Tuesday, February 7, 2012

The American Challenge: Thiel, Tabarrok, and Servan-Schreiber

Ever since 2008 I have been thinking about a question and set of assumptions offered by Peter Thiel on the state of the economy, the future of innovation, and science in general. For those who know Thiel only as that guy on the movie "The Social Network", he is a Stanford grad, uber-libertarian, foil to higher education, founder of PayPal, venture capitalist, and on and on. In November 2008 he was interviewed on Uncommon Knowledge, where he was very critical of the US economy's ability to innovate and create. According to Thiel, our economic growth, in the aggregate and on a per-capita basis, has spectacularly under-performed expectations.

That charge sounds ridiculous on its face considering that I am typing this on a personal computer, with a second monitor, and have an iPhone and iPad within reach. But consider Thiel's charge from a Nov 2011 New Yorker article "No Death, No Taxes":
"The information age has made Thiel rich, but it has also been a disappointment to him. It hasn’t created enough jobs, and it hasn’t produced revolutionary improvements in manufacturing and productivity. The creation of virtual worlds turns out to be no substitute for advances in the physical world. “The Internet—I think it’s a net plus, but not a big one,” he said. “Apple is an innovative company, but I think it’s mostly a design innovator.” Twitter has a lot of users, but it doesn’t employ that many Americans: “Five hundred people will have job security for the next decade, but how much value does it create for the entire economy? It may not be enough to dramatically improve living standards in the U.S. over the next decade or two decades.” Facebook was, he said, “on balance positive,” because of the social disruptions it had created—it was radical enough to have been “outlawed in China.” That’s the most he will say for the celebrated era of social media."