Francis Fukuyama interviewed Thiel for a recent piece at The American Interest. We join their conversation in progress:

[Thiel:] If there is going to be a government role in getting innovation started, people have to believe philosophically that it’s possible to plan. That’s not the world we’re living in. A letter from Einstein to the White House would get lost in the mail room today. Nobody would think that any single person would have that kind of expertise.

Francis Fukuyama: Well, clearly, Silicon Valley was in many ways the product of a government industrial policy, DARPA. So much of the early technology, the creation of the internet itself, the early semiconductor industry, were really spinoffs from investments in military technology that were obviously pushed very strongly by the government.

Peter Thiel: My libertarian views are qualified because I do think things worked better in the 1950s and 60s, but it’s an interesting question as to what went wrong with DARPA. It’s not like it has been defunded, so why has DARPA been doing so much less for the economy than it did forty or fifty years ago? Parts of it have become politicized. You can’t just write checks to the thirty smartest scientists in the United States. Instead there are bureaucratic processes, and I think the politicization of science—where a lot of scientists have to write grant applications, be subject to peer review, and have to get all these people to buy in—all this has been toxic, because the skills that make a great scientist and the skills that make a great politician are radically different. There are very few people who are both great scientists and great politicians. So a conservative account of what happened with science in the 20thcentury is that we had a decentralized, non-governmental approach all the way through the 1930s and early 1940s. At that point, the government could accelerate and push things tremendously, but only at the price of politicizing it over a series of decades. Today we have a hundred times more scientists than we did in 1920, but their productivity per capita is less that it used to be.

Francis Fukuyama: You certainly can’t explain the survival of the shuttle program except in political terms.

[caption id="" align="alignright" width="300" caption="Letter: A. Einstein to F.D. Roosevelt"][/caption]

I will refrain from commenting on Thiel's assessment of DARPA, other than to make two brief notes. First, Thiel's ideas resemble those expressed by Tyler Cowen in The Great Stagnation, and the two men acknowledge their mutual intellectual debt. The second is that I too, as someone who believes in free enterprise and bottom-up innovation, have wrestled with the fact that much of the technological innovation of the last century benefitted from government funding. One can brush it off as low-hanging fruit, or--the perspective I prefer--acknowledge that there are high barriers to entry in the technology realm that require massive up-front capital. I will have more to say on this topic over the next week or two.

At its base, Thiel's argument seems to be that there is a much higher noise-signal ratio in the innovation process today than there was 70 years ago. That seems right, and unfortunately mechanisms such as peer review have been unable to keep up with the flood of research being produced. I suspect that alternative processes will emerge, but they have yet to do so on a large scale.