Book Review: The Contrarian by Max Chafkin

Now fully in the swing of the new Gilded Age, we are ruled by a class of philosopher kings who bestride the business and political worlds. Unelected and with few checks on their power, these philosopher kings – generally philosopher billionaires – wield tremendous influence over our lives. They typically receive hagiographic coverage from the business press.

Peter Thiel, Philosopher King

My New Years’ writing resolution for 2022 is to learn more about our Gilded Age tech and finance overlords through reading their biographies and their own writing. If I cannot prevent their leadership, at least as a citizen I can attempt to understand their leadership.

In this spirit I read Max Chaftin’s first major biography of one philosopher king, The Contrarian – Peter Thiel and Silicon Valley’s Pursuit Of Power, published in 2021. I also read Thiel’s own startup-advice book from 2014, Zero To One, co-authored with Blake Masters.

Thiel has also pursued a political philosophy of extreme libertarianism, which became more openly known when he was one of Silicon Valley’s few backers of Donald Trump’s candidacy, and then presidency. 

As an undergraduate and then law student at Stanford in the late 1980s and early 1990s, Thiel was 30 years ahead of his time in identifying, and then attacking, multiculturalism on college campuses as a unifying enemy of the Right. Thiel founded the Stanford Review in 1987 and authored Diversity Myth: Multiculturalism and Intolerance on Campus in 1995 – [LINK: https://amzn.to/3G65GBt] both publications laying the groundwork for today’s political fights about overly “woke” campus cultures and “critical race theory.” Agree or disagree with him about politics, he certainly is good at anticipating where things are headed, in both business and politics.

What strikes me as most important to know about Peter Thiel from Max Chafkin‘s book is the following: Peter Thiel is not a good guy. He used ethically dubious – even devious – methods to cut out his partners in his original successful venture, PayPal. He would continue that pattern of short-changing early founders numerous times, including encouraging Mark Zuckerberg to undercut his own partners at Facebook. Defenders may see and justify this behavior as just the kind of ruthlessness needed to succeed at the scale at which Thiel has succeeded in business. For my part, Chafkin’s book makes me think Thiel is a philosopher king about whom we should be very, very, afraid.

He used his fortune to secretly sue, and ultimately bankrupt, online media company Gawker because of its unflattering coverage of him over the years. He has a more than 30-year track record of building network ties with right wing provocateurs who are not just conservative in the traditional sense, but anti-democratic in the most dangerous sense. He repeatedly backs and associates with figures on the alt-right fringe like Charles Johnson, Curtis Yarvin, and Milo Yiannopoulos. These aren’t conservative intellectuals and right-of-center public figures as much as they are provocateurs opposed to democratic norms.

“Peter’s not a Nazi,” Chafkin quotes Charles Johnson, speaking about Thiel, “Nazi-curious, maybe.” Johnson later softened that statement about his friend to imply that Thiel simply has wide-ranging intellectual interests. But the pattern of Thiel’s philosopher billionaire interests suggests that he has a kind of end-times, blow-up-the-system, anti-democratic approach to government.  

He also has a clear preference for monopolies as a business strategy, and spends considerable time describing Google’s monopoly power in Zero To One

The rest of Zero To One is fine as business book go, although like many others of its type is filled with sweeping generalizations stated with supreme confidence, relying on anecdote over data, with a preponderance of recency bias and stories about Thiel’s own business experience and network.

One of the clear lessons of Chafkin’s book is that Peter Thiel’s life and philosophy contains major contradictions. He is a self-described libertarian whose major tech holding Palantir depends on national-security government contracting. His other major tech investment, SpaceX, depends on NASA-related and military contracting. 

Another weird contradiction between Thiel’s stated philosophy and life is that he expresses pessimism about the US technology and innovation scene, claiming that the 1950s to 19060s was some golden age of purposeful optimism, now lost. Political correctness and transfer payments have apparently killed the American dream. This is odd, considering the explosion in Silicon Valley power and innovation that he’s witnessed, and been part of, in his lifetime.

Palantir

Although he professes an anti-government philosophy, he has certainly invested heavily in political campaigns. He became well-known for making timely and crucial donations to Ted Cruz’s Senate campaign in 2012 and Donald Trump’s presidential election in 2016.  Palantir’s federal government contracting business soared under Trump, becoming the ultimate military-industrial complex contractor. This is odd for a self-professed libertarian, if he believed his own ideas.

Blake Masters is not only the coauthor of Thiel’s 2014 entrepreneur guidebook Zero To One, he is also running as a Republican primary candidate for Senate in Arizona in 2022. Another Thiel acolyte, J. D. Vance, is running as the Republican Senate candidate in Ohio, after working as part of Thiel’s venture capital firm Mithril. Vance received $10 million in PAC support from Thiel. This all feels like a philosopher king increasing his grip on the US Senate.

As a red-blooded capitalist, I can admire Thiel’s success as the ultimate builder and investor.

As an American and supporter of democracy there’s something profoundly troubling about the absolute concentration of power in the hands of the very few. A philosopher billionaire may have in a sense “earned” our respect through business accomplishments, but that does not mean the result is best for the rest of us. One point of living in a society that makes its own rules – one point of the freedom to choose our own leaders rather than have them chosen for us – is that we should not be overly subject to a king or a set of oligarchs.

I hasten to add that if you admire Thiel’s alt-right philosophy, you may cheer on his growing power and influence. Or you may point to the influence of another billionaire philosopher king like George Soros and claim that what’s fair for the goose is fair for the gander. I think this is missing the point of the danger. I don’t enjoy being subject to the unchecked power of philosopher kings at all, whatever their particular politics.

What is to be done? The current movement to curb Big Tech – a movement with equally enthusiastic support from conservative Missouri Senator Josh Hawley and progressive Massachusetts Senator Elizabeth Warren – seems one step to address this shared worry. 

I should be encouraged by Senator Hawley’s interest in curbing the power of Big Tech – I want this as well. But when I read of Thiel’s $300 thousand contribution to Hawley’s first run for statewide office in Missouri, I worry instead about Hawley as a kind of cat’s paw for Thiel’s attempt to smash Google’s monopoly, to the benefit of Thiel’s own business interests.

We need a more robust way to curb the philosopher kings.

Thiel’s right wing provocateur activities predates his capitalist career. Before he was a billionaire, he was a right wing philosopher.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

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SIGAR And The Afghanistan War Costs

SIGARThis month we debated tax reform and upcoming tax cuts, and a logical follow-up thought to the tax-reform debate is “why does the federal government cost so much to run?” Each of us will answer that question differently – possibly depending on our political persuasion – but everyone likes to agree in a bipartisan way on the need to reduce “waste, fraud and abuse.”

Which is why we should all applaud the work of internal government groups like the Special Inspector General For Afghanistan Reconstruction (SIGAR), dedicated to reporting on waste, fraud and abuse in our nation’s longest war. SIGAR makes quarterly reports to Congress on where our money went, and conducts investigations on fraud and enforcement, all with respect to the Afghanistan conflict.

If you think like me, you might have this vague gnawing sense that pursuing a perpetual war against a shadowy non-state enemy with no end in sight is the surest way to blow our nation’s budget. When you read a SIGAR report, that vague gnawing becomes very specific, with cold hard numbers attached to it.

Here’s just one example of $70 billion in waste. A recent report by SIGAR  studied the cost of building up the Afghan National Defense and Security Forces (ANDSF). The money appears mostly wasted.

In 2005, officials estimated a total $7.2 billion price tag for building up the ANDSF. Bolstering internal police and security forces is an important and logical step toward reducing the US military presence there. As the SIGAR report describes in excruciating detail, 15 years and $70 billion later our efforts at capacity-building have utterly failed. Afghanistan cannot keep its own peace, and the local security forces are wholly dependent on US support, both financially and militarily.

soldier_afghanistanThe devil of this failure is in the details of the report, but the waste, fraud, and abuse is nothing short of mind-boggling.

There’s the obvious, like the $500 million for second-hand Italian transport planes that couldn’t operate in Afghanistan’s harsh conditions.

Or like the unspecified cost of what are believed to be thousands of “ghost” soldiers on the payroll of the Afghan army, basically paid for by us. One estimate in 2015 put that cost at $300 million in phantom payments.

The Afghan Ministry of Defense Headquarters, originally budgeted at $48.7 million, ended up costing $154.7 million, and took five more years to build than expected.

Oddly, given the amount of money we spent, the history of training the ANDSF is often one of equipment shortages. In the early years of US rebuilding efforts, Afghan units would attempt to seize Taliban weapons caches because they were better quality than what they could get from us. Afghanis preferred former Soviet-era weapons because they broke down less easily than the higher-tech US weaponry. We provided high-tech solutions, but we built the wrong level of military and security technology for local conditions.

An estimated 70 percent of Afghanistan’s population is illiterate. What that means is that after we deliver state-of-the art military electronics equipment, and then something goes wrong, the equipment can’t be fixed, using local expertise. So the US military ends up resuming control of the abandoned high-tech equipment. According to SIGAR, the ANDSF remains totally dependent on our high-tech close air support and reconnaissance technology to be effective.

This mismatched technology problem is in fact both a cause and a giant metaphor for wasted expenditures in Afghanistan. We continue to build expensive high-tech solutions unsustainable in the Afghan context.

SIGAR estimated in July 2017 the total cost of the war effort to the United States, so far, as $714 billion. An academic study by Professor Neta Crawford of Boston University, a specialist in tallying war costs, estimates an even higher cost to the Afghanistan war, at $877 billion.

That cost can only increase from here, because the ongoing problem is that we can’t seem to walk away financially, without a fiscal collapse in the country. The Afghanistan government, according to SIGAR’s July 2017 quarterly report, is on total financial life-support from the US government.

How do we know about this dependency? Here are the numbers: The Afghanistan government raised $2.1 billion in total revenues in 2016. The cost of the ANDSF alone will be $4.9 billion, while their government as a whole costs an estimated $7.3 billion. Who pays the difference of roughly $5 billion each year? That would be you and me, with some help from international donors.

SIGARIt’s as if we built a $50,000 Habitat-For-Humanity house for someone who badly needed a home, but then burdened the house with technology, utilities and taxes appropriate for a $2 million mansion. The “lucky” recipient now has an unsustainably expensive albatross of a house. He can’t afford to live there. The Afganistan people cannot afford the armed forces, and government, that we’ve built for them.

There’s no foreseeable path to fiscal sustainability for the Afghanistan government. So, we’re stuck there.

There’s very little to celebrate over the blown $70 billion in rebuilding Afghan security forces, or even the between $714 and $877 billion spent to conduct the war since 2001.

If you’re worried about the rising cost of our government, check out SIGAR’s reports and the progress made in our perpetual war, with ill-defined goals, against a shadowy enemy that can’t be defeated.

 

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