Peter Thiel and Donald Trump Are Pitching a Future That Can’t Exist
The jobs Trump wants to bring back have already been automated by Silicon Valley's robots.
Silicon Valley billionaire Peter Thiel spoke for an hour at the National Press Club Monday to defend his support of and donations to the Donald Trump campaign, which has many people calling for tech companies associated with Thiel to cut ties with him.
Thiel has cast himself as one of the few people in Silicon Valley willing to speak up for the "half of the country" he says have been painted as bigots by the technoelites in the Bay Area.
"It's not a lack of judgment that leads Americans to vote for Trump. We're voting for Trump because we judge the leadership of our country to have failed," he said. "This judgment has been hard to accept for some of the country's most fortunate, socially prominent people. It's certainly been hard to accept for Silicon Valley, where many people have learned to keep quiet if they dissent from the coastal bubble. [Silicon Valley] has sent the message that they do not intend to tolerate the views of one half of the country."
Thiel sits on the board of Facebook and is an advisor to startup incubator Y Combinator; Facebook CEO Mark Zuckerberg and YC president Sam Altman have defended Thiel's right to support Trump of examples of "diversity" of viewpoints on their board. Like it or not, Thiel's money, influence, and now, his contrarian opinions, have positioned him as Silicon Valley's conservative voice, a designation that'll last long after this year's election is over.
It's disappointing, then, to hear that Thiel's main reason for supporting Trump is an anti-globalist economic plan focused on bringing back manufacturing jobs for middle America.
"Where I work in Silicon Valley, people are doing just great. Most Americans haven't been part of that prosperity," Thiel said.
"All of our elites preach free trade," he added. "The highly educated people who make public policy explain that cheap imports make everyone a winner. But in actual practice, we've lost tens of thousands of factories and millions of jobs to foreign trade. The heartland has been devastated."
"The impacts of automation on routine job activities is pervasive and affecting arguably almost all job categories"
Rather than including Americans left behind by technological progress in the prosperity that Silicon Valley's entrepreneurs have built for themselves by leveraging the power of the internet and an increasingly global world, Thiel is advocating for an impossible return to a past that no longer exists.
Thiel is correct that the general thrust of the economy has changed since NAFTA went into effect in the mid-1990s. But overall, most economists think more American jobs have been created as a result of NAFTA and other free trade deals than have been killed by it.
The rural malaise painted by Trump and Thiel is one they say is borne of trade and immigration, but the two ignore more important developments such as automation, globalization, and the urban-rural digital divide. Regardless of trade policies or regulations, the past Trump and Thiel are selling as the future is one that simply cannot exist.
The manufacturing jobs that have been lost to China and India? Those are beginning to be automated. Free trade or not, many of the blue collar jobs rural America has lost are now being done by robots.
"The impacts of automation on routine job activities is pervasive and affecting arguably almost all job categories," Mark Muro, director of policy at Brookings's Metropolitan Policy Program, told me. "I think automation and technology-driven skills requirement change are arguably the most under-discussed topics on the campaign trail. Clearly the stresses created by global trade and the China shock are a legitimate topics, but arguably automation is a much larger matter with a broader impact."
The American economy continues to add jobs, but a study by the Federal Reserve Bank of St. Louis suggests that these jobs are almost entirely "non-routine" ones at both ends of the wage scale. At the low end, these are manual labor jobs that are often performed by immigrants.
At the other end are the jobs created by innovative companies like the ones Thiel invests in, advises, and has created: Skilled jobs usually performed by the highly educated, technologically savvy, and creative classes.
Thiel, a billionaire who has made much of his fortune designing software that analyzes big data, should know better than anyone that it is possible to get fabulously wealthy—or at least have a nice life—by positioning oneself to work for an information-based businesses that doesn't rely on geographic borders to be successful. He acknowledges how successful that strategy can be, which makes his focus on protectionist vision of a manufacturing economy all the more strange—although it seems that his broader frustration is simply with government regulation.
"Silicon Valley deals in the world of bits, the rest of the economy deals in the world of atoms," Thiel said. "If you're in the world of atoms you might be concerned about government regulation. If you're in the world of bits, you might be much less concerned … perhaps Silicon Valley has focused on the world of bits because it's gotten too hard to do things in the world of atoms."
If Thiel wants to fault the establishment, he should fault the fact that we have left rural America behind in terms of things like access to affordable, fast, and reliable broadband internet connections that would have allowed America's heartland to join Silicon Valley's economic revolution earlier than it has.
In failing to foresee the fourth industrial revolution, 23 million Americans have been left without access to broadband, and displaced blue collar workers have been left without a safety net or a fighting chance at retraining themselves in different fields.
Trump has not acknowledged this disconnect between infrastructure, education, and job prospects in the 21st century. That this disconnect wouldn't be top-of-mind for Thiel, who was instrumental in building the epicenter of America's new economy, is inexplicable. Defending economic policies focused on bringing back America's past is contrary to his life's work.