Great Peter Thiel (founder of Paypal) vs. Eric Schmidt (Chair of Google) Debate

You can read the whole transcript here but here are some key excerpts, all from Peter Thiel who I generally agree with:

PETER THIEL: You have Moore's Law on the one hand.  On the other hand, if I had to sort of simplify it, we've had incremental but relentless progress on the computer side.  And on the other hand, we've had basically no progress on energy.  And if you think about where oil prices were in 1973, it was $2 or so a barrel, it is now at north of $100 a barrel, and so you've had sort of a catastrophic failure of energy innovation.  And it's basically been offset by computer innovation.  I think that's sort of the simplified account of what's happened in the last 40 years.

ADAM LASHINSKY:  So, before I give Eric and opportunity to jump in I want to prompt you in one way, Peter, which is why do you think this is?

PETER THIEL:  The why questions always get immediately ideological.  I'm Libertarian, I think it's because the government has outlawed technology.  We're not allowed to develop new drugs with the FDA charging $1.3 billion per new drug.  You're not allowed to fly supersonic jets, because they're too noisy.  You're not allowed to build nuclear power plants, say nothing of fusion, or thorium, or any of these other new technologies that might really work.

So, I think we've basically outlawed everything having to do with the world of stuff, and the only thing you're allowed to do is in the world of bits.  And that's why we've had a lot of progress in computers and finance.  Those were the two areas where there was enormous innovation in the last 40 years.  It looks like finance is in the process of getting outlawed.  So, the only thing left at this point will be computers and if you're a computer that's good.  And that's the perspective Google takes, because it thinks of the world of the future ‑‑

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ADAM LASHINSKY:  Let me ask you this.  Hold on, Peter, one second.

There's one thing, Eric, that you haven't answered.  At the high level Peter has made the assertion that making, for example, cars go faster, or being able to, I don't know, for rockets to go higher or faster, to be able to colonize Mars, as an example, are the sorts of things we're not doing and they're less important than having good algorithmic search.  Is that a fair characterization, Peter?

ERIC SCHMIDT:  If you look at the improvements in power to weight ratio with new materials in cars I think you'd be pretty impressed with that.  There's a whole renaissance of materials science going on, with new smart services, new much lighter, much stronger materials, all of this being driven by American universities.  There is a mini-boom I America in advanced manufacturing using all these new technologies.

PETER THIEL:  I often think it's worth looking at quantity not quality, and we're not going faster.  The Concorde was decommissioned in 2003, and if you include low-tech airport security mechanisms, we're back to about 1960 type travel speeds today in the U.S.  But, let's take another area that's probably much more basic, something like agriculture.  We had a green revolution in the '50s and '60s that basically doubled world food production in line with population growth.  It's decelerated dramatically over the last 40 years and that's reflected in this incredible rise in food prices that we've seen over the last decade.

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PETER THIEL:  But, they're not ones that are able to basically ‑‑ you know, they're sort of the exception to the rule that we don't have enough innovation.  So, you have to avoid confusing the specific and the general.  Google is a great company.  It has 30,000 people, or 20,000, whatever the number is.  They have pretty safe jobs.  On the other hand, Google also has 30, 40, 50 billion in cash.  It has no idea how to invest that money in technology effectively.  So, it prefers getting zero percent interest from Mr. Bernanke, effectively the cash sort of gets burned away over time through inflation, because there are no ideas that Google has how to spend money.

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PETER THIEL:  But I think that ‑‑ I disagree with the premise behind the question that there's some sort of tradeoff between finance and other areas of innovation.  I think it's easy to be anti-finance at this point in our society, and I thin the reality is we have an economy that got very lopsided towards finance, but it's fundamentally because people weren't able to do other things.

So, if you ask why did all the rocket scientists go to work on Wall Street in the '90s to create new financial products, and you say well they were paid too much in finance and we have to beat up on the finance industry, that seems like that's the wrong side to focus on.  I think the answer was, no, they couldn't get jobs as rocket scientists anymore because you weren't able to build rockets, or supersonic airplanes, or anything like that.  And so you have to ‑‑ it's like why did brilliant people in the Soviet Union become grand master chess players?  It's not that there's something deeply wrong with chess, it's they weren't allowed to do anything else.