Peter Thiel: The AI Crisis, Europe’s Decline & the Battle for America
MD MEETS
Peter Thiel discusses his 'stagnation thesis,' arguing that while software has progressed, physical engineering and 'atoms' have lagged sinc
Key takeaways
- Thiel argues that progress in 'atoms' (engineering/physical science) has stagnated since the 1970s compared to 'bits.'
- He views AI as having the potential to be even more transformative than the internet for global growth.
Main topics
- AI and Technological Progress
- Geopolitics and China
Notable quotes
The way I would defend the stagnation thesis is that now that we have AI, nobody disagrees with me that we were in stagnation for decades before.
Conclusion
A deep dive into the intersection of technology, politics, and human l
Transcript preview
Speaker 1 (0:03) Welcome to Berlin. Thank you. Back to Germany. Let's switch to English now. Peter, you have discussed a lot over the last years the problem that, in your view, the West did not deliver enough progress, enough change in technology. Speaker 1 (0:38) You even spoke about stagnation. That is a topic and a term that almost nobody would use these days. It's pretty much the opposite. People are discussing, is there too much acceleration? Is AI progressing too fast? So what's your take? Did you change your mind or is it still not enough? I've changed my mind to Speaker 2 (0:57) some extent. Let me first articulate the stagnation thesis, which I started articulating 20 years ago or so. Speaker 2 (1:06) It's always very hard to measure these things because there's so many different dimensions of progress, so many different areas of technology and science. And the basic thesis was that since the 1970s, there had been a slowdown. There'd been progress in the world of bits, you know, computers, internet, mobile internet, software, but not so much in the world of atoms and most of the engineering fields that were related to atoms. were not even successful fields for people to study. Mechanical engineering, chemical engineering, aero, astro, nuclear engineering was already a bad idea by the 1980s. And that for a variety of reasons, there had been this slowdown. I believed that this, not total stagnation, but this broad slowdown in progress was an important factor driving, you know, Speaker 2 (2:01) A lot of things were going wrong in our society. A lot of the politics have become more polarized because when there's a loser for every winner, it becomes this very zero-sum game, and you sort of get a much worse society. And of course, there were some very deep reasons why I speculated this would happen. But a big picture was that for decades, we had something. something like stagnation. There was a way that the internet was an important growth driver in the late 90s. It was bigger than anything else, perhaps not big enough to take our whole civilization to the next level. And then I think perhaps AI is bigger than the internet and at least has the potential to re-accelerate growth with all the good and bad things that come with that. But yes, the... The way I would defend the stagnation thesis is that now that we have AI, nobody disagrees with me that we were in stagnation for decades before. Yeah, it has been Speaker 1 (3:07) proven in retrospect, I think. So these days, the perception of AI is swinging pretty much between euphoria and dystopia. And there was a lot of discussion over the last weeks about... The collective warning that Dario Amodei, Sam Altman, and Elon Musk presented, and that was the monster could get out of control. What's your take on that? Is it, as some people are saying, mainly a tactical move, a marketing move, or a move in order to drive the expectations down with regard to big, multi-trillion IPOs? Or is it truly the fear that AI could get out of control and could overrule human intelligence and mankind? Speaker 2 (4:02) Well, there are many, many different dimensions to the AI debates and the problems. And yes, there are these scenarios that are maybe science fiction, science fiction fantasy. Maybe they're somewhat more realistic where if you have something that in some sense is way smarter than any human being, is there some way it can escape control? And we have, of course, all kinds of dystopian science fiction movies, Matrix, Terminator, things like that. And I don't even know how you speak about probabilities of things like that happening. I don't think the probabilities are very high. On the other hand, if the probability is even 5 % or 10%, that seems pretty bad. So there's something about the conversation that ends up pushing people very hard in a sort Speaker 1 (4:57) of defensive... precautionary way. If it's about probabilities, there was recently an experiment to ask the six biggest LLMs, is there an extinction risk with regard to AI? And the predicted percentage was between 1 % and 10%. Do you think it's just because the LLMs are based on human fears, human pessimism, or is it a real point? Speaker 2 (5:26) Let us... Let us, for the sake of argument, say that it is a real point. I think it's hard to argue that probabilities are 0 % or something. I do think, but you shouldn't, it doesn't necessarily follow that you should always go slower and always go in the precautionary direction. Because if you do nothing, if there is no progress on any dimension, I don't think our societies work at all. And I've often said the middle class in the U.S., Europe, they're the people who expect their children to do better than themselves. And the sort of intergenerational progressive compact in our society was that there was progress from one generation to the next, maybe economic progress, material progress, progress in health progress, all sorts of softer social kinds of dimensions. And when that breaks down, yeah, I think the whole society starts to derange in very, very strange ways. And so, yes, there's a picture that people implicitly have that the alternative to AI, let's say, a zero growth world where there's no progress at all, will somehow be this peaceful, social democratic society. And I don't think that's true. Speaker 2 (6:52) Yeah, I think the alternative is also far from neutral. I also think there's some degree to which you can never just turn the clock back. Speaker 1 (7:04) But then slowing it down is just unrealistic. How could it work? I mean, I don't get it. If America is slowing down and China is accelerating, we are just strengthening China, but it's not just solving anything. Speaker 2 (7:20) In theory, you could slow it down if you had genuine deep cooperation across the whole world. But I think that would require a one-world government with real teeth, real force. And the sort of classical liberal part of me thinks that's a frying pan into fire. It's a cure that's worse than the disease. And then, of course, you can have fake global government where... We have a lot of conferences to discuss it, a lot of somewhat empty statements that get put out. And then there's also, of course, a risk that it ends up being slowed down in the West and not in China. The Pope recently issued this AI encyclical, or I would characterize it as an anti-AI encyclical. And again, this is maybe it was... Too harsh, but the rhetorical point I have on it is that the Communist Party of China is not going to listen to the Pope. There's a chance people in the U.S. will. And so, in effect, the Pope's encyclical was working for the Communist Party. I'm not saying he was an agent of the communists, but he was at least acting as a useful idiot for Speaker 1 (8:37) the CCP. I spoke to two founders of big AI platforms that both said that they have evidence. that the Chinese are spreading anti-AI content. Speaker 1 (8:52) particularly through American social media platforms, but also elsewhere, in order to turn around the American sentiment towards more AI skepticism in order to increase their advantage. Do you see similar things? Is there any evidence for that? Do you believe that? What's your take? I haven't studied it that carefully. Speaker 2 (9:18) I'm inclined to believe it. I'm also inclined to think that that's not the main factor driving it, that it's mainly, this is mainly what we're doing to ourselves. You know, there's a way, there's a way, you know, there's a way I'm tempted to say that, you know, Greta is working for the Chinese communists and maybe, maybe she is, but she's Speaker 1 (9:37) more of a problem we've created for ourselves in the West. But is Greta's influence on the American sentiment that big? I mean, I'm surprised. I think Speaker 2 (9:45) she's Speaker 1 (9:45) passed Speaker 2 (9:45) her primes. But, but yeah, it's... I think there are so many of these things that we're doing to ourselves. So we should be, you know, I'm a very tough critic of China's, you know, I think we need to take the, you know, the competition, the rivalry with China very seriously. And then also it's often somewhat too easy to simply blame it on China. Speaker 1 (10:10) Yeah, but then why is it so negative at the moment in the U.S.? I mean, I really have to... feeling that if we are talking to our European colleagues about AI, as long as they are able to learn and participate in the journey, they're actually pretty positive. In America, it's very different. People are raising posters and are protesting against AI. So it is almost a very anti-cliché of... being American. Usually America is perceived to be pro-technology, pro-progress. And in that case, it is a bit the other way around. The next election campaign could be to a degree, even a campaign, which political party is protecting their people better against AI. Why is there such an anti-AI sentiment in America? Do they know more about it than the Europeans or has the American mentality changed? What's happening? Well, let me do the pro-US version. Speaker 2 (11:00) This Speaker 1 (11:00) is where the U.S. is the place where AI is Speaker 2 (11:02) happening. And then Europe is, we can debate how far behind it is. In my telling, it's extremely far behind. It's extremely hard to catch up. It's obviously still a very fluid situation. But to first order, there's a lot happening in the U.S. China is a fast follower. And then Europe is extremely far behind. So it's not felt in Europe. It's not even felt on the level of corporations. If I look at something like one business I've been involved with for many years, Palantir, the sales to U.S. corporations have accelerated tremendously in the last few years because there's an urgency to get ahead of the curve and figure out how companies need to be transformed in this new AI age. there's still much, much less of that sense of urgency in Europe, where there's still this inertia. We can wait. Don't Speaker 1 (12:07) do tomorrow what you can say for the day after. Do you think in the long run, is AI going to be good for democracy or bad? Speaker 2 (12:18) It is. That's a very big question. I think the... I think the place where our democracies are in trouble, and I always prefer saying constitutional republics or our broadly liberal societies, broadly free societies are in trouble, is that there's a way that we don't have a broad growth story of the future. There's a sense in which people don't think things are getting better. Things have become... more zero-sum. I don't think AI is the panacea for everything, but I think without that, you know, you're just going to continue to have these sort of zero-sum parties on the Speaker 1 (13:10) extreme right and left gang round. Should we perhaps stop to discuss whether AI is positive or negative? I mean, I think it is almost like a knife. With a knife, you can prepare the most wonderful food and have a great dinner. And with a knife, you can kill a person. So if you don't want killings, you criticize murderer, but you don't criticize or you don't bend the knife. So why do we always moralize new technologies? I would say technologies are just neutral. You can use them for good and for bad causes. And it depends on us, what we human beings are doing with it. Speaker 2 (13:49) Yeah. So I'm going to get in trouble for what I'm about to say, but I think we moralize way too much. And there's always a question I like to ask, what is the antonym of good? And the moral antonym is evil. The functional antonym is bad. A Ferrari is an evil car because it doesn't get many miles per gallon. A Trabi is a bad car. It's less good than a golf cart, you know, the former East German car. Speaker 2 (14:21) And so, you know, if you're evil, you're at least competent. And if you're evil, you're not bad. And therefore, maybe you're actually kind of good because you're at least getting something done. If you contrast the Faust books of Marlow versus Goethe, in Marlow's Faust, that was the 16th century Faust story. Faust is a fake scientist. He's sort of like a magician, you know, sort of a fake alchemist. And it's bad science. And he goes straight to hell. In Goethe's Faust, he has a pact with the devil, and he sort of gets his knowledge by morally dubious means. But it still always, you know, works out more for the best. And Goethe's Faust... gets redeemed. So I think it's better to be good than evil. I want to be very clear. But perhaps, I prefer Goethe's Faust to Marlowe's Faust. And then the moral question in our society is we have all these good versus evil debates and we're just full of badness. Most things are not even evil. They're not even good. They're just merely bad. And so if you're in a world where 99 % of the businesses, companies, people, political leaders, business leaders are totally incompetent. That's the problem we should actually be talking about. Very few Speaker 1 (15:54) people would say about you that you are incompetent, but there are some people in a very polarized discussion that say you are evil. And if it is about your being evil, it is about democracy. And some people are portraying you as the anti-democrat and they are. basically all referring to one quote from 2009, where you wrote, I stopped believing that freedom and democracy are compatible. Can you explain why you wrote it, what you mean with it, and what you're thinking today is about? And it's always Speaker 2 (16:27) very dangerous to