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Peter Thiel's Theory of California

2 minutes read

Has tech wealth turned California into a one-party state?

I'm constantly hearing about California’s acute mismanagement problems, but I haven't heard any good, general theories of what's going on. Until recently.

Many of California's issues have become nation-wide talking points: Extreme homelessness, high taxes causing migration to Texas and Florida, viral videos of mobs looting stores, soft-on-crime District Attorneys, an attempted recall of Governor Newsom, and so on.

Peter Thiel recently presented an interesting theory of California, which may account for several of these issues.

Thiel’s theory is that tech wealth has allowed government workers to capture the state.

California has been cursed by tech wealth, according to Thiel, in the same way that countries like Venezuela are cursed by the oil in their ground.

Is Thiel right?

Thiel argues that government workers in California make 50% more than private-sector workers. This difference is greater in California than any other state.

In 2019, employees of the state government earned an average of $143,000 annually.

Thiel cites Caroll Quigley, a historian who, according to Thiel, says that the Republican Party's base is the middle class and the Democratic Party’s base is everything else.

In other words, Thiel thinks the middle class has gradually left California for other states. This would explain why the Democratic Party is so strong in California, enjoying a 30-point dominance.

Indeed, since 2000, California has seen 2.6 million net domestic migrants. That’s as if the populations of San Francisco, San Diego, and Anaheim all picked up and moved to other states.

Thiel even suggests that California’s wealthy class may have selfishly encouraged the proliferation of homelessness in places like San Francisco.

The more homeless people running around the lower part of town, the more valuable their homes would become on the hills and cliffs.

In Thiel’s model, the exceptional wealth generated by Silicon Valley is what motivates and sustains the government’s exceptional corruption.

Thiel’s thesis requires a bit more testing, but I think he’s on to something.

Thiel is a great example of how to do social science outside of the typical institutional pathways.

You can listen to Thiel’s whole presentation here, but I've summed it up for you here.

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