Sunday, February 26, 2017

Peter Thiel, the shadow U.S. president

Sanity is getting restored at many places of America.

Just two years ago, Ráchel Doležalová – the white woman pretending to be black – was leading a regional movement of the black women and she was even a university professor. Her leadership reminded me of "Her Excellency" in the Polish cult sci-fi movie The Sexmission – in that movie, the boss of the underground hardcore feminist dystopian society turned out to be male.

These days, Ráchel Doležalová is jobless and expecting to become homeless soon, too. That makes much more sense than her being a leader. Note that I spelled her name according to the Czech standards because I think that she has displayed not just some white trickery but a rather typical Czech way of cheating. She is basically a Czech crook in the U.S.

Meanwhile, Peter Thiel – who was mocked and ostracized in some corners just a few months ago – has become a key Trump adviser if you use the words of the British left-wing daily, The Independent, or Trump's shadow president in the Silicon Valley, if you prefer the language of

Thiel's Palantir [data mining company] spreads its testicles in Europe (OK, maybe they were tentacles, who cares) and was a major force assisting the NSA to spy on the whole world. Lots of Thiel's current and former associates are getting various important jobs.

Not everyone is as pleased as I am. For example, Thiel's "colleagues" at wrote a list of
6 things gay billionaire Peter Thiel could learn from straight billionaire Warren Buffett
The zeroth thing that Thiel should learn is already helpfully described in the title: women are hotter than men. Well, it probably depends on the temperature scale you are using. ;-)

But they discuss six more differences between Thiel and Buffett. You know, I do think that Buffett is an exceptional man but it seems clear that I feel closer to Thiel in all these six points. starts as follows:
1. Philantropy: Buffett, like Gates, has promised to spread most of his wealth to charity during his lifetime. folks think that it's a great idea and they try to mock Thiel's analogous "pet causes" such as the colonies on the sea, immortality, and paying the people to stop wasting their time in the college.

It just happens that this very pledge by Gates and Buffett was one of the topics that I personally discussed with Peter Thiel back in 2010 and I do believe that our thinking about this idea is similar. Their pledge is irrational.

If Gates and Buffett find the increase of their wealth from $1 billion to $60 billion unhelpful, they should have stopped accumulating their wealth when they were standing near $1 billion. However, although most mortals can't imagine the difference too well, there are numerous things that you may do with $60 billion that are impossible with $1 billion.

There are always new things – sometimes qualitatively new things – that you may do if you increase your wealth by an order of magnitude or two. And ordinary greed just doesn't stop at $100 million or $10 billion. This is an elementary point that most Czech voters of the Slovak populist Babiš certainly don't seem to grasp. They think that his wealth – about $3 billion, like Trump's – is infinite so he no longer has any incentives to take away another billion from the government budget etc. Well, it's not infinite. With his wealth, he can do some things but not others. It's clear that he wants to be even wealthier – he's not even the wealthiest Czech citizen (he's #2). And I think it's pretty clear that his political career was designed to make him even richer or more powerful. He wants to save money on taxes or any other expenses and he may be – and almost certainly is – a much bigger expense for the country's budget than the owner of a pub who doesn't pay a few dollars in taxes.

But back to Thiel and Buffett. For Thiel, the immortality or colonies-on-the-sea projects are exciting toys, a toy for wealthy adults. It brings him satisfaction to play with these toys. And you know, if you do a thing like that – especially immortality – it will be more important than a billion of condoms or liters of water that you may bring to Africa (which may be consumed rather quickly).

Buffett's and Gates' pledge is counterproductive from their own viewpoint – if they're rational – as well as from the mankind's viewpoint, I think. If billions are poured into "generic charity", the effect is almost the same as the increase of inflation. Instead of pouring billions all over continents, you could equally drown them in the ocean. It wouldn't make much difference. They're almost perfectly "undoing" all the things that they had to do to earn the bucks. Earning billions is about concentration of capital, the spreading of the money is dilution – the exactly opposite process. They are wasting their comparative advantage – which is their being men who know how to really cleverly invest or use some money. They're basically leaving this job to the average people. The capital that is spread like that no longer plays its creative role. Only concentrated capital – and it must be in the hands of the financially skillful or creative ones – is playing the amazing role that has led to the progress of the mankind.

If I had $60 billion, of course I could easily imagine to give $59.999 billion to charity – because I seem to know now that one million dollars is more than what you "really need". ;-) But I wouldn't be doing such a thing. One spreads the money to charities once he has run out of ideas how to play or invest them interestingly. Peter Thiel hasn't intellectually retired in this sense and I think it's great that he hasn't.
2. Commitment to community: Buffett is doing lots for Omaha and even more than Thiel for Thiel's place
Thiel was born in Frankfurt and still holds the German citizenship. I think it's obvious that even though the Bay Area has meant a lot for him, his relationship to it must be restricted. His feelings are often international, I would claim that he is a part-time European, too, and the Bay Area must often seem too small and provincial to him. People who think that Trump is too nationalist – and maybe even others – should welcome the fact that Trump's key adviser is cosmopolitan in Thiel's way. I find it childish for them to complain that Thiel isn't obsessed with lunches or LGBTQ orgies in the Bay Area. They're not necessarily his priorities and they don't have to be his priorities.
3. Willingness to pay his fair share: Buffett wants progressive taxation praise Buffett for his weird claims that it's unfair for Buffett to pay so low taxes while Thiel is criticized for believing that a small government is better than a big one and that taxes are a form of theft. But you know, taxes are a form of theft and a big government is a bigger problem – and a more effective decelerator of the progress – than a smaller one. basically criticize Thiel for his being libertarian or right-wing on the big-government issues. The editors are just left-wing fags while Peter Thiel is right – they should embrace these differences with much more happiness and wisdom.

There's also another difference between Thiel and Buffett that may contribute to Buffett's bad conscience that leads him to all this insane support for progressive taxation and similar pathologies: Buffett has earned almost everything from "financial operations" (purchases and sales of companies) while Thiel has also helped to "build actual things that wouldn't otherwise exist". Maybe, Buffett has some ethical reasons to think that everything he has earned was earned thanks to the society. But this is simply not the case of Peter Thiel. More precisely, it's not the case of either man but it may be more obvious in Thiel's case.
4. Patriotism: Buffett invested in 2008 to increase the morale of the Americans while Thiel has backup plans to move to New Zealand if things go wrong in the U.S.
First of all, Buffett prefers to invest to the U.S. companies because he seems genuinely convinced that they're the best investments in the world. This isn't an example of his "doing something for your country". It's just an opinion about the U.S. that millions of non-Americans actually share. And his 2008 investments weren't any sacrifice. It was unavoidable that the markets would restore their health at some point – the question was just when, not if.

In particular, in late September 2008, Buffett invested $5 billion to Goldman Sachs. Was it a sacrifice? Just look at the damn graphs of the GS stock price. It peaked earlier in 2008 at about $235. He bought it at about $140 per stock (maybe even $115-$125 a stock; if that's the case, the future would be rosier than what I describe). Yes, it did continue to drop and touched the low of $50 in November 2008. But from that moment on, it was increasing. Buffett was already making a positive profit in June 2009, just some 9 months after his investment, and the stock is worth about $250 now. His Goldman Sachs investment in 2008 was no patriotic sacrifice. Instead, it was the classic example of Buffett's purchase when things are cheap!

On the other hand, I did buy my first stock funds in Spring 2008 when they were 20% beneath a peak and it looked cheap to me. Well, these investments lost over 60% of their value in the following year – and I still haven't quite recovered that loss (just to be sure, the later investments into stocks and stock funds were almost entirely profitable). That's patriotism! ;-) No, I am not serious. I do think it's mostly bad luck. But the difference might be due to Buffett's better abilities to find the bottom. And, after all, Buffett's large purchase could have inspired other investors, too.

On the other hand, Thiel is thinking about New Zealand. I don't think it's a big sin for an American – or German – to love New Zealand. In fact, it's not a sin for a Czech, either. The Czech Public Television Facebook account recently reported that a man named Luboš Motl was one of the dozens of tourists who helped to save the cetaceans who lost their orientation and emerged on the beach somewhere in New Zealand. (I exchanged my first e-mails with Mr Luboš Motl some 20 years ago.) And more generally, I think it's right that people aren't "fundamentalist" about their life in their homeland. When things go very wrong with the politics, when the freedom gets heavily suppressed or taxes become too high, it's often sensible for people like Thiel – but even for much more ordinary people – to emigrate. This "potential for emigration of the elite" is a force or mechanism that discourages the politicians from doing really bad things to their countries.

Various people have left France because the taxation was too high. On the other hand, a top socialist presidential candidate in France offered itself to be the new Gulag Paradise that will host all the climate alarmist crooks who should be expelled from their jobs in the U.S. in coming months or years. Needless to say, countries that lose their credible elite and replace it with crooks similar to the climate alarmists may end rather badly.
5. Belief in democracy: Buffett did childish things to increase the voter turnout, Thiel said that he no longer believed in the compatibility of freedom and democracy
I wrote "childish" because I do think that it was childish for Buffett to shuttle the people to polling stations. I can't imagine any sense in which it's meaningful to do such things. He must have developed some instinctive reaction that makes him feel happy when the official turnout turns out to be high.

But there's really nothing great about a high turnout, especially if you increased it artificially by such Buffett shuttles. You know, when a voter doesn't vote, he is also expressing some sentiment, he is also evaluating the list of candidates in a certain way. None of them is good enough for the voter or the voter doesn't care or the voter doesn't see any substantial difference between the candidates. It's a possibility. I do prefer when people vote for somebody – and I think that all the people who say that "there's nobody" are just talking rubbish, especially if the number of competing parties is 30, like in typical Czech elections. But I don't think it improves the society in any way if you force the undecided or disillusioned people to vote. Such shuttles are bringing noise and distortions to the results of the elections.

Czech ex-president Klaus was frequently asked about similar things – whom he is gonna vote for now etc. He has always said that people should vote and it's nonsense that they can't choose anybody. Except that now he basically admits that he's not excited by any party and he's close enough to the disillusion, too. Well, that's how things are. Parties that are influential and vigorous are dragging the country in wrong directions while the parties whose direction could be basically right are unconvincing, lacking excitement, charisma, and a clear and convincing articulation of their ideas and plans. Of course it would be natural for Klaus not to vote.

Just to be sure, I have always voted whenever it was physically possible and with one exception, I was a loyal voter of the ODS party that Klaus had founded 25 years ago – in spite of the fluctuating or decreasing excitement. Two exceptions were Zeman in the presidential elections and Mach in the European Parliament elections (once, he got there).

On the other hand, says that Thiel no longer believes in the compatibility of freedom and democracy. Well, my belief in this co-existence fluctuates along with their cooperation in the real world. Right now, I think that they don't seem compatible in Czech politics. A shocking fraction – 30-36 percent, according to various polls – is planning to vote for Babiš, a former communist secret snitch (I've read so many detailed documents about that from the communist era that I would be thrilled to defend this statement of mine in the court) and a communist director who doesn't hide his plan to become a new Führer. Yesterday, he was "elected" the boss of his own "movement" again – no counter-candidate, of course. They have radically increased his powers within the "movement". (I write "movement" in the quotes because it's silly to call it in this way. A movement should be organized by many people from below, not a business-political project of one rich guy who is basically hiring everyone else.)

This guy has repeatedly described the Parliament as a "place for babbling and no work" – he basically parroted Adolf Hitler in verbatim – and he wants to reduce both chambers of the Parliament by 70% now. Yesterday, he also attacked late ex-president Havel for his failure to establish Czechia as a "presidential system" (Babiš really means a Third-Reich-style dictatorship and yes, he wants to be the dictator). He believes that all other entrepreneurs are thieves – although the cold hard data from his EET basically prove that they're not stealing a penny since the revenue hasn't increased in the first months when all the receipts had to be reported by the EET online system. And he thinks that he has the right to decide what jobs people can do or can't do. They should be workers in big factories because that's our tradition, he says – so people working in their own business are just "crap" that is not needed, he repeatedly said.

Are we really back in the era when fucked-up and inarticulate Slovak bumpkins who have made their fortune by incorporating themselves into the communist structures, robbing their colleagues, and trading with feces are gonna "dictate" whether owners of small businesses are "obliged" to become workers in a factory again? Are there really people who are not shocked by the vision of this return straight to the Stalinist 1950s?

He has said – and he constantly repeats – so many things that deny the totally basic freedoms of the citizens of the Czech Republic and their very human dignity that every person with at least elementary sensitivity with respect to the Western values must be absolutely flabbergasted. He deserved the capital punishment in late 1989 as a member of the stinkiest layer of the totalitarian filth and he clearly deserves the capital punishment now because he's obviously planning to terminate the totally basic freedoms in my homeland. But you still find 30-36 percent of voters who would not only utterly fail to execute him even if you gave them the loaded gun with all the required permissions into their hand but they actually choose him and often root for him. Clearly, the cold hard data in Czechia show that freedom isn't compatible with democracy right now. The compatibility has often looked better than now (e.g. when ODS was anomalously getting those 35 percent of votes) but there have never been too good reasons to be convinced that the compatibility was sustainable.

It's not just the 30-36 percent of voters of ANO. Additional 10-15 percent will vote for the unreformed Communist Party and about 1/2 of the voters (and politicians) of the social democratic party (that is expected to get some 15-20 percent) want to deconstruct freedom in the Czech Republic, too. These groups are very likely to add up to more than 50% of the Czech electorate – the fresh polls indicate that a majority of the Czech voters consider freedom basically worthless – and when it's so, democracy is simply going to work against freedom. You can't change this basic logic. Maybe the U.S. has a much lower probability that more than 50% of the voters will support the self-evident removal of some rather basic freedoms but in countries like mine, freedom constantly fights for its bare survival because a huge fraction of the people – or rabble – just see nothing wrong about individuals like Hitler, Stalin, Gottwald, or Babiš.

That's why some regime with reduced democracy – perhaps along the lines of Pinochet's regime in Chile – would be a safer setup to preserve freedom in Czechia in the long run (or at least medium run). It would be crazy to close one's eyes whenever we see rather clear evidence that Thiel is right.
6. Rewarding others: Buffett kept on earning, Thiel did two great transactions
I think that the title "rewarding others" has nothing to do with the topic of the "sixth lesson that Thiel should learn from Buffett". Buffett's investments did grow most of the time and his successes seemed repeatable. (However, sometimes Buffett's returns were no different from the average stock investor's returns.) On the other hand, the gay writers assert that Thiel has increased his wealth mainly in two big steps – when PayPal and Facebook were being created as big companies.

It may be partly true. But you know, what Buffett was doing was a much more uniform kind of work that followed certain rules – it was a boring, monotonous drudgery to earn the billions – while Thiel's projects were more innovative and every one of them is actually doing "totally new things". As I have already written, Buffett was just buying and selling while Thiel has been building and is still building lots of very diverse things. There's no systematic way to be successful in everything and many totally new things one may do. But Thiel has still been successful in numerous enterprises that show that his PayPal (or Facebook) investments weren't really just coincidences.

After all, we could add some recent victories – including his successful liquidation of and his incorporation to the U.S. presidency – which indicate that his investments keep on being rather ingenious.

There's one more point that penetrated many paragraphs in this blog post. Buffett was buying and selling and he has earned lots of money. But in some sense, he doesn't really know how to spend them. His purchases of the companies aren't the classic "spending" of the money that one earned – they are mainly a part of his work to earn the money in the future. On the other hand, Thiel (and others, e.g. Milner) are paying for assorted "adult men's toys", as I mentioned, and those are really ways to spend the money. They may be repaid or not but they're clearly a part of the fun in life which can't be classified as a part of some monotonous work to mindlessly earn the money.

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