Reid Hoffman and Peter Thiel, old friends from their days at Stanford University, talk at the Techonomy conference in Half Moon Bay, Calif.
Peter Thiel acknowledges that the middle class has faced tough times over recent decades — but thinks that technology is unfairly blamed for it.
The billionaire venture capitalist and PayPal founder was asked Sunday at the Techonomy conference in Half Moon Bay, Calif., how he thought the middle class would fare in an increasingly automated world.
“I think it is true that we’ve had a lot of pressure on middle class wages in the U.S. and Western Europe over the last 40 years,” Thiel said. “I think that coincides much more closely with this era of globalization than with technology, which has been going on for hundreds of years.”
Technology gets a bad rap when people discuss the future of labor, he said. History is full of jobs that have been replaced with other jobs, and people have been “wrong” to resist that cycle, he said.
“I’d say that people blame too much on technology, and the real problem is low-wage workers from India, China, places like that,” he said. “I’m not against globalization. But I think that’s the real pressure point on middle class wages in our world. We shouldn’t scapegoat technology for it.”
Thiel was sharing the stage with LinkedIn founder Reid Hoffman, an old friend from Stanford University — the two met as undergrads in a philosophy class. Hoffman also thought that globalization played a larger role in the squeezing of the middle class than technology — and that the impulse to push back on it was a mistake.
“The general reaction people have is, ‘Let’s slow down technology, let’s limit it,’” Hoffman said. “That’s actually, generally speaking, a failing game. Other people aren’t going to slow down technology.”
Thiel also discussed the difference between the profit incentives for founders in different industries.
“When you think about the history of innovation more broadly, the past 200 to 250 years, it’s a sobering fact how many inventors and creators of new things, how little they capture over time,” Thiel said. “You have to create x dollars of value for the world and you have to capture y% of x. And in most cases y equals 0.”
The Wright brothers didn’t make money off of aviation, he pointed out, and even after the advent of the first factories and the beginning of the Industrial Revolution, much of the wealth was still held by the aristocratic classes in Europe. In Silicon Valley, a similar split can be seen between software and cleantech, Thiel said.
“You can say that cleantech was important to get right, but the microeconomics were so hard to come up with something better,” he said. “Most of innovation is more like cleantech. Software is one of the very few categories where y is greater than 0%. It would be a mistake to say software is more important than everything else. But we live in a financialized world. We measure importance by how much money things have made.”