Peter Thiel on Regulation and Progress
By David Henderson
Peter Thiel gave an interesting talk at the International Students for Liberty Conference earlier this month. In it, he claimed that few sectors other than the relatively unregulated IT sector have had substantial progress decade by decade. He mentioned, for example, airplanes and cars. Decade by decade, he said, they improved, until about 1980, after which progress slowed or ground to a halt. He attributed this to government regulation. He also made the case quite well that the FDA is preventing us from getting drugs because it’s setting up huge barriers to those drugs being developed. Many others, including me, have made that case. (See here and here, for instance.)
I think his big-picture story, that heavy regulation slows progress, is basically right. But I also think he missed a lot of more-subtle technological change that has improved things in many industries. My guess is that he missed it because he’s biased by his own experience. He was and is in an industry with rapid technological change and I think that experience makes it hard for him to note subtleties in other industries.
Take even the highly regulated industry of medicine. We’ve seen dramatic improvements in treatments of various diseases and in surgical techniques, decade by decade. Fortunately, the FDA, as far as I know, has not yet tried to prevent surgeons from trying new techniques.
Or consider cars. I think CAFE (the Corporate Average Fuel Economy law) has focused the industry on better gas mileage at the expense of other improvements. But there have been other improvements. The main one is durability. Cars last much longer than they did in 1980.
There’s a long Q&A session that lasts longer than Thiel’s talk. Thiel is quite good in places and quite weak in places. He’s particularly weak when he discusses monetary policy.