Wired: You say that we have big problems in the US economy and that investors have unrealistic expectations. We’ve certainly been through a major crisis, but over the long term the stock market seems to grow fairly reliably.
Thiel: People take it for granted that their retirement funds can earn 8.5 percent a year. That’s what their financial planners tell them. And sure, you look back over the past 100 years, the stock market has generally gone up 6 to 8 percent a year. But in a larger historical perspective, that kind of growth is exceptional. If you had done the equivalent of investing in the stock market from, say, 1000 to 1100 AD, you would not have made 8 percent a year. During the fall of the Roman Empire, you’d have been lucky to get zero. We’ve been living in a unique period of accelerating technological progress. We’ve gone from horses to cars to planes to rockets to computers to the Internet in a very short time. It’s not automatic that that continues.
Wired: What happens if we don’t get the growth everyone expects?
Thiel: If it doesn’t happen, people will go bankrupt in retirement. There are systemic consequences, too. If we don’t have enough growth, we will see a powerful shift away from capitalism. There are good things and bad things about capitalism, but inequality becomes completely intolerable to society when everything’s static.
His points are well taken and should really underline the importance of scientific research (public and private), a rational scientifically literate populace, and a system that rewards innovation and risk taking.
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