Diary

Book Review: Peter Thiel's Book From Zero to One

 

Peter Thiel and Blake Master's Book: From Zero to One
Peter Thiel and Blake Master’s Book: From Zero to One

Peter Thiel, co founder of Paypal, early investor in Facebook as well as the co founder of the Founders Fund, a major Silicon Valley venture capital fund, has written, along with Stanford student Blake Masters, a masterful book on what should be a centerpiece of Republican policy, which is the development of technology to improve our world.

The title of the book From Zero to One, is talking about breakthrough technological development.  Globalization, which has been the buzzword of development for the past 20 years, he characterizes as from 1 to n development, that is taking technologies already developed, airplanes, nuclear power, national infrastructure such as interstates, the computer industry, and replicating them around the world.  Thiel’s thesis is that since the early 1970’s the pace of zero to one development has dramatically slowed outside of the information technology realm, and that it is this form of development that we need as a global society to move forward.

A key hook, or thought upon which he hangs his exposition is what he calls the contrarian question, or has he defines it and frames it for people that want him to invest in their companies, what do you believe, that few others do? His answer to that question is;

In a world of scarce resources, globalization without new technology is unsustainable.

Our friends on the left and the democratic party have the opinion that technology cannot save us and that it is only by changing the entire structure of western civilization, with the control (by their enlightened leadership) and our future left in the political technocrats of the world.  As Al Gore said in his book, Earth in the Balance;

The environmental crisis is a case in point: many refuse to take it seriously simply because they have supreme confidence in our ability to cope with any challenge by defining it, gatherings reams of information about it, breaking it down into manageable parts, and finally solving it.  But how can we possibly hope to accomplish such a task?  The amount of information and exformation—about the crisis is now so overwhelming that conventional approaches to problem-solving simply won’t work. 

Thus we have the polar opposites regarding how our future unfolds, with the technological optimists, as represented by Thiel, against the technological pessimists, of which Gore was a leader, but who’s infection has spread to engulf almost all of the political left and current leadership of the democrat party.

Thiel postulated that around 1971 our progress became much less since, than in the generation before, and in this he is correct. We went from regularly landing humans on the Moon, supersonic jet development, nuclear power, to figuring out how we can clone an app in order to get a big valuation and sell out to a Google or Facebook.  While Google and Facebook are in and of themselves innovations, they are also intrinsically globalistic in nature, with the majority of their growth being of the 1 to n kind of growth.

Thiel explains that we have traded a faith in the definite future (man will land on the Moon by the end of the decade type), we have traded that for an indefinite faith in the future. He states;

Everyone learned to treat the future as fundamentally indefinite, and to dismiss as extremist anyone with plans big enough to be measured in years instead of quarters. Globalization replaced technology as the hope for the future. 

Many of the problems that our friends on the left in the democrat party complain most loudly about are intrinsically technological.  Whether it is CO2 in the atmosphere, resources, or pollution, these are problems that fundamentally technological, but they insist that only through political solutions (that they conveniently will control and implement) that they will save the world.  Thus, as the pace of technological progress continues to slow, and the problems grow, the solutions from the left (political) become more and more strident, until we get to the point where, as exhibited in New York recently, the environmental movement is openly calling for the overthrow of our current form of government, to give control to a new and “better” socialistic society that is even more hidebound by its politics!

While Thiel does not get into this political aspect, keeping his comments within the realm of business, there are lessons that the Republican party can gain from his book.

His indirect statement on the subject is this;

There simply aren’t enough resources in the world to replicate old approaches or redistribute our way to prosperity.

Again, he is right.  We cannot continue to do things the way that has been the norm for the past several decades, nor will the taking of all of the productive income of the 1% do anything to solve poverty other than create more of it.  This is where the Republican party has a major opportunity, now and in 2016.

The Republican Party as the Party of Technology

During the Eisenhower and Reagan years the Republican party was the party of technology.  During the 1980’s the high tech industry was solidly behind the Republican brand.  Reagan more than doubled NASA’s budget, and began what was derisively called Star Wars.  Well, almost 30 years later it is called the Iron dome, and one can bet that the people of Israel have become true believers.  The Internet began its meteoric rise after the government released control of it in the early 1990’s and it was the lack of taxation that has allowed it to grow into a very significant contributor to our GNP.  However, during the 1990’s the next generation of technologists began drifting away from the republican party.  However, I think that the time is right to recapture this demographic, if the Republican party will embrace the technological optimists ideas for moving forward to solve the legitimate problems that the left identifies, but cannot solve only through coercive political means.

Republican congressman [mc_name name=’Rep. Dana Rohrabacher (R-CA)’ chamber=’house’ mcid=’R000409′ ] (R) CA in the 1990’s floated a “Zero G Zero Tax” bill that would remove from taxation, and provide an investment tax credit, for companies that invested in new technologies and ways of doing business in space.   I wrote an article about this several years ago that is now on the National Space Society website.  The ZGZT legislation has had many sponsors and actually almost passed in the House of Representatives in 2001. The bill failed because the congressional budget office examined the tax consequences of the bill at $10 billion over its 20-year life. This was not examined for its positive aspects. Today there is zero revenue by any company that would be covered under the ZGZT legislation. In order to cost the government $10 billion, the companies have to make a profit of $28.57 billion over that time period (assuming the standard 35% corporate tax rate). If we use a conservative 10% profit margin for these companies, this implies that the aggregate revenue over the 20-year period is $285.7 billion!

This is just  the beginning.  The democrats, after taking congress in 2006 starting cutting back other advanced technology research in nuclear fission and fusion power.  If, as the left claims, CO2 emissions will end civilization, then we have a duty to heavily invest, with as much private incentives as possible, nuclear power in all of its forms.  The argument against fusion is that we have funded it but it has had no results.  This is a typical way the government kills technology, by investing just enough to give the appearance of support, but never enough to actually make progress.  It is like telling NASA to make plans to go to the Moon, and giving them only half the funds required to do it!

Fission, fusion, fuel cells, aerospace, all of these things could be supported without putting the nation into bankruptcy.  Indeed, wise investments, and investment incentives will lead to renewed economic growth, high paying jobs, a revival of real education in the nation, and it will solve these big problems, without sacrificing lady liberty on the altar of panic about the future.

In the end this is what Thiel is talking about in his book.  We made a mistake in turning away from investing in technology development a generation ago.  Reagan tried to reverse it but in the intervening years, technology has become a four letter word to the democrats.  It is time to take the mantle of technology leadership away from them, and at the same time, help all of our fellow countrymen and women build a better future..