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Peter Thiel: Whatsapp Founders Jan Koum from Welfare to $19 Billion

Feb 21 2014, 1:31am CST | by

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Peter Thiel:Whatsapp's Jan Koum from Welfare to $19 Billion

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Peter Thiel: Whatsapp Founders Jan Koum from Welfare to $19 Billion

What’s the relationship between the technological innovation of the past few decades and the widening inequality gap in America? That was the subject at issue in a Thursday night debate sponsored by, the lobbying group created last year by a phalanx of tech-industry power players to press for immigration and education reform.

Squaring off were PayPal founder and billionaire Peter Thiel and Andrew McAfee, an MIT business professor who studies the effects of technology on the economy.

After McAfee led off by citing research suggesting that digitization and automation have hurt middle-class workers, Thiel countered by saying the Computer Age isn’t the right time frame for consideration. The rapid rise in innovation began with the Industrial Revolution, he noted. In the last 40 years, he asserted, digital technology has been a counterweight to inequality, not an engine of it.

“I think generally there’s a trend toward equality in the sense that everyone has access to Facebook and Dropbox and LinkedIn and all these services.” (Not that no one has tried creating alternatives whose benefits would accrue only to the very rich .)

“I think technology has helped,” he continued. “You have things like Facebook, like Google. Technology has helped to offset some of the brutal effects of globalization” — that being, in Thiel’s view, the real force depressing middle-class incomes in America today. Whereas Chinese workers compete directly with American ones for jobs, computers generally don’t: “For the most part, the story of technology and people is one of compatibility.”

Yet not only do Americans not appreciate the ways technology has improved their standard of living; they actively resent it. Whereas once mainstream movies celebrated the promise of tech — he cited “Star Trek” and “Back to the Future” as examples — more recently they’ve depicted it as a force to be feared, as in “Terminator,” “Avatar” and “Elysium.” (Never mind that “The Terminator” actually came out a year before “Back to the Future.”)

“The technology industry is an easy scapegoat,” he said. “People are looking for an excuse to beat up on tech….We should be aware that this is a psycho-sociological phenomenon that’s very widespread in our society and do everything we can to resist it.”

And what about the role of government in addressing inequality? That’s something Thiel, an arch-libertarian, touched on only briefly during the debate, but he expanded on it afterward.

I would say the right-versus-left debate is something like the left says there’s too much inequality and the right says the government is incredibly bad at spending money. And I sort think they’re both correct. I wouldn’t mind paying more in taxes if I felt the money was being spent as well as it was spent in the ‘30s or ‘50s. I live in the Marina area in San Francisco. They built the Golden Gate Bridge in three and a half years in the 1930s, ‘33 to ‘36. They’re now building an access road to the bridge that’s taken eight years and possibly will end up costing more in inflation adjusted dollars than the whole bridge cost in the ‘30s. So it’s one of the reasons I personally don’t want to pay more taxes, because I feel the government spends the money so extraordinarily badly. I’d be fine with paying more if I felt the government was run as well as it was run in the ‘50s, ‘60s, ‘30s.

I think it’s going to be hard to increase tax rates until the government does a better job than it’s been doing. That’s why things are so gridlocked.

But what about those times when government spending does exactly what it’s supposed to? This week brought the world the story of WhatsApp founder Jan Koum , an immigrant who went from living on food stamps to selling his company to Facebook for $19 billion.

Does Thiel think government spending of the sort that kept a young Koum fed is money well spent? I asked him.

I can’t speculate on the whole history of that. We have a safety net in this country. I think there are people who are heroically able to escape from the sort of welfare trap in which many people find themselves. But it’s far too rare for people to be able to do that, and that’s the problem. So we shouldn’t let…we really have to think about how we can have more mobility into the middle class for a broad range of people.

Source: Forbes


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