible at allocating resources but it does this by reaching consensus Communism is a type 1 system, it might be terrible at allocating resources but it does this by determining the best allocation Democracy is a type 2 system, it might be terrible at determining laws but it does this by reaching consensus Dictatorship is a type 1 system, it might be terrible at determining laws but it does this by determining the best set of laws
The first step is to figure out which universe we live in.
If we live in universe 1, we need to pick type 1 systems. If we live in universe 2, type 2.
As I understand it, communism decides an allocation of resources to maximise a utility function which isn't driven by individual demands but by some objective ranking of value.
From my side I am curious what you mean by economic democracy.
That is incorrect. Communism refers to the set of economic systems which involve a stateless, moneyless, classless society in which the means of production are operated by workers for human need (ie: individual and collective demands).
Or at least, that is how the term "Communism" is used by self-professed communists, as opposed to by self-professed enemies of communism, who of course use the term in their propaganda to mean "Soviet-style dictatorship". But if you use any term as its enemies imply it to be defined in their propaganda, you will of course never get the bottom of the matter.
> (Just like how I've been using capitalism).
This is very wrong, as well. "Capitalism" means the set of economic systems in which the means of production are primarily controlled by private owners (who are distinct from the state), and operated for profit (via the sale of commodities in some sort of market), by wage laborers (who survive by offering their labor in a labor market), coordinated via the exchange of currency (again, some kind of market).
Systems can vary from "textbook" capitalism in multiple directions, such as: by the state intervening to some great or small degree in the economy (social-democratic capitalism), by finance becoming the dominant economic power above and over commodities manufacturers (financialized capitalism), by raw-materials producers becoming the dominant economic power (rentier capitalism), by private rentiers merging state power into their own personal power (feudalism), by the replacement of capital-labor separation with economic democracy (socialism), by the foundational subsidization of "market" businesses by the state (state capitalism), by the complete nationalization of production and its turning towards the state's national goals (fascism), by the removal of the state and its regime of private exclusive-possession "property" titles to resources but the keeping of the market economy (mutualism), by the removal of the state and its private-property regime and the removal of markets in favor of a debt/gift economy (anarchism), etc.
>From my side I am curious what you mean by economic democracy.
The means of production are owned and ultimate decisions are made by the people who actually do the work operating those means of production. It means exactly what it sounds like: democracy in the workplace and the commons, either direct or representative.
Someone will always be offended no matter what you do but the proof is in the pudding. Capital needing to flow to where it is most useful should not make you take personal offense.
Thiel was talking about why libertarianism fell and big government grew in America.
He pointed out the fact (Source: http://www.jstor.org/discover/10.1086/250093?sid=21105913766...) that since women got the vote in America the size of the government increased and became far more interventionist - both points are against libertarianism's core principles, hence women becoming franchised was a factor in the fall of libertarianism.
Like any reasonable person, Peter Thiel fully supports equal rights for women. It's a shame that people misunderstood what he was trying to say.