Peter Thiel did a 25 minute video interview on Big Think, a wonderful site if you're looking for video brain food. He answered questions from Scott Summers, Will Wilkinson, Arnold Kling, and others. Embedded below. Full text transcript is available on the page. Some excerpts:
On a decreasing appetite for bailouts:
With respect to Dubai, the basic mistake people made was they assumed that it was all part of the United Arab Emirates. Everybody was in the same boat, Abu Dhabi had lots of money, and they would help Dubai out. In reality, Abu Dhabi was probably quite resentful of the shiny and glittering and fake city known as Dubai and when push came to shove didn't really want to give them more money. And I think that kind of emotional or political or social phenomenon is going to be much more widespread and the question that will come to the fore in the next few years is will Germany bail out Greece or Spain, or Italy, or Eastern Europe? Will the responsible people bailout those they deem to be less responsible? If General Motors goes bankrupt again, will it get a second bailout? Will there be a second bailout for the banks? Will there be a second stimulus bill? I think the answer to all of these things is, no.
On thinking about what the world will look like in 20 years rather than six months:
There have been many people ask many questions about whether the recession will end with the 'U' or 'L' or a 'V' shaped recovery and sort of a lot about the tactical questions, you know, how high is the employment rate going to go, is it ticking down, is things turning a corner. I tend to think the really important questions are not about the next six months, but are about the next 20 years. The next six months is driven by the financial system liquidity, what central banks do, what they don't do. The next 20 years are driven by science, technology, a set of questions that are very different from the ones people are focused on.
On his least favorite economist:
My villain in economics is clearer. I believe the villain is Keynes and there was a Keynes line that in the long run we are all dead. Whether or not that is true, I believe that in the long run Keynesianism will be dead and that the problem with never thinking about the long run is that in the long run, the short run becomes the long run. And I wonder whether the crisis of 2008-2009 was not just a crisis about finance or about technology, but also a crisis about short run thinking and it was a point in time where short run thinking had run out and there was no more time to think about the short term and that actually a lot of long term problems we have been putting off and deferring had finally come home to roost.
On his favorite thinker overall:
My favorite thinker remains a French philosopher named Rene Girard. He developed an account of human nature in which one thinks very hard about the question of imitation and the role it plays in the ways in which culture and societies form.
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Here are my past posts on Thiel. Here's my post of icons / heroes.
Ah, my favorite theory again!
Why bailouts are wrong? They perpetuate inefficiency by masking wrongdoings. For forgiveness, look to the heavens – never to the tax payer.
American carmakers did not learn from Japanese and they suffered for building cars no longer people wanted. Now they learn from the third world how much a job should be really paid for what it is worth or what should be the actual cost of healthcare. Ask those who lost jobs to settle for compensation levels commensurate with what it *really* takes to get it done from overseas and that will compel them to shun profligacy and wake up to what they can really afford – rather than carping over job losses or resorting to suicidal protectionism that perpetuates the anomaly. That is how deficits are managed and eventually recessions to be seen thro.
As Thiel says, the long term is always relevant because the world has been in existence for over a few million years and likely will exist for quiet a few more, well adapting to innumerable short term cataclysms and not dying with each.
I completely agree with his conclusions on short term thinking and long term problems coming home to roost. While our representatives in Washington are being consumed with how to redefine health care in the USA Social Security insolvency is barreling at us like a freight train.
1945 is when WWII ended and the baby boomer generation started to develop en mas. 65 is the age people can start to draw on their Social Security benefits. 1945 + 65 = 2010… the year the baby boom generation begins to retire en mas and withdraw from not only their Social Security but also their pensions, 401ks and are eligible for medicare.
For or against, it doesn’t matter if Washington passes health care because many of our entitlement programs will begin to collapse over the next 5 years. IMHO of course.
How long is the Fed going to keep interest rates at 0%? Washington still thinks that we can spend our way out of this problem by building more pyramids… however were about out of bricks.
This is a bit strange because Keynes devotes a significant part of his masterpiece to the same point about time frames – that most people are much too short term oriented.