Why Is Peter Thiel Pessimistic About Technological Innovation?

The automobile has changed as much in the last 20 years as in the previous 100. Ubiquitous embedded computing has transformed essentially everything, especially manufacturing. Hell, there's even a new flurry of innovation in spaceflight, with a very high chance that we'll see Martian colonies in the next few decades. That alone is nothing to sneeze at.

But let me take a moment to drill down on one specific thing: pollution. In the mid-20th century pollution and abuse of the environment in the developed world was becoming a very serious, even existential problem. Ocean dumping was ubiquitous. Millions of deaths per year were occurring due to the sad state of air quality in major cities like LA, Pittsburgh, London, etc. There were disastrous individual events like the great smog of London in 1952. Many people aren't aware that that event killed more people than 9/11, that's how serious it was. It also made over 100k people seriously ill, aside from the impact it had on quality of life for people living in London in general. Since then there has been a massive uptick in the population of Los Angeles, there has been a massive increase in car ownership and total vehicle-miles driven, a massive increase in freight volumes on railroads and trucks. And yet, despite all that there has been an even more massive improvement in air quality, enabled by technological innovation.

There are many, many more amazing stories along the same lines, with the cornerstone in every case being technology developed in the late 20th century as an enabling factor.

One of the downsides of technology that works so well and so smoothly (which late 20th/early 21st century automobiles would fall in the category of) is that it can be difficult to garner the attention it deserves. Smooth functioning is the absence of problems, so it becomes too easy to simply set the baseline at the point where the technology is working (taking it for granted). But these amazing technologies (automobiles, the internet, etc.) are the product of herculean amounts of effort from an enormous number of incredibly skilled people. It should be amazing that we have handheld computers with wireless internet connectivity at broadband speeds, yet this is just the normal state of being in the developed world these days.

The real issue with incentivizing long-term investment is one of distributing risk and reward over both participants and time. The great advantage of the web startup space is the quick time to expand the market - even if working fusion were here today, it would not have the growth curve typical of successful web companies. Add this to the long and risky development time for things like fusion (or AI, or space launchers, etc.), and what you say seems obvious.

So, why did I choose to follow the risky route rather than the more assured Big R&D route? Well, competition is the main answer. Big R&D projects often start with the idea that developing something is expensive, and since you can't afford to build more than one, this idea morphs into the One True Design (e.g. ITER/Tokomak in fusion). Then big R&D turns its back on other, possibly cheaper development paths. Taking the VC route may put the risk on to the participants, but at least it is open to new, cheap ideas which may be able to bypass the big R&D route.

Earlier new technologies used to be priced sky-high. Now cost benefit analysis is the only thing that matters.

And anyway what's wong with incremental improvements across the board? Just look at medicine, and life expectancy!