Peter Thiel addresses the National Press Club on Monday, October 31st:
PETER THIEL: Thank you very much for having me here.
Everybody knows we’ve been living through a crazy election year.
Real events seem like the rehearsals for Saturday Night Live. Only an outbreak of insanity would seem to account for the unprecedented fact that this year a political outsider managed to win a major party nomination.
To the people who are used to influencing our choice of leaders, to the wealthy people who give money and the commentators who give reasons why, it all seems like a bad dream.
Donors don’t want to find out how and why we got here. They just want to move on.
Come November 9, they hope everyone else will go back to business as usual.
But it is just this heedlessness, this temptation to ignore difficult realities, indulged in by our most influential citizens that got us where we are today.
A lot of successful people are too proud to admit it since it seems to put their success in question.
But the truth is, no matter how crazy this election seems, it is less crazy than the condition of our country.
Just look at the generation that supplies most of our leaders: the Baby Boomers are entering retirement in a state of actuarial bankruptcy.
64 per cent of those over the age of 55 have less than a year’s worth of savings to their name.
That is a problem, especially where this is the only country where you have to pay up to 10 times as much for simple medicines as you would pay anywhere else.
America’s overpriced healthcare system might help subsidise the rest of the world but that doesn’t help the Americans who can’t afford it and they’ve started to notice.
Our youngest citizens may not have huge medical bills, but their college tuition keeps on increasing faster than the rate of inflation adding more every year to our $1.3 trillion mountain of student debt.
America has become the only country where students take on loans they can never escape, not even by declaring bankruptcy. Stuck in this broken system, millennials are the first generation who expect their own lives to be worse than the lives of their parents.
While American families expenses have been increasing relentlessly, their incomes have been stagnant.
In real dollars the median household makes less money today than it made 17 years ago.
Nearly half of Americans wouldn’t be able to come up with $400 if they needed it for an emergency.
Yet while households struggle to keep up with the challenges of everyday life, the government is wasting trillions of dollars of taxpayer money on faraway wars.
Right now we’re fighting five of them in Iraq, Syria, Libya, Yemen and Somalia.
Now, not everyone is hurting. In the wealthy suburbs that ring Washington DC, People are doing just fine.
Where I work in Silicon Valley, people are doing just great. But most Americans don’t live by the beltway or the San Francisco Bay.
Most Americans haven’t been part of that prosperity.
It shouldn’t be surprising to see people vote for Bernie Sanders or for Donald Trump who is the only outsider left in the race.
Very few people who vote for president have ever thought of doing something so extreme as running for president. The people who run are often polarising.
This election year both candidates are imperfect people to say the least.
Now I don’t agree with everything Donald Trump has said and done and I don’t think the millions of other people voting for him do either. Nobody thinks his comments about women were acceptable. I agree they were clearly offensive and inappropriate. But I don’t think the voters pull the lever in order to endorse a candidate’s flaws.
It’s not a lack of judgement that leads Americans to vote for Trump. We’re voting for Trump because we judge the leadership of our country to have failed.
This judgement has been hard to accept for some of the country’s most fortunate, prominent people.
It’s certainly been hard to accept for Silicon Valley where many people have learnt to keep quiet if they dissent from the coastal bubble.
Louder voices have sent a message that they do not intend to tolerate the views of one half of the country.
This intolerance has taken on some bizarre forms.
The Advocate, a magazine which once praised me as a gay innovator even published an article saying that as of now I am, and I quote “not a gay man”, unquote, because I don’t agree with their politics.
The lie behind the buzzword of “diversity” could not be made more clear.
If you don’t conform, then you don’t count as diverse, no matter what your personal background.
Faced with such contempt, why do voters still support Donald Trump? Even if they think the American situation is serious why would they think that Trump, of all people, could make it better?
I think it’s because of the big things that Trump gets right.
For example: free trade has not worked out well for all of America.
It helps Trump that the other side just doesn’t get it. All of our elites preach free trade.
The highly educated people who make public policy explain that cheap imports make everyone a winner according to economic theory.
But in actual practice we’ve lost tens of thousands of factories, millions of jobs to foreign trade. The heartland has been devastated.
Maybe policymakers really believe that nobody loses or maybe they don’t worry about it too much because they think they’re among the winners.
The sheer size of the US trade deficit shows that something has gone badly wrong.
The most developed country in the world should be exporting capital to less developed countries. Instead the US is importing more than $500 billion every year. That money flows into financial assets, it distorts our economy in favour of more banking and more financialisation and it gives the well-connected people who benefit a reason to defend the status quo.
But not everyone benefits, and the Trump voters know it. I think Trump voters are also tired of war. We’ve been at war for 15 years and we’ve spent more than $4.6 trillion. More than 2 million people have lost their lives and more than 5000 US soldiers have been killed.
But we haven’t won.
The Bush administration promised that $50 billion could bring democracy to Iraq. Instead, we’ve squandered 40 times as much to bring about chaos.
Yet even after these bipartisan failures, the Democratic party is more hawkish today than at any time since it began the war in Vietnam.
Harking back to the no-fly zone that Bill Clinton enforced over Iraq before Bush’s failed war, now Hillary Clinton has called for a no-fly zone over Syria.
Incredibly, that would be a mistake even more reckless than invading Iraq since most planes flying over Syria today are Russian planes.
Clinton’s proposed course of action would do worse than involve us in a messy civil war, it would risk a direct nuclear conflict. What explains this eagerness to escalate the dangerous situation? How can Hillary Clinton be so wildly over-optimistic about the outcome of war?
I would suggest that it comes from a lot of practice. For a long time our elites have been in the habit of denying difficult realities.
That’s how bubbles form.
Wherever there is a hard problem but people want to believe in an easy solution they will be tempted to deny reality and inflate a bubble.
Something about the experience of the Baby Boomers, whose lives have been so much easier than their parents’ or their children’s has led them to buy into bubbles again and again and again.
The Trade Bubble says “everyone’s a winner”, the war bubble says “victory is just around the corner”, but these over-optimistic stories simply haven’t been true and voters are tired of being lied to.
It was both insane and somehow inevitable that DC insiders expected this election to be a rerun between the two political dynasties who led us through the two most gigantic financial bubbles of our time.
President George W. Bush presided over the inflation of a housing bubble so big that its collapse is still causing economic stagnation today. But what’s strangely forgotten is that last decade’s housing bubble was just an attempt to make up for the gains that had been lost in the decade before that.
In the 1990s, President Bill Clinton presided over an enormous stock market bubble and a devastating crash in 2000 just as his second term was coming to an end.
That’s how long the same people have been pursuing the same disastrous policies.
Now that someone different is in the running, someone who rejects the false reassuring stories that tell us everything is fine, his larger-than-life persona attracts a lot of attention. Nobody would suggest that Donald Trump is a humble man. But the big things he’s right about amount to a much needed dose of humility in our politics.
Very unusually for a presidential candidate, he has questioned the core concept of American exceptionalism.
He doesn’t think the force of optimism alone can change reality without hard work.
Just as much as it’s about making America great, Trump’s agenda is about making America a normal country.
A normal country doesn’t have a half-trillion dollar trade deficit. A normal country doesn’t fight five simultaneous undeclared wars.
In a normal country the government actually does its job. And today it’s important to recognise that the government has a job to do.
Voters are tired of hearing conservative politicians say that government never works.
They know the government wasn’t always this broken.
The Manhattan Project, the interstate highway system, the Apollo program, whatever you think of these ventures you cannot doubt the competence of the government that got them done.
But we have fallen very far from that standard.
We cannot let free market ideology serve as an excuse for decline.
No matter what happens in this election, what Trump represents isn’t crazy and it’s not going away.
He points towards a new republican party beyond the dogmas of Reaganism.
He points even beyond the remaking of one party to a new American politics that overcomes denial, rejects bubble thinking and reckons with reality.
When the distracting spectacles of this election season are forgotten and the history of our time is written, the only important question will be whether or not that new politics came too late.