A government that spends 10 to 15 percent of its GDP while building institutions to protect people and property.

Question: What is your vision for an ideal state?

Peter Thiel: I don’t have a precise, bright line thing there.  Obviously if you say we should just get rid of everything altogether and let everybody have their own nuclear bombs and stuff like that, and let people solve things by themselves, that’s obviously not the right answer either. 

I think that something about a government that spends maybe 10 to 15 percent of GDP is about the right number.  I think we can have political debates as to where that money best be spent. 

Countries like Hong Kong, you know a number of the emerging __________ that have done really well seem to have been stable.  They’ve had institutions that have protected people from crime, that protected property rights.  And you know they have not been completely chaotic, unstable places.  And they’ve achieved tremendous rates of growth. 

I think one of the perspectives that’s always been very important is a long time horizon. One of those debates is that on our short time horizon, of course, you get all sorts of different priorities. 

But I think it’s the question is how do we create the best world in the next 50 years, in the next 100 years or beyond?  I think you get to very different answers from if you ask what do we do that’s the best for the next two years, for the next four, or the next political election cycle.

Question: Is the need for greater openness to stimulate competition in conflict with current geo-political realities?

Peter Thiel: There obviously is a very significant tension.  And the security problem is a difficult one for libertarians to tackle.  Children are a problem for libertarians.  Crazy people are a problem for libertarians.  And criminals are a problem.  And I consider terrorists are a sort of subset of crazy people and criminals at the same time. 

But that being said, I do think that there should be ways to address this. 

There’s one set of arguments, and I wouldn’t say this is a panacea at all, but there is definitely one line of analysis that it is that terrorism tends to rise most in parts of the world that are very disconnected from the rest.  And so that if we have a more connected world in which people feel they have a stake in what happens in different places and different countries, that will create some incentives, that will mitigate against the runaway hostility that is very, very dangerous.  I don’t think that’s a panacea, but I think that is certainly a partial thing.  So I think globalization is not the whole answer, but it is probably a partial answer to some of the things that are  driving things towards terrorism. 

And then of course I do think there are pieces of it that could be dealt with in a variety of ways.  I think if you could reduce the energy dependency in the U.S., this would be a very important step, in effect de-funding a lot of the terrorist organizations. 

There probably are a whole set of security measures one could take that are not necessarily incompatible with globalization.

Recorded on: Sep 05, 2007