Introduction of the Forum:
Trey Grayson, the director of the Institute of Politics, welcomes the audience to the John F. Kennedy Jr. Forum. The forum is a partnership between the IOP and the Harvard Program on Constitutional Government under Professor Harvey Mansfield.

Introduction of the Moderator:
Professor Harvey Mansfield introduces the moderator, Neil Ferguson, a renowned historian and author.

Credentials of Neil Ferguson:
Ferguson is the Lawrence A. Tisch Professor of History at Harvard. He is a Senior Research Fellow at Jesus College in Oxford and a Senior Fellow at the Hoover Institution at Stanford. He has written extensively on economic history, war, and empire.

Introduction of the Speaker:
Professor Mansfield introduces the speaker, Peter Thiel, a successful entrepreneur, investor, and author.

Background of Peter Thiel:
Thiel was born in Germany and graduated from Stanford and Stanford Law School. He clerked after law school and worked on Wall Street for three years. He founded PayPal and Clarion Capital, a hedge fund. He was an early investor in Facebook.

Thiel’s Reputation:
Thiel is known as an avowed libertarian and a reflective thinker. He is considered more interesting and insightful than other billionaires like Warren Gates and Bill Buffett.

Silicon Valley’s Current State:
Peter Thiel does not believe we are in a full-blown second dot-com bubble. Businesses are being built more incrementally, and valuations are nowhere near the levels of the late 1990s. Optimism around Silicon Valley is focused on computers and the internet, but it has not moved the dial on the overall economy.

Identifying the Next Big Thing:
Thiel emphasizes the difficulty in identifying the next successful company due to the non-repeatable nature of major technological innovations. He cautions against following trends or seeking the next big thing in a category, as it’s often too late by the time a trend emerges.

Two-Speed World of Technological Innovation:
Thiel argues that we are living in a two-speed world where technological progress is happening rapidly in computers and the internet but not in other areas.

Stagnation in Transportation and Energy:
Thiel highlights the lack of innovation in transportation, with speeds not improving since the 1970s. He points to the stagnation in energy, where conventional and alternative energy sources are becoming more expensive.

Concern About Biomedical Progress:
Thiel expresses concern about the slowdown in biomedical progress, with fewer new drugs in the pipeline and large pharmaceutical companies reducing research staff.

Virtual vs. Physical Progress:
Thiel draws a distinction between progress in the world of bits (virtual, digital) and the world of stuff (physical). He observes progress in computers and finance (computer engineering and financial engineering), but not in other areas involving physical goods.

Reasons for Concentrated Innovation in Virtual World of Bits:
Risk aversion and over-regulation in non-virtual fields Financial incentives in computer engineering vs. other engineering fields Lack of funding and prioritization for science and engineering Conservative argument: progress requires sacrifice motivated by war

Reasons for Stagnation in the World of Stuff:

Regulation and risk aversion Declining interest in sacrifice and military-motivated projects

Libertarian Perspective:
Excessive regulation and risk aversion have hindered progress in non-virtual fields Lack of funding and prioritization for science and engineering

Conservative Perspective:
Progress requires sacrifice and is often motivated by war The end of the Cold War and the Apollo-Soyuz docking may have contributed to the decline in progress in certain fields

Liberal Perspective:
Lack of funding and prioritization for science and engineering Deprioritization of these fields in favor of other societal concerns

Tech Industry Overemphasis:
Peter Thiel believes that the tech industry, being in a bubble, overestimates the impact of computers and technology while undervaluing other areas like agriculture.

Disconnect with Public Opinion:
Thiel highlights the discrepancy between the optimistic views of tech experts and the pessimistic sentiments of the general public regarding the future.

Critique of Liberal Conventional Wisdom:
Thiel presents a critique of the liberal belief that deregulation led to inequality. He argues that it was the overregulation in other sectors that stifled innovation and trapped people in underperforming industries.

Deregulation of Technology:
Thiel advocates for heavy deregulation in the tech industry, believing that it has forced people to focus on other areas, leading to innovation in computers and finance but neglecting other important sectors.

Slowdown in Technological Progress:
Thiel asserts that there has been a slowdown in technological progress, particularly in sectors like agriculture, leading to problems like food price increases and social unrest in the Middle East.

Keynesian Theory and Technological Progress:
Thiel argues that Keynesian economic theories work well in periods of rapid progress, but they become problematic when there is no progress. He believes that many current economic debates center around a debate about history, using the 1930s as a data point.

Political Challenges:
Thiel laments the lack of serious discussions on real issues in the political process. He believes that discussing growth challenges and deficit problems can put candidates in an unelectable position, leading to a chaotic austerity.

Introduction:
Niall Ferguson established guidelines for audience participation during a presentation. These rules were intended to ensure orderly and productive engagement with the speakers.

Rules of Engagement:
1. Identification: All questioners were required to identify themselves before asking a question.
2. Journalists: Journalists were not permitted to ask questions.
3. Brevity: Each person was limited to one brief question. Speeches were prohibited.
4. Question Format: Questions had to be clearly formulated with a question mark at the end.
5. Microphones: Microphones were placed strategically for audience members to use.

Example of Audience Participation:
An individual named Ari Cole, an alumnus of the Kennedy School and a physician, thanked Facebook for its positive impact on the world and specifically mentioned Mark Zuckerberg. Cole posed a question regarding the use of Facebook’s technology to support electronic medical records (EMR) systems in hospitals. He highlighted the need for a backup system for EMRs in case of system crashes, especially in critical care situations. Cole suggested that Facebook’s platform could be leveraged for storing and sharing medical images, notes, and encrypted communications between healthcare providers. He emphasized the potential of Facebook to contribute to saving lives and inquired about the possibility of the company developing a medical records backup system.

Peter Thiel’s Response:
Thiel stated that he could not provide a direct answer due to Facebook’s quiet period after filing its S1. He suggested broadening the discussion beyond Facebook and considering the use of technology more generally to address the challenges in healthcare.

Stagnation in Healthcare Technology:
* Despite being the world’s most expensive healthcare system, the US faces technological stagnation.
* Peter Thiel emphasizes the lack of technocratic solutions and a focus on minor issues instead of engineering solutions.
* The mindset of policymakers overlooks the importance of implementing technological advancements in healthcare.

Luck vs. Hard Work:
* Thiel acknowledges his fortune in being at the right place and time, but he emphasizes the significance of hard work.
* He discourages viewing success solely as a result of luck or brilliance, arguing that it’s a lazy approach.
* Thiel stresses the importance of thorough research and analysis in investing, rather than relying on chance.

Investment Success Rate:
* Out of approximately 140 businesses Thiel invested in over 12 years, slightly more than 50% succeeded.
* Thiel acknowledges that this success rate is not as high as desired but is significantly better than random lottery-type odds.

Nature of the Problems:
Europe and the US face a lack of growth, leading to a zero-sum game mentality where countries compete for resources. Without growth, there is no progress, and societies become stagnant. The problem is not limited to Europe; the US also faces the risk of a lost generation and unsustainable deficits. Japan is another developed country struggling with similar issues.

Globalization and Technology:
Globalization has displaced an emphasis on technology, leading to a mindset where developing countries copy developed countries. This pro-globalization narrative suggests that nothing new will happen in developed countries because they are already developed.

Developing the Developed World:
The question arises: how to develop the developed world and reignite growth? Deregulation, realism, and tackling specific problems, such as energy, are important aspects of addressing this challenge. High energy prices act as a barrier to innovation and progress.

Additional Points:
The developed world needs to rediscover its entrepreneurial spirit and willingness to take risks. Governments should create an environment that encourages innovation and investment. Education systems should focus on fostering creativity and problem-solving skills.

Peter Thiel’s Critique of Higher Education and the Education Bubble:
Peter Thiel believes there is a serious bubble in education, driven by the belief that it is the best investment and the key to success. He criticizes the lack of focus on the return on investment in education and the absence of discussions about its value and purpose. Thiel sees parallels between the education bubble and the housing bubble, with subprime education being the worst part.

Thiel’s Advice on Learning and Innovation:
He emphasizes the importance of intrinsic motivation and learning for the sake of the subject matter rather than just winning the tournament of education. Thiel suggests skipping grades if possible to accelerate learning and encourages parents to support their talented children in doing so. He recommends playing chess as a valuable learning activity, highlighting its benefits for developing strategic thinking and problem-solving skills.

Thiel’s Views on Environmentalism and Government Regulations:
Thiel acknowledges the positive role environmentalism has played in regulating industries and improving air pollution. However, he criticizes the buildup of regulations without proper evaluation of their cost-benefit trade-offs. Thiel advocates for more realism and honesty in environmentalism, considering alternatives like nuclear power with a smaller carbon footprint.

Nuclear Power vs. Renewables:
Peter Thiel believes that nuclear power is a more reliable and cost-effective energy source compared to fashionable green technologies like wind, hydro, and biomass. He emphasizes the need for a pragmatic approach, focusing on technologies that can work at a lower cost than existing ones. Thiel expresses pessimism about the prospects of new technologies and suggests investing in viable alternatives rather than solely relying on unproven solutions.

Deregulation and Nuclear Power:
Thiel acknowledges that nuclear power cannot be completely deregulated due to issues like nuclear waste and military uses. He stresses the importance of finding a balance in regulation to avoid excessive delays and obstacles that hinder the development of nuclear power plants. Thiel points out the negative consequences of overregulation, leading to a situation where alternatives to expensive oil become even more expensive.

Open Intelligence:
Thiel acknowledges a question about his investments in Palantir and Quid, companies focused on extracting insights from open information. He recognizes the potential for innovation in open intelligence but suggests that the question is too broad to provide a specific answer.

Big Data Challenges and Opportunities:
The computer revolution has brought vast amounts of data, overwhelming individuals and organizations with information overload. Companies and governments struggle to manage and utilize this data effectively, leading to inefficiencies and missed opportunities. Consumer applications could assist individuals in discovering products and services tailored to their needs, leveraging data insights.

Palantir’s Role in Data Management:
Palantir, a software company founded by Peter Thiel, aims to address big data challenges in national security and enterprise contexts. It utilizes technology developed at PayPal to combat fraud and applies it to prevent terrorism, conspiracies, and criminal activities. The sheer volume and diversity of data pose significant hurdles, requiring innovative approaches to combine and analyze information from various sources.

Technological Solutions for Security Concerns:
Peter Thiel emphasizes the importance of technological solutions to security problems, particularly in preventing terrorist attacks. He argues that the absence of such solutions often leads to draconian responses and a reduction in civil liberties. Thiel believes that software capable of connecting dots and preventing attacks is not only morally right but also utilitarian in terms of cost-benefit analysis.

Balancing Innovation with Government Involvement:
Corinne Kersey raises the question of balancing unique businesses and investments with government involvement in addressing complex issues like healthcare. Thiel acknowledges the need for innovative and unique businesses to drive important innovations. He proposes the appointment of individuals with diverse backgrounds, such as engineers, to government positions to bring fresh perspectives and solutions to challenges. Finding the right balance between government involvement and private innovation is crucial to foster creativity and address societal problems effectively.

Government and Technological Progress:
Peter Thiel believes that a government aggressively pushing science and technology would lead to technological progress. However, he notes that the current government is not focused on this and does not prioritize scientific advancement.

The Manhattan Project Example:
Thiel cites the Manhattan Project as an example of government-led scientific achievement. He highlights the rapid development of the nuclear bomb under government direction.

Government vs. Private Sector:
Thiel presents the scientific pro-government perspective, which argues that government-organized scientists can achieve more than the private sector. He suggests that this perspective is outdated and no longer widely held.

Lack of Vertical Innovation:
Thiel criticizes the current government for focusing on horizontal solutions, such as copying and distributing existing technologies, rather than vertical innovation, which involves creating new things. He emphasizes that both Democrat and Republican parties prioritize horizontal expansion over vertical innovation.

Warfare and Innovation:
Niall Ferguson raises the question of whether conflict is necessary for federal government innovation. Thiel suggests that peace may lead to welfare-focused policies, while warfare can stimulate innovation.

Motivation for Technological Progress:
War has been a motivator for technological progress, but its unthinkable nature today may limit its effectiveness. Identifying other motivators, such as terrorism and climate change, is crucial.

Government’s Inability to Respond:
Major governments, including the federal government, struggle to respond to current threats with groundbreaking innovations. The question of why this occurs is complex and difficult to answer.

Lack of Priority and Understanding:
These threats are not seen as priorities, and technology is viewed as self-sufficient. The belief that these problems will solve themselves prevails.

Clean Energy Investments:
Public good and government’s role in subsidizing clean tech are acknowledged. The approach has been a financial portfolio theory, lacking substantive consideration of what might work.

Criticism of Obama’s Solyndra Disaster:
Obama’s response should focus on the need for high-risk, high-reward investments rather than avoiding failures.

Clean Tech Companies and Substantive Issues:
Clean tech companies that demonstrate success are lacking, and the government does not adequately address substantive issues such as technology effectiveness. Political critiques focus on procedural violations rather than the technology’s viability. Ethical issues are less significant if the technology works, as seen in the case of the Transcontinental Railroad.

The Long-Term Picture and Genetic Engineering:
Long-term wealth creation requires a focus on innovation and technological advancement. Genetic manipulation and IQ enhancement could potentially lead to a highly intelligent species, unlocking vast wealth and resources.

Ethical Considerations and the Perfect Human Race:
Genetic engineering of a perfect human race raises ethical concerns and may not be widely accepted or desirable.

Malthus and Technological Progress:
Malthus’s prediction of population growth outpacing resources was accurate until the Industrial Revolution. The exponential technological progress of recent centuries has been an exception to the historical norm. The potential end or deceleration of this progress poses a significant challenge.

The Role of Technology in K-12 Education:
While there has been progress in the world of bits, there has been little innovation in K-12 education. The technological approach to education would focus on increasing the number of students taught by talented teachers. Current trends indicate a movement towards smaller class sizes, not larger ones.

Government Efficiency and Technological Solutions:
Many areas of government could operate more efficiently by adopting a “do more with less” approach. Technology can potentially improve healthcare, education, and other sectors.

The Decision to Sell a Business:
Entrepreneurs face the difficult decision of when to relinquish control and sell their companies. In the case of PayPal, the decision to sell was influenced by the presence of monopoly competitors. Selling a business often means stopping its innovation cycle.

The Founding Period and Innovation:
Peter Thiel believes that the founding period of a company is crucial for innovation. Once the founding period ends, the company often becomes more bureaucratic and less innovative.

Apple as an Example:
Thiel argues that Apple made a mistake in 1985 when they decided that computers were like Pepsi and that there would be no more innovation in the industry. This led to the ousting of Steve Jobs, the company’s founder. Jobs eventually returned to Apple and led the company to another 14 years of innovation.

Founders and Innovation:
Thiel believes that businesses led by founders are more likely to innovate than those led by non-founders. He argues that founders should stay in control of their companies as long as possible to ensure continued innovation.