Welcoming Remarks: Raihan Salam introduces the 33rd Annual Walter B. Wriston Lecture, expressing excitement to host Peter Thiel to discuss “the end of the computer age.” Salam acknowledges the absence of Don Smith, a trustee and friend, highlighting his dedication to ideas and positive impact, as well as his warmth and wisdom.
Keynote Speaker Introduction: Speaker 01 emphasizes the significance of the Wriston Lecture in shaping intellectual discourse in America. The lecture platform is renowned for presenting bold perspectives that challenge conventional wisdom. James Q. Wilson’s 1995 Wriston Lecture addressed American dissatisfaction despite prosperity and power, highlighting disorder signs like crime, failing schools, and cultural decline. Wilson attributed these issues to the dissolution of the family, a controversial view at the time.
Current Disorder and Policy Challenges: Speaker 01 draws attention to rising disorder, not limited to New York City, as a consequence of rolling back successful policies advocated by Manhattan Institute scholars. Mayor de Blasio’s presidential campaign may have faltered, but his preposterous policies are gaining traction through other radical candidates. New York and the nation face crises such as opioid addiction, single parenthood, and an education system prioritizing bureaucrats over students. Higher education curricula often indoctrinate students to be ashamed of Western civilization and disdain private enterprise and economic freedom. Campus culture is criticized for its limited ideological diversity, ranging from Noam Chomsky to Robespierre.
The Manhattan Institute’s Approach: MI scholars challenge conventional thinking, offer bold solutions, and stand for principles like rule of law, public safety, free markets, and the importance of culture. In investing and policy, the ability to adapt while maintaining core convictions is essential. The Institute’s new president, Reihan Salam, embodies this spirit of independence and innovative thinking.
Peter Thiel’s Contributions: Thiel is an entrepreneur, venture capitalist, and public intellectual known for his independence, persistence, and innovative thinking. He co-founded PayPal, was an early investor in Facebook, and founded Palantir and Founders Fund. Thiel criticizes the current state of technological innovation, arguing that it has become too focused on marginal improvements rather than transformative breakthroughs.
The Importance of Scale: Thiel emphasizes the importance of scale in business and innovation. When something is good, more of it can be better, but there is also a qualitative element where reaching a certain scale can enable qualitatively different achievements. Scale can also have a normative dimension, such as expanding capitalism to transform the world on a trans-political level.
Challenges of Scale: Thiel acknowledges that the transformation of scale does not always work in a libertarian direction. He cites Margaret Thatcher’s embrace of the EU as an example of how a trans-political approach can lead to unintended consequences and bureaucratic overreach. Questions about scale and its implications for innovation, free markets, and society remain complex and challenging.
00:14:10 Tech Scaling: Innovation, Democracy, and the Problem with Big
AI and Communism: Peter Thiel suggests that the rise of AI, big data, and centralized databases could lead to a communist-like surveillance state. He argues that scaling up can sometimes lead to negative consequences, such as loss of individual liberty and innovation.
The Limits of Scaling: Thiel uses the example of democracy to illustrate the point that there is a limit to how far scaling can go before it becomes counterproductive. He argues that innovation does not scale well and that the tech industry’s growth could lead to slower innovation.
Science and Big Science: Thiel criticizes big science for its groupthink and its tendency to obscure individual differences. He argues that the belief in a universal knowledge produced by big science is a lie.
The Obamas and Education: Thiel criticizes Michelle and Barack Obama for their statements about the importance of attending prestigious universities. He argues that this is a lie because the quality of education is not necessarily correlated with the fame or prestige of the university. He suggests that Harvard should be seen as a nightclub rather than a university.
00:19:50 Challenges of Global Scale in the U.S.-China Rivalry
Changes in the Global Landscape: The United States has historically pursued a strategy of expansion and global leadership, aiming to operate on a large scale and influence world affairs. In the modern context, particularly in light of the rivalry with China, the effectiveness of this strategy is being questioned.
Globalization’s Four Vectors: Globalization involves four primary aspects: movement of goods, movement of people, movement of capital, and movement of ideas. The United States previously benefited from scale in all these areas, gaining outsized returns.
Current Advantages and Challenges: Today, the United States retains a strong advantage primarily in finance and the Internet. However, there is a lack of full trust in banks and tech companies, leading to challenges in supporting them as national champions.
Rivalry with China: The rivalry with China necessitates a reevaluation of the United States’ global strategy. Simple bigness may not be the optimal approach in the face of a similarly large rival.
00:23:49 Scale, Immigration, and Trade in the U.S.-China Rivalry
China’s Scale: China has a significant advantage in scale compared to the U.S. China has 7 out of the 10 largest container shipping ports, while the largest U.S. port, Los Angeles, is only number 11. China has had the greatest internal migration of any country in the last 20-30 years. Shenzhen, China grew from 60,000 people in 1980 to 12 million in the last 40 years.
U.S. Challenges: The U.S. has difficulty scaling people and infrastructure. It costs $3.8 billion to build one mile of subway in New York City, compared to $400 million per mile in Paris. Zoning restrictions and regulations limit the ability to build new things and transportation.
AOC’s Argument: AOC argued that Amazon coming to New York would drive up rents and prices. This argument highlights the inelasticity of real estate in New York due to zoning restrictions. Henry George’s economics theorem suggests that in a restricted and regulated city, the inelasticity of real estate can be complete, leading to gains in the economy flowing to landlords.
Competition with China: The U.S. needs to rethink its competition with China in terms of scale. The U.S. cannot simply go subscale like Israel or Switzerland. The U.S. needs to find areas where it can scale in a good way and win.
Shift from Quantity to Quality: The U.S. should shift from quantity (scaling in size) to quality. This means focusing on innovation, intensive growth, IP protection, and fewer but elite universities. This shift to quality is the U.S.’s comparative advantage over China.
Challenges in Understanding the China Rivalry: The U.S. has not asked questions about scale for a long time. The China rivalry has remained obscure due to ideological blinders on both the left and right.
Ideological Blinders: The left has focused on social justice and equality, ignoring the importance of scale and competition. The right has focused on free trade and globalization, ignoring the challenges posed by China’s scale.
00:29:14 AI, American Identity Politics, and the Hope for the Future
Identity politics has become a distraction from focusing on the issues that matter for the United States as a whole. The left needs to move beyond identity politics to focus on the scale that is needed to address the country’s problems. The right needs to rethink the doctrine of American exceptionalism, which has led to a lack of self-awareness and poor decision-making. The United States should settle for greatness in the 2020s instead of striving for exceptionalism.
AI and Communism AI can be used to monitor people and know more about them than they know about themselves. This could enable communism to work as a political theory, if not as an economic theory. China’s love for AI and hatred for cryptocurrencies is a sign of its communist leanings. People are creeped out by AI because it is invasive and potentially oppressive.
Hopes for the Future of America The United States needs to find a way back to more intensive growth. The focus on globalization has divided the world into developing and developed countries, with the developed countries stagnating. Breaking this logjam would create a future that is different from the present. Progress needs to happen across the board, not just in narrow areas like iPhone apps.
00:35:24 Tech Industry Innovation and the Illusion of Automation
Silicon Valley’s UBI Perspective: Silicon Valley’s belief is that the rapid advancement of technology, particularly automation, is leading to job displacement and the potential need for universal basic income (UBI).
Trump’s Nationalistic Appeal: Trump’s political success is partially attributed to his ability to connect with those left behind by economic changes, particularly in industries affected by automation.
Thiel’s Disagreement: Thiel challenges the notion that runaway technological progress is a significant threat, arguing that the data does not support the idea of widespread job loss due to automation.
Automation’s Progression: Thiel highlights the long history of automation since the Industrial Revolution and suggests that the rate of automation has slowed in recent years.
Impact on the Economy: Thiel points out that sectors resistant to automation, such as non-tradable service jobs like kindergarten teachers and nurses, have become larger parts of the economy, contributing to the slowdown in productivity gains.
Silicon Valley’s UBI Discussion: Thiel compares the UBI discussion in Silicon Valley to identity politics, suggesting that it serves as a distraction from more pressing issues.
Lack of Innovation in Silicon Valley: Thiel criticizes the tech companies in Silicon Valley for not innovating enough and suggests that the political pushback against them is partly due to this lack of innovation.
Positive Contributions: Thiel acknowledges that tech companies have done some good things, but argues that the list of positive contributions is lacking, with self-driving cars being one of the few notable achievements.
00:38:32 Challenges of Innovation in Technology and Science
Innovation and Scale: Thiel believes that the transition from horse to car was a more significant innovation than the development of self-driving cars, as the latter does not require a fundamental change in scale or technology. Thiel emphasizes the challenges of understanding complex systems at large scales, leading to specialization and potential self-policing within expert communities.
Science and Research: Thiel mentions an anecdote about Nobel Prize winner Bob Laughlin, who investigated other scientists at Stanford for alleged fraudulent research, leading to catastrophic consequences for Laughlin’s reputation and funding. Thiel argues that forbidden speech and unasked questions often indicate underlying truths that should be acknowledged.
American Exceptionalism: Thiel critiques the notion of American exceptionalism, suggesting it is too abstract and prevents discussions about specific details and issues. He believes that focusing on questions of detail and scale will help frame the issues more effectively. Thiel views the rivalry with China as an opportunity to re-evaluate scale questions and push the country to consider its advantages and areas of focus. He sees this topic as one of the few issues that can foster bipartisan discussion and agreement.
Abstract
The Significance of Scale: Peter Thiel’s Insightful Perspective
In an era of unprecedented technological and social change, Peter Thiel’s discourse at the 33rd Walter B. Wriston Lecture provides profound insights into the concept of scale, its impact on society, and the challenges it poses in various domains. Raihan Salam’s introduction and Paul Singer’s acknowledgment of the lecture’s tradition set the stage for a thought-provoking exploration of societal issues, technological innovation, and the critical interplay between scale and progress.
The Essence of the Lecture: A Synthesis of Ideas
The lecture, woven through various segments, underlines a central theme: the multifaceted implications of scale in modern life. James Q. Wilson’s 1995 lecture is recalled to contextualize America’s discontent amidst prosperity, highlighting issues like crime, educational failure, and cultural decline. Today, similar patterns of disorder resurface, exacerbated by policies that hinder successful initiatives, a crisis in education, and a cultural shift in higher institutions that often undermines Western civilization’s achievements.
The Manhattan Institute’s role in challenging established thinking frames the discussion, underscoring the importance of rule of law, free markets, and cultural significance. Thiel, celebrated for his entrepreneurial and intellectual prowess, critiques the modest ambitions of our technological era, advocating for transformative innovations over incremental advancements. He underscores the significance of free enterprise and open inquiry in fostering groundbreaking innovations.
The Complex Dynamics of Scaling
Thiel’s analysis extends into the tech industry, where the shift from libertarian ideals in cryptocurrency to centralized AI raises alarm about surveillance and individual autonomy. The lecture delves into the dichotomy of scaling, where it can yield both positive and negative outcomes, such as in the context of democracy and Silicon Valley’s network effects.
The critique intensifies when addressing the stagnation in big tech and science, where larger structures seem to impede rather than accelerate innovation. The lecture also spotlights the contradictions in educational narratives presented by figures like the Obamas, challenging the perceived merits of elite education.
Globalization, Scale, and the U.S.-China Rivalry:
Globalization involves four primary aspects: movement of goods, movement of people, movement of capital, and movement of ideas. The United States previously benefited from scale in all these areas, gaining outsized returns. Today, the United States retains a strong advantage primarily in finance and the Internet. However, there is a lack of full trust in banks and tech companies, leading to challenges in supporting them as national champions.
The rivalry with China necessitates a reevaluation of the United States’ global strategy. Thiel argues for a reevaluation of the pursuit of scale, particularly in sectors where the US holds clear advantages, such as finance and the Internet. Simple bigness may not be the optimal approach in the face of a similarly large rival.
China has significant advantages in scale compared to the U.S. China has 7 out of the 10 largest container shipping ports, while the largest U.S. port, Los Angeles, is only number 11. Shenzhen, China grew from 60,000 people in 1980 to 12 million in the last 40 years. The U.S. has difficulty scaling people and infrastructure. AOC argued that Amazon coming to New York would drive up rents and prices. This argument highlights the inelasticity of real estate in New York due to zoning restrictions. The U.S. needs to rethink its competition with China in terms of scale.
Tech, Economic Automation, and the Political Divide: Silicon Valley’s UBI Perspective and Thiel’s Disagreement
Silicon Valley believes that the rapid advancement of technology, particularly automation, is leading to job displacement and the potential need for universal basic income (UBI). Thiel challenges this notion, arguing that the data does not support the idea of widespread job loss due to automation. He highlights the long history of automation since the Industrial Revolution and suggests that the rate of automation has slowed in recent years. Thiel criticizes the tech companies in Silicon Valley for not innovating enough and suggests that the political pushback against them is partly due to this lack of innovation.
Innovation, Science, and National Exceptionalism: Thiel’s Insights
Thiel believes that the transition from horse to car was a more significant innovation than the development of self-driving cars, as the latter does not require a fundamental change in scale or technology. Thiel mentions an anecdote about Nobel Prize winner Bob Laughlin, who investigated other scientists at Stanford for alleged fraudulent research, leading to catastrophic consequences for Laughlin’s reputation and funding. He argues that forbidden speech and unasked questions often indicate underlying truths that should be acknowledged. Thiel critiques the notion of American exceptionalism, suggesting it is too abstract and prevents discussions about specific details and issues. He sees the rivalry with China as an opportunity to re-evaluate scale questions and push the country to consider its advantages and areas of focus.
Navigating Global Scale and Rivalries
A significant portion of Thiel’s lecture is devoted to the US’s strategic approach in a world marked by the rise of other major powers like China. He suggests a nuanced approach to scaling, focusing on areas of comparative advantage. This perspective is further elaborated in the context of real estate and the arguments presented by figures like AOC, emphasizing the need to reconsider migration policies and welfare programs.
Ideological Perspectives and Future Prospects
Thiel does not shy away from critiquing ideological biases on both the left and right, which often obscure critical issues like the China rivalry. He calls for a shift from quantity to quality, focusing on innovation, intensive growth, and a leaner but more effective educational system. Thiel’s call for academic freedom and the pursuit of forbidden questions reflects his commitment to unearthing suppressed truths.
His critique of American exceptionalism and the emphasis on detailed, specific advantages over abstract notions set the tone for a pragmatic approach to national and global challenges. The rivalry with China, seen as an opportunity for bipartisan discussion and progress, encapsulates the lecture’s overarching message: the need for a balanced, innovative, and responsible approach to scaling in the modern world.
Concluding Thoughts: A Call for Innovation and Accountability
In his concluding remarks, Thiel dismisses the urgency of UBI in the face of automation, urging Silicon Valley to focus on genuine innovation. He raises concerns about the challenges of scaling technologies and criticizes the specialization in modern science. Thiel’s call for academic freedom and the pursuit of forbidden questions reflects his commitment to unearthing suppressed truths. His critique of American exceptionalism and the emphasis on detailed, specific advantages over abstract notions set the tone for a pragmatic approach to national and global challenges. The rivalry with China, seen as an opportunity for bipartisan discussion and progress, encapsulates the lecture’s overarching message: the need for a balanced, innovative, and responsible approach to scaling in the modern world.
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