Tech as the Oil of the 21st Century:
Peter Thiel sees tech as the oil of the 21st century, referring to the “tech curse” similar to the natural resource curse or oil curse. He suggests that a sudden influx of immense wealth from tech can lead to social and political misgovernance.

Defining the Tech Curse:
Thiel introduces the concept of the “tech curse,” comparing it to the natural resource curse experienced by countries with abundant resources. He highlights that a sudden gusher of wealth from the tech industry can result in various societal and political challenges.

Three Variations of the Tech Curse:
Thiel identifies three variations of the tech curse: as a problem for California, a problem for the Democrats, and a problem for the Republicans. Each of these variations represents unique challenges and implications for these respective entities.

Tech Curse for California:
Thiel sees the tech curse as a problem for California, where the concentration of wealth and power in Silicon Valley has led to rising inequality and social tensions.

Tech Curse for Democrats:
The tech curse also poses challenges for the Democrats, who have traditionally relied on Silicon Valley for financial support and political influence. Thiel suggests that the Democrats’ close association with the tech industry may alienate other segments of their voter base.

Tech Curse for Republicans:
The Republicans also face difficulties due to the tech curse, as they struggle to adapt to the rapid technological changes and evolving societal values. Thiel argues that the Republicans need to find ways to engage with the tech industry without compromising their core principles.

The Tech Boom:
California has experienced a “gold rush” of tech innovation in the past 50 years, resulting in the creation of valuable companies. Tech companies like Apple, Google, and Tesla have contributed significantly to California’s economic growth and market capitalization.

Narrow Progress in Bits, Stagnation in Atoms:
While the tech industry has thrived, other sectors like manufacturing and engineering have suffered. Industries dealing with atoms, such as mechanical engineering and chemical engineering, have faced challenges. Computer science has emerged as the only successful field, leading to a narrow focus on the digital world.

California’s Economic Success and Misgovernance:
California has become the fifth-largest economy in the world, surpassing Germany and Japan in terms of per capita GDP. However, this economic success has been accompanied by misgovernance, corruption, and dysfunctional government.

Two Main Vectors of Misgovernance:
Tech industry gains have been diverted into a corrupt government and quasi-governmental real estate rackets. Government workers in California receive a 53% premium over private sector workers, excluding retirement benefits. California spends heavily per student but ranks low in educational scores, highlighting inefficiencies in spending.

Real Estate and the Disappearing Middle Class:
California’s real estate market has become highly distorted, with soaring costs and limited new development. Affordable housing has been replaced by financial windfalls in real estate, pricing out the middle class. The middle class has been largely replaced by government workers, leading to a distorted political landscape.

Conclusion:
The tech boom in California has brought economic success but also created significant distortions and misgovernance. The narrow focus on the digital world has led to stagnation in other industries, while real estate and political dynamics have further exacerbated the challenges faced by the state.

Housing Market Dynamics:
Thiel discusses the peculiar dynamics of California’s housing market, where a slight increase in supply leads to a disproportionate decrease in prices, and vice versa. This inelasticity makes housing a highly dysfunctional financial asset. The homeless situation in San Francisco is used as an example, with Thiel suggesting that the city’s extreme housing costs create a situation where the homeless population is concentrated in certain areas, contributing to the value of upscale neighborhoods.

California’s Comparison to Oil Countries:
Thiel draws parallels between California and oil-rich countries like Saudi Arabia, emphasizing that both rely on a single resource for economic prosperity. He argues that California’s governance is as dysfunctional as that of Saudi Arabia, leading to a misdirection of resources and wealth. Thiel criticizes the superstructure of California’s governance, rather than focusing solely on individual tech companies.

The Superstructure of California:
Thiel compares the wokeism prevalent in California to Saudi Arabia’s Wahhabism, suggesting that both ideologies are largely performative and serve to maintain the status quo. He believes that the true believers in these ideologies are a minority, while the majority passively participate for personal gain.

The Challenge for California:
Thiel emphasizes that California’s dependence on the tech industry makes it difficult to scale its success to the entire United States. He argues that the problems and solutions that work in California may not be applicable to the country as a whole.

The Democratic Party’s Dilemma:
Thiel believes that the Democratic Party faces a challenge in finding an alternative to California’s model, as the state has a strong hold on the party’s future. He criticizes potential presidential candidates like Kamala Harris and Gavin Newsom for their lack of distinct positions and their entanglement in California’s political dynamics. Thiel argues that the Democrats’ main argument is that they represent the future and that embracing technology is necessary to avoid the fate of countries like Germany and Japan, which prioritized social democracy over technological advancement.

California vs. Other Models:
Peter Thiel critiques the current educational system, particularly colleges, for perpetuating outdated models that hinder growth. He sees a stark contrast between California’s zero-sum model and the more dynamic growth-oriented models of Boston and New York City. Thiel suggests that California’s success is unlikely to scale nationally due to its limited growth potential.

The Limits to Growth:
Thiel discusses the Club of Rome’s book, “The Limits to Growth,” published in 1972, which predicted a zero-growth society with limited population and resource growth. He argues that this ideology has shaped California’s policies and contributed to its unique challenges, such as deranged cultural institutions and a lack of broad-based growth.

California’s Transformation:
Thiel traces California’s ideological shift from promoting suburban development under Governor Brown Sr. to emphasizing environmental protection and limiting growth under Governor Brown Jr. He believes California’s focus on tech offers some limited growth but is insufficient to address the state’s broader societal issues.

Challenges for Republicans:
Thiel warns against Republicans solely relying on negating California’s model. He emphasizes the need for a positive agenda and vision that addresses the challenges of a zero-growth society and promotes broad-based, sustainable growth. Thiel criticizes the current Republican approach for leaning too heavily on nihilistic negation, focusing on what they are against rather than what they stand for.

Broad-Based Growth:
Thiel stresses the importance of finding a growth model that is not inflationary, cancerous, or based on narrow real estate schemes. He highlights the example of Governor DeSantis in Florida as a potential model for achieving broad-based growth.

Better Alternatives to California:
Peter Thiel believes that the best of the governors in terms of offering a real alternative to California is trying to tackle it in some ways.

Real Estate Prices:
Thiel cautions that if a high-growth alternative is to be successful, real estate prices must come down and remain affordable. The fact that real estate prices in Florida and Texas have been increasing rapidly in recent years is not evidence of a successful model. It’s a concern that these states are becoming like California in terms of housing affordability.

Housing as a Real and Virtual Asset:
Housing can be seen as both a real asset (a place to live) and a virtual asset (a number on an Excel spreadsheet). A healthier alternative to California would be one where housing is affordable and doesn’t overshoot in value. The focus should be on providing affordable housing for middle-class people, not on making money through housing investments.

Challenge to Achieve a Better Vision:
Thiel challenges people to go beyond criticizing California and to offer a concrete vision for the 21st century that’s better than the California alternative. He emphasizes the need to concretize this vision in relation to China.

Dealing with China:
Thiel proposes a simple two-by-two quadrant for dealing with China: economically hawkish or dovish, and militarily hawkish or dovish. He suggests that the Trump administration’s approach of tariffs without immediate military action made sense.

California’s Strategy:
Peter Thiel presents the “California Quadrant” approach, which involves escaping into the internet, metaverse, and artificial reality rather than competing with China. The “steel-manned” version of California’s strategy is to defeat China through propaganda and convince them to adopt California’s ideals, including environmental regulations and policies.

China’s One-Child Policy:
China’s one-child policy was influenced by a book called “Limits to Growth,” which raised concerns about overpopulation. The architect of the one-child policy, Zhang Jian, was a Maoist China military scientist who encountered the book at a conference in Finland in 1978. The Politburo implemented the one-child policy in 1980, aiming to reduce China’s projected population growth.

California’s Propaganda and China’s Competition:
Thiel suggests that California’s propaganda might have influenced China’s one-child policy, potentially scoring a victory for California. He expresses skepticism about whether California can replicate this success with its current ideological approach. Thiel questions the effectiveness of Wokism and Wahhabism as strategies for competing with China.

Challenge for the Panelists:
Thiel poses a challenge to the other panelists to propose better strategies for dealing with China’s competition. He emphasizes the need to take China seriously and find practical solutions that surpass California’s current approach.