Tuesday, November 1, 2016

Peter Thiel Economics

Many view billionaire Silicon Valley operator Peter Thiel a libertarian. Indeed, he calls himself a libertarian. But he is far from such. It is a stretch to even call him a conservative in the old school sense.

Yesterday, Thiel spoke at the National Press Club in Washington D.C. in support of Donald Trump's presidential run. It provided us insight into Thiel's real thinking:

At one point, he argued for a government that isn't broken and remarkably said this:
[Voters] know the government wasn't always this broken. The Manhattan Project, the Interstate Highway System, and the Apollo Program — whatever you think of these ventures, you cannot doubt the competence of the government that got them done. 
Government big spending programs and government killing machines as examples of the competence of government? Well, I guess if you are looking for competence in delivering top level evil The Manhattan Project counts.

But as far as the Interstate Highway System and  the Apollo Program, how can he claim competence? In what sense does he mean this? Mises and Hayek both taught us that without free market signals we can not understand what is efficient. Government programs by definition can not be "efficient" in a free market sense since these programs have not emerged as a result of free exchange.

Government can build a bridge to nowhere and see to it that the bridge meets all correct engineering criteria but do we really want such "competence."  Such a bridge would just be wasteful government central planning.

Thiel appears to a horrific degree to have fallen into the trap Hayek called the fatal conceit. Thiel sees a role for government as a central planner in sectors. And he is doing this under the guise of being a libertarian!

And do not think for a minute he is a lite planner. He even attacked conservatives for claiming government doesn't work:
Voters are tired of hearing conservative politicians say that government never works.
And chew on this comment from him for a minute:
[W]e cannot let free market ideology serve as an excuse for decline.
He then went on to hail Donald Trump's mercantilist trade positions:
Free trade has not worked out well for America. 
And he said we are in a "trade bubble":
 The sheer size of the trade deficit shows you something is wrong... 
A normal country doesn't have a half trillion dollar trade deficit.
In other words, Thiel has no fundamental understanding of trade and the danger of a focus on a trade deficit.

I hasten to add that Theil does appear to be anti-war, which is a plus. But it appears to be the only plus. Other than that plus, he appears to have no grasp of why central planning is the great danger.

It would be nice to see some free market support coming from a Silicon Valley billionaire or, even better, libertarian support, but Theil is not that billionaire.

We can hail his positions against war but he must be called out for his hugging of the state.

-RW

UPDATE

The Latest News on "Libertarian" Peter Theil

8 comments:

  1. What level of competency is Thiel talking about? Efficiency is wonderful goal but it's not what the government was going for.

    I find government to be largely competent even today because I don't believe their goals to be what most people do. Government is very competent in achieving the goals of those who run and influence it. Everything people say is broken I've learned are working as they are designed to work and achieving the goals they were designed to achieve. It is simply not the goals the american public thinks these things were created for.

    Thiel may be broken clock correct on the trade deficit. A normal country doesn't have a trade deficit like the USA does because a normal country doesn't produce the world reserve fiat currency that requires the huge trade deficit. Most roads seem to go back to monetary policy and the trade deficit is one of them.

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  2. Your continual rejection of the logic behind how "free trade" has hurt America (even while you admit that there is nothing free about govt implemented trade deals--ie actually occurring 'free trade') boggles the mind. Your reasoning is simple enough, if things are produced in the location where it is cheapest to produce said thing, the price for the consumer will be lowest, meaning best. This of course completely ignores Say's law. How is an American meant to buy these cheaper products if they have not first produced some product (and made a wage in return for their efforts)? Production before consumption, even if the products consumed are "cheaper", still applies.

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    1. It is rather simple. You produce widgets in Widgetland at cheaper price than I can produce widgets. I produce tidgets in Tidgetland at cheaper price than you can. We get on Amazon and buy each other's goods. There is a margin, and this gives us an opportunity to buy even more goods.

      If I was originally producing widgets and you put me out of business doing it cheaper, then I will have to put my productive resources to work in an area that is more productive. Thank God for tidgets (and cheap plentiful widgets from Widgetland which I love and can now have more of thanks to amazing free market division of labor and chains of production!)!

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    2. Thanks ZT for your brain-dead regurgitation of surreal, fantasyland economic storytime. Unfortunately, the real world is significantly more complex. Now, come with me as I guide you through a non-exhaustive list of factors that affect the people in your story...

      Let's start with the government intervention known as a "free-trader" deal that allows the widget maker to move production to foreign soil, where cost of labor is significantly cheaper. The tax incentives, subsidies for building new widget plants, and legal protections the widgeteer receives allows him to mitigate all of the risk inherent in moving production from a place known for good employees, infrastructure, and stable legal environment to a place with an uneducated workforce, terrible infrastructure, and ever-changing legal landscape. Without the government intervention of a "free trade" deal, the widgeteer would rarely find the mystery and unpredictable nature of the 3rd world to be a better place to produce widgets.

      Secondly, in your fanciful story, you simply gloss right over the time (yes, time does exist in the real world) it takes for newly unemployed people to find new work once their source of income departs for foreign lands and government guaranteed profits. If the widgeteer was the main employer of the area, the people could be waiting some time before some new industrialist moves to town (but then again, why would he when he can receive guaranteed profits moving abroad?) Now, tell me, during this time, what are the jobless people meant to produce in order to consumer? Say's law waits for no man.

      Let's think about the loss of capital now. A factory of widgets requires a technologically advanced production line, with the required floor space, constant and reliable electricity, and a trained staff. Once the widgeteer leaves for government garaunteed profits, what happens to the factory it leaves behind? The land it sits on is probably prime, as it was the major production facility in the area. The cost to repurpose the factory from making widgets to making tidgets must be born by someone, if a similar product can be made with the specialized equipment necessary for the production of widgets. Again, we have a significant amount of time--and now capital--that are now required before production can begin again. What, pray tell, are the former workers meant to do during this time? Say's law waits for no man.

      Now we get to the fun bit--the politics. The now laid-off employees of the widgeteer, despite common perceptions, are not Hill Billy yokels. They saw from the get-go that the widgeteer would only move production to another country if he was garaunteed to make more money there. The fact that he would make more money is clear, as he'll be paying his new staff 10% of what he paid his old staff; however, the garauntees from both governments involved is the truly marginal item in the deal that reduces what would otherwise be extreme risk. The former workers see this as nothing more than a government intervention, based upon the free market ideology (to borrow Mr. Thief's words) that strips them of their career, while allowing the widgeteer to grow profits by 1000%, without any added risk. Those former widget producers get angry. They know that Say's law waits for no man.

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    3. Hi Phillip,

      Thanks for your reply!

      Nobody said it's easy or fun finding new employment. The market is simply the most peaceful and efficient way of allocating resources. I encourage you to take a look at some of Peter Klein's works, particularly on entrepreneurship. https://mises.org/profile/peter-g-klein

      No author here defends NAFTA or TPP. They argue for real, genuine, free trade. To understand what Robert is writing about in his articles (so you can make a cogent comment), I also encourage you to read more about that here https://mises.org/search/site/free%20trade/library/mises-daily-articles-147

      Good luck you to you!

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    4. When your own government takes your taxes and uses it to help your employer move to a different country to achieve higher profits, you can imagine a bit of anger fomenting in the populace.

      Also, thanks for not attempting to engage any of my arguments, but rather cowering right to some sort of half-hearted appeal to authority. I have attended a Mises University (2009) and have a pretty decent understanding of this idea that it is some sort of act of nature-esque phenomenon that precipitates the necessity of acquiring new work that is embedded in the Austrian school. It is not an act of nature. It is deliberate.

      Which is more harmful, government interference by implementing a "Free Trade" agreement, or government interference via implementation of tariffs?

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  3. Great post and well said. Thiel seemed much more libertarian in his "Diversity Myth" days.

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