A couple of days ago, Peter Thiel sat down with Tyler Cower at George Mason University’s Mercatus center for a chat about all sorts of interesting things. The Washington Post picked up on some of his thoughts regarding the American political system, which I think deserve some additional commentary.
On the one hand, he accurately identifies the U.S. as nothing resembling either a democracy or a constitutional republic. He then goes on to point out that the system we have is one in which the power is increasingly concentrated in undemocratic, “technocratic” agencies. Where I think he falls way short is with a failure to ask what interests are driving the decisions of these undemocratic entities. Any unbiased observer can clearly see that it is oligarchs driving the oligarchy, as opposed to independent thinking bureaucratic technocrats driving a technocracy. I have published countless articles proving this to be the case. Naturally, a billionaire might have a harder time recognizing this.
Democracy in America is dead, according to Silicon Valley investor Peter Thiel.
“It’s not clear we’re living in anything resembling a democracy,” he told a crowd Tuesday at George Mason University. “We’re living in a republic that’s modified by a judicial system, that’s been largely superseded by these agencies that drive the decision-making.”
“Calling our society a democracy is very misleading,” Thiel went on. “We’re not a republic; we’re not a constitutional republic. We live in a state that’s dominated by these technocratic agencies.”
Thiel says that organizations like the Federal Reserve have been allowed to roam too far. Calling government agencies “deeply sclerotic and deeply nonfunctioning,” Thiel pointed to the Energy Department’s failed investments in Solyndra as a case study in bureaucratic mismanagement and executive overreach.
The Federal Reserve is a great example. Is it really a public agency, or is it a banking cartel that has gone into partnership with the U.S. government? Who does the Federal Reserve really work for, financial oligarchs or the middle class? It seems to me, that the tremendous success of the Federal Reserve system in enriching financial oligarchs who extract far more from society than they give back, has been imitated throughout the economy until we got what we have today — a centralized crony capitalist corrupt mess.
“You could use ninth grade geometry to show this was never going to be commercially viable,” he scoffed in reference to Solyndra’s round solar panels, which he argued weren’t as efficient as conventional solar collectors.
Investors such as Chamath Palihapitiya, a former Facebook vice president and one of the founders of lobbying group FWD.us, have said that it’s now “excruciatingly, obviously clear to everyone else that where value is created is no longer in New York, it’s no longer in Washington, it’s no longer in L.A. It’s in San Francisco and the Bay Area.”
For Thiel, this trend is tied to a much broader notion about globalization.
“I think with the benefit of hindsight, we will realize 2007 was the peak of globalization,” he said.
As a result, the venture investor isn’t all that confident about the future relevance of Washington and New York in world affairs, either. States like California and Texas — relatively “inward-looking” places, said Thiel — are stronger bets.
In Thiel’s worldview, it makes sense to want to short the nation’s capital. And his theory explains why Washington seems so deadlocked. It’s just the wrong tool for the job, and the government is adapting in the only way it knows how: by becoming more assertive.
Here’s where the Washington Post writer picks holes in some of what Thiel states.
But the idea that the entire dog of government (or the country, even) is being wagged by the tail of agencies is a little far-fetched when we know there are so many other factors that play a role in decision-making.
Take lobbying, for example. Some of the most powerful nongovernmental interests in the country are constantly seeking to shape how policy gets made in Washington. Lobbying doesn’t just happen in Congress; it happens at the White House and at federal agencies, too. Corporations, nonprofits, trade groups — you name it — they’re all pushing policymakers to take one course of action or another. You’ve heard of the military-industrial complex? Citizens United? If federal agencies were truly running the show, none of that would matter. But it does.
Even that glosses over another fundamental Washington dynamic you may be familiar with: The revolving door theory of politics, which describes what happens when a federal official leaves their job and becomes a lobbyist, or vice versa. OpenSecrets keeps a whole list of people who’ve done that. At the FCC, the agency I cover most closely, we’ve seen former commissioners become leading lobbyists for the cable industry and the wireless sector, and we’ve seen former industry lobbyists become full-fledged chairmen.
If Thiel is right and agencies are hijacking the country, then companies and business interests deserve part of the blame.
These are basic features of Washington that someone in Thiel’s position should grasp.
Check out the entire conversation here. Certainly plenty of interesting stuff to think about: