The Big Winner

June 3rd, 2008 by admin

Peter Thiel was a co-founder of Paypal (acquired by eBay for $1.5 billion) and currently manages the hedge fund Clarium Capital. In the essay “The Optimistic Thought Experiment” he sets out his vision of a possible future.

Excerpt:
Since the direct approach to our central question leads to paradoxes, absurdities, or at best money-losing investment schemes, it might prove more profitable to explore the inverse as a thought experiment: What must happen for there to be no secular apocalypse — for what one might call the “optimistic” version of the future to unfold? And furthermore, which sectors will do well — surprisingly well, in fact — if the world more or less stays intact, even if there are some major bumps and dislocations along the way? Any investor who ignores the apocalyptic dimension of the modern world also will underestimate the strangeness of a twenty-first century in which there is no secular apocalypse . If one does not think about forest fires, then one does not fully understand the teleology of each tree — and one badly will undervalue those trees that are immune to all but the greatest of fires. Even in our time of troubled confusion, there exists a chance that some things will work out immeasurably better than most believe possible.

As we embark on our ambitious voyage to the ends of the earth, one cautionary note is in order. Thought experiments are notoriously misleading. Unlike more rigorous forms of scientific investigation, there are no empirical means to falsify these mental exercises. The optimistic thought experiment exists largely in the mind. The vistas of the mind are not always the same as reality. One could do worse than to ignore Milton ’s seductive promise: “The mind is its own place, and in itself, can make a heaven of hell, a hell of heaven.”

The full piece is here:
http://www.hoover.org/publications/policyreview/14801241.html