ON CONSERVATIVE REALISM AND NATIONAL SECURITY
BIG TECH AND CHINA: WHAT DO WE NEED FROM SILICON VALLEY?
FEATURING SPECIAL GUEST PETER THIEL
APRIL 6, 2021
>>Hugh Hewitt: Welcome to The Nixon Seminar. I’m Hugh Hewitt, President of the Nixon Foundation. We are pleased to welcome tonight three new members of The Seminar – Dr. Monica Crowley, Dr. Nadia Schadlow, and Congressman Michael Waltz. We are joined by our twelve other members and our co-chairmen – former Secretary of State Michael Pompeo and former National Security Advisor Robert O’Brien. Ambassador O’Brien and Secretary Pompeo are joined by a special guest tonight, entrepreneur and author Peter Thiel. And I turn it over to you Mr. Secretary.
>>Michael Pompeo: Alright Hugh, thank you. Peter, thanks for joining us. It’s great to be with everyone this evening. I look forward to a wide open discussion on a range of things that impact high tech America and national security, and we will spend a lot of time talking about China and the Chinese Communist Party, I am sure. Peter, I thought I’d start things off tonight with just a general question. You spend a lot of time – and I’ve read most of what you have written – you spend a lot of time thinking and writing about the technology fight between the west and the ideas that the Chinese communist party puts forward – whether that’s disinformation or capacity to move digits around the world. They now have a full-on digital currency that they are deploying. Give us all your sense of where we sit today, if we were to draw up the assets and liabilities for the west and for the Chinese Communist Party – how would you evaluate the relative positions across various technology spaces?
>>Peter Thiel: Well, it’s a pretty broad question. I think that in many ways we are, in most areas we are still ahead of China, and we are still far more innovative. I think innovation happens in the west, and shockingly little innovation happens in China. But they have been very good at copying things, stealing things, and to some extent if China is able to just catch up, there is a way in which it will become a more powerful country. You know, China has four times the population of the US, and so if you converge and China gets to parity on productivity, on technology, will you have four times the GDP and maybe 4 times the military and it will be the dominant power. So, Parity means the west is losing, it means the U.S. is losing at parity.
>>Michael Pompeo: Of the technology, if you took AI or machine learning or block chain – how much of that did they create and how much have they stolen from the west? Do you have a sense for those?
>>Peter Thiel: Well I think, again those aren’t the only two possibilities, I don’t think they created very much, I think a lot of it was just handed over from the west so it wasn’t even stolen.
You know, I criticized Google a few years ago for refusing to work on its AI technology on Project Maven with the U.S. military, but working with Chinese universities and Chinese researchers. And since everything in China is a civilian- military fusion, Google was effectively working with the Chinese military, not with the American military. And there was sort of this question, “Why Google was doing this?” And one of the things that I was sort of told by some of the insiders at Google was they figured they might as well give the technology out through the front door, because if they didn’t give it – it would get stolen anyway.
>>Michael Pompeo: Yeah.
>>Peter Thiel: It doesn’t quite count.
>>Michael Pompeo: Co-opted. Yes. Robert?
>>Robert O’Brien: Thank you, Mr. Secretary. So, one of the things we have seen and it has happened faster than the experts anticipated especially over the past decade, is the Chinese military and naval services have closed the gap on the U.S., both in terms of quantity but also quality much faster than expected, and so the gap – I agree with you, I think we still have an edge, but the gap is getting smaller. They’ve done things, they’re looking at their military platforms the way that maybe Silicon Valley or industry would look at a product. So there is iterative manufacturing and design, beta testing, constantly upgrading. And we are looking at what the Pentagon does, where we have these pristine processes that take decades to get to a platform that is perfect, or near perfect, but it’s taking us forever to get the products designed and then eventually deployed and at very high expense. What does the Pentagon need to do to keep the edge and also to fix procurement? You know, in some ways, to make sure that the Chinese don’t catch up the way they appear to be doing relatively quickly.
>>Peter Thiel: Yes. Well, I think the procurement question is obviously a very broad question, but I think what was healthy about the military, you know, industry complex and what was relatively healthy about it during the Cold War, was we had some balance of bigger companies and a lot of smaller companies in the ecosystem, and I think big companies are generally good at doing things at scale, small companies are generally better at innovating and coming out with new products, and you want some ecosystem that has a blend of both kinds of companies. And I think what happened in ’89 after the Cold War ended, was there was a shrinking of military budgets, but there was also an incredible consolidation of the defense industry, and the consolidation actually meant the money was spent less efficiently – especially with respect to R&D. And so we spent less money and less efficiently, and so there was some massive decline in the effectiveness of the system in the 90s. I think there have been various attempts over the last half decade to reform the procurement process, to figure out ways to fund smaller companies and do some — allocate some R&D to all these different projects. I think we’ve improved some, but it has to be a sort of integrative process. You don’t want to get a $5 million DARPA grant, where what you invent gets stuck in the broom closet in the Pentagon. It has to somehow, you have to somehow be able to get a pilot, it scales and somehow be integrated into the whole procurement process, and it’s just, there are all these risk averse things, where you probably — if you are — if you are working the Defense Department it is always safe to go with IBM or something like that. But it never works.
>>Michael Pompeo: You know, putting these together in some way in terms of how this technology moves – in a good year, in 2019, there were 360,000 Chinese students studying at American universities, there were less than 30,000 American’s studying at Chinese universities, “in-country” in Chinese universities – make any sense?
>>Peter Thiel: Well, we are an open society and they are not.
>>Michael Pompeo: Right.
>>Peter Thiel: They are not open in any way, It’s just incredible. I spent some time in China, in 2015 and 2016, and you know, my book on start-ups did surprisingly well so I did this two-week book tour. But, It is — you know, there are sort of crazy ways if you just drive around Beijing, and you have all these military, paramilitary, militarized police – they are defending themselves against their own population. So even within China, things are segmented and closed off in all sorts of ways, and even though there are some number of westerners in there, it’s also as a ratio, you know, it’s a population 30,000 in a population of 1.4 billion. Which is different than 360,000 in a population of 330 million. So it’s not 10 to 1 – it’s actually 40 to 1 adjusted for population.
>>Michael Pompeo: Yea, that kinda the question as a policy maker. You think of deploying capital – you think about where to invest in the best ideas, the most innovative technologies, and we have a whole bunch of students coming here, who are either going to go back or stay and work here, and become part of the US workforce for often large US companies, but sometimes small US companies, and the question is – taken we are an in fact an “open country, I think it makes it riskier to have those students studying here. Because the capacity for that information to end up in places that benefits the Chinese Communist Party’s model, it’s ideology is pretty significant. And just, as you stare at workforce issues here in the United States, and there was a President trying to figure out what the right policy was – do you have thoughts about how they should begin to think about that?
>>Peter Thiel: I think you are basically right. You want to be in the more restrictive zone.
It is quite hard to do anything given where a lot of the university leadership is sort of in a completely deranged space on this, where they think of graduate students as sort of indentured servants, cheap underpaid labor – and maybe the Chinese grad students are actually less demanding and are willing to get paid less or something. And there are all sorts of weird ways that universities have not been very helpful, and I think we should put a lot of pressure on them, and be looking at “Are they getting money from Chinese funding?” and think there has probably been a lot of abuse on this in various ways.
>>Robert O’Brien: Now Peter, following up on Mike’s question which I think there is a consensus now that AI and quantum computing are the new high grounds, or at least going to be the new high grounds for the future, and I think there is a consensus we have an edge in both of those areas.
>>Peter Thiel: Yes
>>Robert O’Brien: Although it is a diminished edge over where it was a few years back.
What is your advice on Biden administration, how do we stay ahead on quantum and AI, keeping in mind that we are an open society and we have all these graduate students over here and that sort of thing, what do we need to do to stay in the forefront – because my concern is that if we fall behind and lose the high ground, we are going to be in for a rough spell.
>>Peter Theil: The thing that I would say that is tricky about AI is that there are a lot of aspects about the technology that we don’t want to pursuing too much because – AI is what you need for a surveillance society. I’ve had this riff, where people often say “crypto” or Bitcoin is a vaguely libertarian technology. Technology is politically neutral, but can still be — if crypto is kind of libertarian, then AI is kind of communist. And so, even though we are ahead on the basic science of AI, China is willing to apply it and turn the entire society into a face recognition surveillance state that is far more intrusive, far more totalitarian than even Stalinist Russia was. That is something we are not willing to do. It is a two-edged thing in that way.
>>Robert O’Brien: Let me follow up on that question, Mike, if I can jump in.
>>Michael Pompeo: Yes. Of course.
>>Robert O’Brien: What do these folks do, we got these authoritarian countries now, the PRCs the lead example but you got others like Russia, that will be able to employ these high-tech tools to create this total surveillance society – you know, something beyond even Orwell and when you go back read 1984 it seems a little quaint right now. How are those people going to defeat the high-tech tools that are oppressing them or surveilling them, and how do they ever win back their freedom or liberty if a government or regime is willing to use those tools, the way we have seen the PRC and others employ them – What are your thoughts on that?
>>Peter Thiel: I’m not sure. Certainly in the 1980s I had the view that the Soviet Union could never be reformed from within, and that even the Eastern Bloc countries would — you know, it was high-tech enough, you had the secret police with guns, they could break up any protest and it would never change. And certainly the history of the late 80s suggests there is more possibility than we think, and it is always — you know, there probably are ways in which the Chinese governments certainly not acting like the technologies are that straightforward, they are reinforced with concentration camps and lots of police and lots of secret police and yeah. It is a — it is — it’s not obvious how you would change that at all. This is — you know, it is — it is not developing at all in the way that people — you know, that people — that people thought it was going to. You know, one of the — I think that — I — it would be interesting to hear your view on this: one thought I always had was, why did it take us so long to wake up to the threat of China, to the way it was not becoming a liberal democracy and why we were able to tell ourselves all these fictional stories in the west for so long? The crazy thought experiment I have on it was that — you know, if Tiananmen happened one year later, we might have woken up 27 years earlier. So Tiananmen happened in June of 1989 and Brent Scowcroft from the Bush 41 administration went to China and said don’t worry about it because you are anti–soviet and what matters.
>>Mike Pompeo: Had it happened 2 years later.
>>Peter Thiel: Even one year later, we might have come to senses 27 years earlier or something like that.
>>Mike Pompeo: I think that’s right. There are lots of theories out there. In the end it was easy and we believed we had destroyed the Soviet Union.
>>Peter Thiel: Right.
>>Michael Pompeo: We were right about that, and so who needs another long twilight struggle, who needs to go fight that, and so for a long time, and deep commercial interests became connected to continuing this as well.
>>Peter Thiel: It is very different from the Soviet Cold War conflict, where there was very little economic overlap.
>>Robert O’Brien: I think everyone thought, well, if could sell one hamburger to every Chinese person, I could sell a billion hamburgers a year. That’s kind of the fill in the blank with the product. It was such an allure, the market was so attractive to American business folks that those commercial interests caused people to tell themselves a story that just wasn’t true.
>>Peter Thiel: Cheap supply chains for Walmart or Apple.
>>Michael Pompeo: Absolutely. I had just one more question. A comment to your point about we didn’t know – I remember I was a young soldier patrolling the East German border in 1989, and literally left two weeks before that wall came down. We had no earthly idea it was coming down two weeks on. I watch the Chinese, I watch how they respond when we talk about the Chinese Communist Party as separate from the country of China itself. It’s fragile. Whether it’s Tibet or Mongolia or Taiwan or Hong Kong – they know, and that’s why surveillance state has to be so strong.
>>Peter Thiel: How good of a model do you think we currently have at all of what is going on in China? Is Xi in absolute control, are there lots of factions that might overthrow him any day?
>>Michael Pompeo: I think we have a pretty good understanding. I think of this in the Middle East, and we think we know what is going on and the reality is it is so much more complex, so much more tribal, so much more intricate than we can ever fully appreciate from the outside. As hard as we work on it, I think we often miss things. That’s why we didn’t see the fall of Soviet Union coming. It’s why you see these moments where the intelligence community in the U.S. and the west just can’t get it right.
>>Robert O’Brien: Although, Xi seems to have a very serious grasp on power and the early corruption purges were clearly a cover for getting rid of political rivals and he seems pretty unrivaled right now, and that may not be the case but all appearances are is that he has a stranglehold on power.
>>Michael Pompeo: And we should take him at his word for his intentions. One that comes to technology, and it’s a narrower question than where I began. Our team spent a lot of time thinking about semiconductors and the ecosystem around it, and the manufacturing of semiconductors. I went back this week, you sent a note out, and I reread the Nixon Kennedy debates, where they were debating these two little islands off the coast of China that are a part of Taiwan formally – deep intricate debates. Taiwan is even more central today to the high-tech infrastructure for the world – TSMC itself – and all of the subsidiary technologies around it. I wonder what your sense is? We have a policy, it’s the one China policy and communiques that flows from it, and the Trump Administration largely stayed with that. Give me your sense of what would happen if that were upended? Not necessarily through military force. We didn’t steal it. If it is coerced into semiconductors not being available for, the semiconductors not being as readily available to the west. What’s your sense on how should we, and how should the private sector think about that as well?
>>Peter Thiel: Well, I think that there are basically two cutting edge semiconductor manufacturers, Taiwan Semiconductor and Samsung. There are probably something like 30 semiconductor companies that were cutting edge 20 years ago, or 30 years ago. It has gotten a lot more expensive, so these scale economies and so then you have questions about how many semiconductors do you need that are cutting edge versus more cheap mass produced things?
If you’re going to have a self-driving car, that probably will require a cutting edge semiconductor and there’s probably some weird way in which from an economic point of view you can almost think of Taiwan as just this one company. Taiwan Semiconductor and then the political questions are, who really controls the company and is it — you know, is it — does the Chinese Communist Party have hook into it, or are they still more scared of them? But somehow the board corporate politics of Taiwan Semiconductor are probably in some ways a proxy for all of Taiwan, and I think Samsung is probably the other one in the mix. One of the very strange dynamics in Silicon Valley is people don’t do very much with semiconductors anymore. I am a venture capitalist. I get pitched on semiconductor startups ever few years, but then it’s always, I haven’t done much with it, I don’t know what is going on and it seems expensive and complicated, and I think one of the weird problems with 20 years of intellectual property theft, and where IP doesn’t really have as much value as you used to, is that you learn not to invest in things like that. You can think of consumer internet, which has been the be all and end all for tech investing in the U.S. for the last quarter century, as the kind of thing you invest in a world where there are no intellectual property rights, because consumer internet there are these companies, there are brands, and network effects, and you get to scale, and even if people copy you they can never take it over. Whereas semiconductors are in a very different zone, and I think we are still ahead of it in lots of ways on the design side. It is one of the places where we can do more to block China than they can do to block us, but we have lost a lot of ground in the last 20 years.
>>Robert O’Brien: I think we did that at the end of the Trump administration, I worked with commerce and state, and when I first took office as National Security Advisor everyone said the Huawei the fight is over, we’ve lost. We decided, Mike and Wilbur and Larry Kudlow and I got together and decided we haven’t lost. Using the design tools and some of the other things we were able to put a crimp on Huawei, and now I think 29 of 30 western democracies in Europe – plus Japan, Australia and India have moved away from Huawei and want trusted providers, and it did show we have some leverage still.
>>Peter Thiel: I would say in general, where China’s at best in parity, mostly still behind us, Huawei may be the one exception at least with all of the subsidies they have given the company. What do you think the alternative to Huawei is? Is it Erikson and Nokia? Which I think of is not great, slightly sclerotic companies, but maybe that’s the best we can do? Or my sort of luddite answer is that maybe we should just say that the 5G technology is overrated, and maybe we can be a little bit slower in rolling it out, even though you can never say that in public seemingly.
>>Robert O’Brien: I think that actually both of those answers are correct. I don’t think we have to be quite as fast as we thought we did – I look at a company like Rakuten in Japan. We were out – Mike and Larry and even the President – were out pushing Ericsson, Nokia, and Rakuten – the not American companies, it be nice if we had one. I think Dell is doing some interesting things. I think Microsoft is doing interesting things. And think that the technology with some of theses radio towers and radio devices are small and inexpensive, and we swapped in and out like servers are now. I think it has the potential to leap frog what Huawei is doing. And so I’m pretty bullish on it, but I think it will take a little more time. The problem will be, and I think you hit the nail on the head Peter, in countries in Africa and Latin America, where there’s zero money and even if technology that the west develops is less expensive, which I think it will be, if the Chinese Communist Party is coming in saying – we will give you a free Huawei 5G kit, or we’ll take a loan you can repay with opaque terms but we will put you in a debt trap, but you can have your 5G today and you can pay us back 20 years from now when we take your railroad stock and we take your mines and that sort of thing – it is attractive to take the Huawei if someone is offering it free, or apparently it’s free. And as we know there is nothing free, and these countries will give up a lot of sovereignty by taking Huawei equipment but for certain countries in Africa and Asia and Latin America it’s going to be hard to say no.
>>Peter Thiel: And just, one other area of the tech spectrum – covering a lot of ground here – Mike, maybe I will ask you, how do you think about the space race that is kind of emerging, with some extend Russia, but even more with China, where they are launching killer satellites and maybe space weapons.
>>Mike Pompeo: Yeah.
>>Peter Thiel: And lots of this is of course very classified.
>>Michael Pompeo: A lot is classified. And there are a lot of people who know more about it than I do. Suffice it to say, here is a data point that is useful. In 2019, the Chinese launched more missiles than the rest of the world combined. They just have the resources – the scale of what they’re doing, to work to put up the right satellite, to work to make sure they have capability is staggering – and they are moving very quickly. I don’t want to say much about where we are from a parity perspective, but there will be an enormous amount of energy and resources put into place so that whenever there is confrontation somewhere the world, it doesn’t have to be global one, that space will be able to generate an awful lot of leverage and an awful lot of power for some country who gets this most right.
>>Peter Thiel: And maybe another question on war gaming, where part of the thing that is very strange is China has this sort of new fangled weapons that haven’t really been tested out. They have, “will hypersonic missiles destroy US aircraft carriers,” or “will their satellites be able to knock out our satellites,” and I’m not exactly sure how well it can be gamed out by the Chinese side, since a lot of this stuff hasn’t been tried.
>>Michael Pompeo: Want to take a shot at it Robert, and talk about it?
>>Peter Thiel: How should one think about that? Are they going to be deterred because it’s some new fangled thing they won’t quite know that it works? Or will it embolden them into telling some heroic story, how they’re going to win without taking any casualties at all?
>> Robert O’Brien: It could be both at the same time, right? Number one, I remember a few years back calling Buzz Aldrin, who we had out here at the [Nixon] Library not too long ago, to ask him — he was known as “Dr. Rendezvous” at NASA, I said “how easy will it be for one of these DF-21 or Dongfeng missiles to take out an aircraft carrier?” He said the problem is an aircraft carrier is moving and the missile — it’s a pretty tough shot. On the other hand, if the Chinese built enough of them and saturate a zone it may be tougher in a fast moving aircraft carrier to avoid a missile. Look, the way to deter the Chinese, we — when you talked about the technology theft and the copying, all of the hypersonic technology that the Chinese have that are now deploying and their missiles, was stolen from us, or obtained in gray market by open source means. During the Obama administration when we stopped doing our hypersonic research and deployment, the Chinese leapt ahead. One of the things that was a triumph for the last administration was refunding the military. The Chinese have sophisticated weapons, we’ve got some pretty sophisticated weapons ourselves. What we need to do – Peace through strength works, and we need to get those platforms deployed, not just do research on them and talk about them, but we’ve got to get them deployed, so we have to put the Chinese at risk right now. They are putting us at risk, we’ve got to put their airfields, their ships, their launch sites at risk, the way they are doing ours with the weapons they are deploying quickly. At the end of the day I take our qualitative edge any day over theirs, but we have to continue to fund the DOD, and we have to make sure these cutting edge weapons that we have done a great job developing are actually getting deployed, not just like you talked about earlier, sitting in a broom closet at the Pentagon.
>>Michael Pompeo: Hugh, have you got some folks out there that would like to provide some questions to Peter?
>>Hugh Hewitt: I will start with Congressman Michael Waltz. Congressman, you have the floor.
>>Congressman Michael Waltz: Thanks Hugh, can you hear me okay?
>>Hugh Hewitt: We do.
>>Congressman Michael Waltz: Well, great to be with you. Robert, great to see you. Mike, great to see you. We miss you guys in DC, oh my God. I used to say Afghanistan was tough, but there are days these days. Peter, thanks so much for joining us. You know, I come at this with a business background, but also I’m sitting now as the ranking Republican on the Research and Technology Committee, also on Space and the Armed Services. And, you know, we’ve discussed a lot, obviously how the IP stuff that is either being handed over, or IP that is being stolen through cyber and through other means. I’m very interested in your thoughts, putting on your venture capital hat, on how we block and tackle and fence what is going on in the MNA world. We’re seeing companies small, medium, and large – whether they’re chip manufacturers, CRISPR technology, advanced materials — really down the shopping list that are getting gobbled you through MNA and the industry is doing quite well on it. Of course, we have Cyfius, but that is frankly hugely under resourced and really only scratching the tip of the iceberg. DOD just rolled out a trusted capital mechanism, but that is a process, that is a vetting process. What I’m interested in is, what from your perspective do you think we can do either legislatively or importantly from a technology standpoint? I have attended a number of presentations looking at how AI can follow the money and can look at beneficial ownership and help us understand the money flows into the venture capital world, so that we can protect some of these technologies. You know, again, particularly from my vantage point as the head Republican on Research and Tech sub-committee. Thanks so much. I will mute and hand it over to you, Peter.
>>Peter Thiel: Yes, well I think that there is sort of a lot of nuance to this, but to first approximation, you want to have — make it harder for Chinese investors to invest in the U.S. and perhaps we should also make it a little bit harder for American investors to invest in China, because I think one of the ways for the political game theory, the political economy that always works, we have these U.S. investors that invest in China that become a big constituency for open capital flows, for doing this, I think a decent part of the Wall Street crowd is pretty bad in this regard. So, I would dial it back on both sides, and maybe making it harder for US investors to invest in China is almost an equally important part of this.
>>Hugh Hewitt: Mary Kissel. You’re next.
>>Congressman Michael Waltz: We’re funding our greatest adversary, both through our capital flows, but also through what we’re handing over. So certainly, I’d welcome any follow up ideas you have.
>>Hugh Hewitt: Mary Kissel.
>>Mary Kissel: Thanks Hugh. Peter, thank you for joining us. And Robert and Secretary, it’s great to be with you. It just occurs to me we’re assuming, that maybe the viewing audience knows why we care so much about this. I just want to say, we deal with a lot of authoritarian regimes, but there’s one that has the capability to dominate, and that’s China. Peter, it seems like they’re in a tech war with us, but we’re not in a tech war with them yet. And they have certain advantages particularly on the big data front, in that they can command the collection of an enormous amount of data that’s fundamental to AI, often from countries that they dominate – near, abroad, and elsewhere. They’re also collecting through elicit means. How do we compete with that? Do we need a free world coalition on the data front? And secondly, and I think this was implied earlier, is there a way to innovate around it? We were talking about 5G. Does star link kinda make that obsolete? These are difficult questions, but maybe tackle those two.
>>Peter Thiel: Well, I think I got the first part of that question. You know, I do think that seeing China in an adversarial way would be a helpful start. And Silicon Valley has not been that good on this. Although, in some ways, it’s structurally better than Wall Street or Hollywood, or the Universities, because Silicon Valley for the most part has been frozen out of China. And so it’s not — it doesn’t naturally believe it can get that much out of it. If you look at the big five tech companies, Google, Facebook, Amazon, Microsoft virtually have very, very little presence in China. So they aren’t naturally a pro-China constituency. Apple is probably the one that’s structurally a real problem, because the whole iPhone supply chain gets made from China. And Apple is one that has real synergies with China. But then, there’s something about the woke politics inside these companies, the way they think of themselves as not really American companies. And it’s somehow very, very difficult to, for them to have a sharp anti-China edge of any sort whatsoever. At Facebook, I’ll give you an example. You had with the Hong Kong protest a year ago, the employees from Hong Kong were all in favor of the protests and free speech. But there were more employees at Facebook who were born in China than who were born in Hong Kong. And the Chinese nationals actually said that, you know, it was just Western arrogance. And you shouldn’t be taking Hong Kong’s side and things like that. And then the rest of the employees at Facebook sort of stayed out of it. But the internal debate felt like people were actually more anti-Hong Kong than pro-Hong Kong.
>>Robert O’Brien: Let me get follow-up on the question on that. So in Silicon Valley, we’ve got, it’s very woke industry in general about what’s happening here. And yet it’s not very woke in what’s happening to the Uyghurs, what’s happening to the Tibetans, what’s happening to the democrats with a small “d” in Hong Kong, the threats against Taiwan where you’ve got the indigenous people – Taiwanese, many of them are indigenous to Taiwan. So, there seems to be less concern about those folks in Silicon Valley and the industry in general than the concern for woke progressive politics here. What’s driving that and how do they get their conscience back when it comes to folks around the world? Maybe even victims of environmental disaster in the Mekong Delta?
>>Peter Thiel: There are all sorts of things one can say. If you’re concerned about climate change, maybe the tariffs the Trump Administration put on China were way too small? They should be much higher because it’s all a carbon tax. Even the electric cars in China are dirty because they use coal power, they’re dirtier than oil powered cars than China. But somehow it’s very difficult to talk about this stuff coherently. I had a set of conversations with some of the Google people in the deep mind AI technology, “is your AI being used to run the concentration camps in Xinjiang?” and “Well, We don’t know and don’t ask any questions.” You have this almost magical thinking that by pretending that everything is fine, that’s how you engage and have a conversation. And you make the world better. And it’s some combination of wishful thinking. It’s useful idiots, you know, it’s CCP fifth columnist collaborators. So it’s some super position of all these things. But I think if you think of it ideologically or in terms of human rights or something like that, I’m tempted to say it’s just profoundly racist. It’s like saying that because they look different, they’re not white people, they don’t have the same rights. It’s something super wrong. But I don’t quite know how you unlock that.
>>Hugh Hewitt: I’m going to go back to Mary Kissel, I think you had a follow-up, Mary?
>>Mary Kissel: Yes Sorry, just two questions. How do we get around their data collection advantage, Peter, technically, and two, are there other areas where you think we can innovate around them? Thanks.
>>Peter Thiel: Well, I don’t think they have a technical advantage. It’s more of an ideological advantage. In totalitarian communist society, you have no qualms about getting data on everybody, in every way possible. And that’s where I think that makes AI a very tricky technology where even if we’re ahead in theory, there are a lot of ways we don’t actually want to apply in the U.S. or in the West. And they will apply it. And get some advantages from it. I think the hope is always that it doesn’t give you that much of an advantage. How much does big data really tell you about things? And there’s certain kinds of things that can tell you stuff about, but I don’t think it makes as much of a difference as people want beyond maybe having, you know, sort of all these Communist control mechanism on a society. But there’s some places where we probably shouldn’t even be trying to compete.
>>Hugh Hewitt: Let’s go to Jon Burks now. Jon, you’re up.
>>Jonathan Burks: Thank you, Hugh. Peter, can you talk to us a little bit about, concretely what we should do to improve technology adoption at the Pentagon? Obviously, none of us want our technological edge sitting in a closet some place in the Pentagon, but how do we move to really deploying it?
>>Peter Thiel: Again, I’ll just repeat what I said earlier, which is some, I think big companies are better at doing things at scale. Small companies are better at innovating. To the extent we need to innovate, you need to figure out a way to slightly larger fraction of the pie to go to start-up companies, mid-sized companies, new companies with technologies. And there has to be a way for it to be integrated procurement, where you can get a pilot and then there’s a pathway for if the pilot works to scale rapidly and get adopted rapidly. And then these sort of opposite versions that we have now is that you can only deploy things where you’ve been buying things from a customer for a decade or something. And you have these chicken before the egg type rules, which mean that no new person can ever break in. And the big defense primes have gotten to be more scoliotic and less innovative overtime, and its very hard to correct that. But would be one the thing I would zero in on. There Obviously are, there’s all these different areas where we have set programs on like building more aircraft carriers. Maybe we should be doing less of that and be doing more innovative new areas. And that’s always very hard to do, because set programs have constituencies around them, and you can’t disrupt that easily so, when you have a growing defense budget, you probably have more room for innovation. And one of the worries I have is that the defense budget will probably not grow that much in the next few years. And then these innovation challenges are going to be much, much harder. And we’ll have, the risk is we’ll have a repeat of what happened at the end of the Cold War, where the budgets got cut, but innovation got cut a lot more.
>>Hugh Hewitt: Christopher Cox.
>>Christopher Nixon Cox: Thanks, Hugh. Peter, it’s great to be on this panel with you. I just want to start off with a point that your leadership at Palantir and the policies you put in place to say that Palantir won’t deal with countries that are not on good terms with the United States, that’s such a great leadership position you’ve taken in Silicon Valley, and I really commend you for that because that’s going to be the big issue — where does big tech fall in the divide with United States and China? So I commend you for that. My question is regarding digital currency, we’ve seen recently in the last few days, that China has proposed creating their own digital currency. And I was wondering how much of a threat is that to the dollar and its dominance of world markets? And if it is a threat, what can we do about it?
>>Peter Thiel: Well, you know, I think there’s sort of a lot of different things that fall under digital currency, presumably the one that’s electronic form that China envisions, are ones that can be monitored in an even more granularly the way than they’re being monitored currently. The geopolitical thing I sort of wonder about is always, the U.S. dollar is the reserve currency of the world. There are some things about that that are good for the U.S., some things that are more problematic. From China’s point of view, they want to get — they don’t like the U.S. having this reserve currency, because it gives us a lot of leverage over Iranian oil supply chains and all sorts of things like that. They like — they don’t want the Renminbi to become a reserve currency, because then you have to open your capital account and you have to do all sorts of things they really don’t want to do. I think the Euro, you can think of as “in part” of a Chinese weapon against the dollar. The last decade has not quite worked out that way, but China would have liked to see the two reserve currencies, like the Euro. And, even though I’m sort of a pro-crypto, pro-Bitcoin maximalist person – I do wonder whether at this point, Bitcoin should also be thought “in part” as a Chinese financial weapon against the U.S. where it threatens FIAT money, but it especially threatens the U.S. dollar and China wants to do things to weaken it. It’s China’s long Bitcoin, and perhaps from a geopolitical perspective, the U.S. should be asking some tougher questions about exactly how that works. But some internal stable coin in China — that’s not a real cryptocurrency. That’s just some sort of a totalitarian measuring device.
>>Robert O’Brien: Venmo for the government?
>>Peter Thiel: Yes.
>>Hugh Hewitt: Mr. Secretary, are you going to comment on that? That story made the front page of the Journal this morning — of China wanting to go start their own Bitcoin. What do you think about that?
>>Michael Pompeo: If I understand what they are doing, they are digitizing their currency. Separate from Bitcoin, still a FIAT currency, still Chinese money that they are now digitizing. It has huge impacts for their surveillance capacity. They would pitch it as anti-fraud, you can prevent fraud from taking place. I suppose that’s true. This is something I think they believe will reduce the cost of cross-border transactions as well for the Chinese. Your point about not wanting to be a reserve currency, I think is right. I think they’d like it to be among a mix, they want to make sure that when Secretary Pompeo issues sanctions against the Iranian leadership, that there is a way to purchase Iranian oil that we don’t have the capacity to either seize, understand, or impact. So I do think these digital currencies, separate from Bitcoin and cryptocurrencies, are something you’ll see more countries go to. The United States has a project, we’re working on it too. But we will be slow off the gate. It has a lot of implications for us here at home. And my guess is we will not be the leader in this forefront, where an authoritarian regime like China sees nearly all upside from having the capacity to issue currency or take away currency from people who act in ways that are inconsistent with Xi Jinping thought.
>>Robert O’Brien: Absolutely, you think of one of the things that gives folks freedom is the ability to walk in with a $100 bill or some type of currency, and buy something without it being tracked. But the Chinese will be able to track every single purchase that everyone makes. Now we’ve really given up a lot of that privacy in many ways with Amazon, so there’s a record of our purchase these days especially with COVID. But by taking away hard currency that can be used to purchase things, it will give the Chinese Communist Party enormous measure of control over the Chinese people, which then every time they have an opportunity for more control, they will take it. And as Peter pointed out and the Secretary pointed out, this is another big step along with facial recognition, to have total surveillance society. They will know everything single thing you buy.
>> Peter Thiel: On some level, It is really an extraordinary sociological political experiment with no real 20th Century precedent. There are ways that probably, you know, Stalin was still worse than Xi, and probably killed more people. But the degree of hooks that you have into people is just extraordinary. It’s sort of like, it’s sort of like the government is in your innermost core and it’s completely out. It’s like the God of Saint Augustin. It’s Totally outside you, totally inside you, and knows everything about you.
>>Robert O’Brien: Can imagine how this will affect the —
>>Peter Thiel: Omnipotent, malevolent. omnimalevolent
>>Michael Pompeo: It makes the Stasi look like amateurs.
>>Robert O’Brien: — Social credit score when you tie-in the currency?
>>Peter Thiel: What you’re spending money on?
>>Hugh Hewitt: I’ve never heard the term omnimalevolent before. Dr. Schadlow, Nadia Schadlow. It’s your turn.
>>Nadia Schadlow: Hi, it’s great to be here. Hi Peter. It’s nice to see you. I want to ask one question that goes back to your original point when you were discussing AI, and sort of loose equivalent to Communism. How do we address that problem set in our own society of AI, the proliferation of surveillance technology? And essentially setting up an infrastructure or foundation, an infrastructure for “as nascent” but it’s what China has today. And how do we grapple with that? How do we grapple with that today in terms of the U.S.? And actually Europe as well, there is a problem there too. Thanks.
>>Peter Thiel: Well, it’s all probably all these debates we’re having that are versions of sort of privacy versus transparency. So transparency is more efficient. But privacy is an important way in which freedoms are preserved in our societies. And so I think, yeah, I think there are a lot of these ways where I would bet on the privacy side, getting a little bit more traction in the years ahead. Somehow things have been pushed already too far into the Chinese are Communist direction in our own country, where we have maybe few big tech platforms, few big companies that know an uncomfortable amount of things about people. And I think there is going to be some corrective to that in the years ahead. And at the same time, in the military context, we need to just be pushing this, figuring out ways to build semi-autonomous or autonomous weapon systems, and we need to sort of figure out ways to combine cyber and AI. So there’s a military piece where we need to go full steam ahead. And then, in the large social aspect, I would be more careful.
>>Hugh Hewitt: Alex Wong.
>>Alex Wong: Thanks, Hugh. Good to be with everyone again. And thanks Peter for joining our group. It’s a real privilege. Earlier, you touched on the need to continue reforming the defense procurement system to bring applied engineering faster, to bring defense systems faster into our competition with China and not wait so long. But I’m wondering if your thoughts also stray to basic R&D, and how the U.S. government invests in that? Looking at our national labs, looking at the NIH. Are they structured in the right way? Are they doing enough to invest in computing sciences? But also material sciences, in nuclear, and the biosciences to provide that good base for the private sector to continue innovating in applied ways to out run the Chinese. Not just in the defense systems, but also in the wider economy?
>>Peter Thiel: Yeah, my suspicion is the basic science, basic research funding is probably even more inefficiently and worse allocated than the applied things. Because when something is applied, you’re supposed to get something that works and get some tests on how quickly things work. One of the — when I looked into the NIH budgets, one of the striking things is that a lot of the breakthroughs are made by somewhat younger scientists. The average age of a scientist who gets a Nobel Prize, is in their late 30s or early 40s when they make the discoveries where they get a Nobel Prize. And something like maybe 2% of NIH funding goes to scientists who are under age 40. If you look at it over the last 30 years, it’s gotten older – the medium age of the scientists getting funding is getting older and older. And it’s kinda this institutional inertia lock-in. And there probably is something about that which you always need to push back on. There’s probably something about the peer review process in science that leads to a sort of consensus groupthink, but also very incrementalistic kind of things. The kind of things that maybe worked a lot better in the 50s and 60s, when you had one person running DARPA and he knew the 30 top scientists in the country, and he gave them money and they could work on whatever they wanted to. And so, I think there are ways that as science scales, it often becomes less of a science. Big tech, you can think of big tech as something that’s very natural. It’s maybe unnaturally big. It’s unhealthy. It’s too strong. But there’s something in the nature of tech to be big. Big science is actually an oxymoron. And it’s like if you have a science factory, or if you have some sort of giant science — you have some giant science factory, there’s probably not much science going on at all. So yes, I think probably there’s a whole bunch of things on the basic R&D side where it could be reconfigured in some ways that is much better, and how you do that politically is a very, very hard lift.
>>Hugh Hewitt: John Noonan.
>>John Noonan: Hi, Peter. Nice to see you again. The great lesson of World War I was that the Industrial Revolution was wedged in this long century of the relative peace between the Napoleonic wars and then ultimately the great war. And generals had no idea what those technological leaps in things like steam power versus machinery, chemistry processes that lead to dynamite and poisonous gas meant for the battlefield. And the results were pretty awful. So, we’ve had arguably three Industrial revolutions in the years of relative peace between World War II and today, and I emphasize the word “relative.” There’s oil, gas, and electric – nuclear fission – and Telecom and computers, and also I think where we are now in the digital age with fiber optic, satellite communication, cyberspace, etc. So I have very two different questions for you. And without getting into the viability of futon torpedoes and giant planet killing space lasers — from your outside perspective as a technologist and an investor, what does the 21st century battlefield look like? And second, just given the fact that Silicon Valley provides the software backbone or central nervous system for almost all of our critical industry sectors — that’s IT, banking, agriculture, power, etc — How do we reduce our exposure to Chinese and foreign influence in big tech, where they can potentially build back doors into all these critical sectors that are required for the survival of our country and ultimately the continuity of government?
>>Peter Thiel: You’ve done a great job articulating the question. And that’s probably why it’s very hard to answer you. It’s been 75 years since the end of World War II, 76 years. And I suspect that if you had a war on the global-scale, that we have no model for quite what would happen. I think in World War I, in some ways, we had, it was prefigured by the Civil War in the U.S., and people just didn’t pay attention to that. So, there are probably things one could be paying attention to, the way things have shifted. And I think the last time aircraft were used, where there was an actual battle between competing aircraft, military aircraft, was between Israel and Syria in 1982. So I don’t think they had combat between aircraft in close to 40 years. It was just the drone war in Armenia, where Azerbaijan used the drones effectively. And so I do think we should be paying very careful attention to what’s going on, and what’s been used. But it’s very, very weird. If you just have basic division – you have conventional weapons, we have cyber, we have a shooting war with Russia and China. It’s all-out war. And then we have all these nuclear weapons which I assume never get used? It’s unthinkable. And so you have these 3 completely different kinds of weapon systems. One, we have a shooting war, the conventional war. We don’t really know what would happen. And the nuclear war we don’t have people thinking about it anymore. It was a thing to think about nuclear deterrent strategy in the ’50s and ’60s. And the game theory doesn’t actually make any sense anymore. It’s like the North Korea problem, it’s like if you actually think about it rationally, we should just be bombing them or you have to stop them now? And then maybe you treat them as a cartoonville and you ignore it? And actually good but nothing makes sense. So you think about those systems and how they would interact if you had a major confrontation with China. It’s really hard to model out.
>>Hugh Hewitt: Mr. Secretary, does anybody sit around and think about that? What the next battlefield looks like?
>>Michael Pompeo: Oh Yeah, there’s lots of folks working on that assessment. Panicky people down in bowels of the State Department. Yeah, there are big pieces of the U.S. government working their way through it. But I think Peter’s point is well-taken. It’s so complex. And you don’t know how it will unfold.
>>Peter Thiel: But for example, just to focus – How do people think about the nuclear weapons vis-a-vis China? We have a massive advantage in nuclear weapons, but if we never use them, it doesn’t count?
>>Michael Pompeo: They literally have simulations that try and take into account how people rationally, often assume rationally, sometimes they’ll turn the rationality switch off, and say what happens if someone makes a really bad decision knowingly? Knowing it may impact them and what their relative value sets are? But your point is well-taken. It becomes really complicated really fast. You didn’t mention the other space which maybe we’ll get us into the other three spaces – which is the information war. Which is so confusing and can move so quickly, and the capacity for nations now to act in ways in the information space that didn’t have, we didn’t know what was going on in the battlefields of the Somme for weeks. The information battlespace is now so central to how this will unfold that it gets, the variables quickly overwhelm the capacity for modelers to think their way through this. And so they try to do it in bite-sized chunks and make big assumptions.
>>Robert O’Brien: We war games these things. We do these war games pretty regularly, and there is a cottage industry and some are well-run, but the problem with the war games is what Mike just pointed out, is you introduce so many different variables. It used to be easier to do a tabletop if you’re just moving ships or aircraft or things around. But once you introduce cyber information and space, and all of a sudden, the homeland becomes at-risk maybe because it’s a cyber-attack, not a long range bomber from China but a cyber-attack on the electrical grid. So it’s very, very complicated.
>>Peter Thiel: If China invades Taiwan, what actually happens? Do we bomb the strait of Hormuz, do we cut of the oil, do we just lose? Is there some — do we use tactical nukes?
>>Michael Pompeo: Right, so I think there’s a reason president’s don’t answer that question for an awfully long time. No president’s ever said “in the event that this happens I will, in response to A, I will do B.” There’s strategic ambiguity as the concept, to try and avoid just exactly that day. I think a lot depends on two things. One, who is in charge the day that that happens, that leader and the conditions that leader has set. And the capacity for that leader to think through the ramifications and to quickly to have prepared himself or herself for that moment and to understand the intended risk. And second, can that person at that point in time marshal the world for a response that is not just a U.S.-China response but a response that is more holistic, more complete and at least has the capacity to convince the Chinese that wherever they are long that way, that deterrents can be restored quickly. In the event it can’t be, you’ve seen these war games too. It escalates rather quickly and it gets very confusing, and the information gets very confusing very quickly as well.
>>Robert O’Brien: And we have to keep in mind what a strategic coup it would be if the Chinese could take over, not just because of Taiwan, not just because of the chips and the factories and the foundries, but Taiwan sits as the cork in the middle of the Pacific. The entire Pacific is wide open if China takes Taiwan. I mean, it splits northern Asia, Japan, our allies there, South Korea. Splits them from Australia and New Zealand and the Philippines and Thailand and their treaty allies. But the entire Pacific becomes a superhighway, all the way out to The Aleutians and Hawaii, we’ve seen this movie once before.
>>Peter Thiel: What’s your best guess when they’re going to take a crack at it, or if and when they do it?
>>Robert O’Brien: My view is that peace through strength works. We are at the Nixon Library, and peace through strength is more associated with Ronald Reagan and the Simi Valley library. But the point is if we have a strong enough deterrent, if we continue to invest in the Pentagon and in our forces and our allies do the same, and that includes the Taiwanese, our partners there. If they turn themselves into a porcupine, that would be difficult to digest. I think it’s possible to deter the Chinese from doing that. But look, I’ve always said weakness is provocative. And we show weakness to the Chinese or they perceive weakness on our part, it could actually provoke them into attacking Taiwan. And then it leads to all of the myriad of problems the Secretary pointed out and potentially war. The best way to prevent war is to be prepared for it, and that’s the policy we have to pursue.
>>Peter Thiel: Let me run one theory by you guys here. I’m pretty surprised by the crackdown China has done in Hong Kong. I always thought they could wait until 2047. They didn’t have to do anything quite this drastic. And in my mental model was, that every time the Politburo discussed a total crackdown on Hong Kong there was someone in the back of the room that raised their hand and said we can’t do that because we have to convince Taiwan to reunify with China. This time that person was told to shut up. never going to do it peacefully anyway. And is there a way to read the Hong Kong thing as the Chinese timetable on Taiwan has moved up?
>>Robert O’Brien: Well, after Hong Kong, the idea that the Taiwanese would gladly, or without being coerced, enter into some sort of one country two systems, that’s never going to happen. They saw what’s happened in Tibet, they saw what’s happened in Hong Kong, and now they’ve seen what happened in Xinjiang. And the idea that the Taiwanese would voluntarily surrender their liberty and their freedom and their democracy to the Chinese communist party — I think that idea is past. I think that the Chinese have recognized that, so the only way for reunification will be a coerced reunification in my view. Or a total change in China which I don’t think the CCP has contemplated.
>>Michael Pompeo: Remember too, they have elections there. The Chinese Communist Party’s capacity to influence elections that are held on Taiwan is real. So it may not be that it takes carriers and missiles and bombs and threats. It may just be that over time you can apply such coercive pressure – military, economic, diplomatic that you can convince enough people there that it is not worth the candle, and remember Taiwan has never been part of China. This thing is stitched together. When we think of the historic China – Xinjiang, Tibet, Mongol, this is stitched together. The People’s Republic of China itself is a figment of the communist party’s imagination and they know it. And they are trying desperately to find the tools they can best to consolidate their own power internally, and one of the tools of that is external power and external threats as well.
>>Hugh Hewitt: John Noonan.
>>John Noonan: Yeah Peter, just to reiterate the second part of my question, you’ve warned starkly about companies like Google, and your words forgive me If I am misquoting you, more or less infiltrated by the Chinese Communist Party. Silicon Valley provides the backbone and central nervous system for most of the critical industries and sectors in the United States. What is our exposure, just given the fact that Silicon Valley is purportedly infiltrated by a deep and intrusive Chinese Communist presence?
>>Peter Thiel: I left it a little bit ambiguous. I was unclear on how much is actual united front Chinese Communist agents, how much is useful idiots, how much is people surrender in advance, you know there are a lot of different constituencies. You know, I — I think that the thing I would say is to keep putting a certain amount of pressure on Silicon Valley and we need to call companies like Google out on working on AI with Communist China, and not with the U.S. military. I think we should be putting a lot of pressure on Apple with its whole labor force supply chain on the iPhone manufacturing in China. I think that is — you know, that is one way we sort of do a little what Robert was talking about earlier where you sort of — you know, there is obviously crazy double standard where labor laws don’t apply there, but do apply here ,and all sorts of crazy double standards, and you need to call people out on that relentlessly. I think the cyber security is simply a mess as far as I can tell. Where the basic problem is that cyber is one of these places where offense works a lot better than defense. I don’t know quite what you do. I sort of assume that so much stuff has been hacked into in one way or another, and I’m sort of amazed that stuff doesn’t get used in more ways. People should be getting blackmailed, bribed and all sorts of crazy things should be going on all over the place and somehow all of the data I assume has already been exfiltrated its weird that it doesn’t get used more and I don’t know why that is. My model is that cyber is just a disaster and its actually amazing that it doesn’t manifest itself more.
>>Hugh Hewitt: Christian Whiton.
>>Christian Whiton: Thank you Hugh. Peter, speaking of getting tougher on Silicon Valley and holding them to account, the Supreme Court decided to vacate its order that former President Trump or while he was President, couldn’t block people on Twitter. But the more interesting development was a concurring opinion from Clarence Thomas the Associate Justice, who basically said that companies like Twitter and others should be regulated, or could be regulated as common carriers, basically implying that they are a natural monopoly, and their attempts to censor people that we know tend to focus much more on conservatives could in fact be limited, could be regulated by federal government or state governments in same way we regulate utilities. Do you think that is the future where we are going with Twitter and other platforms like it?
>>Peter Thiel: I’m on the Facebook board so I have to always be careful what I say here. You know, de-platforming President Trump, you know, two or 3 months ago was really — was really quite extraordinary. That, you know, I think there has been lots of deplatforming of conservatives and I always think that the actual censorship that people talk about is just the tip of the iceberg, and the real problem is the downranking. One of the top Google executives used to always say 5 or 6 years ago, we never sensor anybody, we just downrank people, and the downranking was the far more insidious way to sort of tilt the playing field of the discourse. But there has been outright censorship, outright deplatforming and when you do it with the President of the United States, that does feel like you really crossed some kind of rubicon where you know, I’m not sure you declare war on half the country but maybe a third, forty percent of the country and that seems really crazy. When you have Angela Merkle and Obrador from Mexico saying that the tech platforms have been too anti Trump, too mean to Mr. Trump, that tells you you have probably really overreached.
>>Hugh Hewitt: Matt Pottinger, you had a comment.
>>Matt Pottinger: Thanks a lot, Hugh. Going back to the conversation about Taiwan, is that we should remember is that we’re talking about all the different domains that China fights in, information, cyber as well as military and the rest. One of the strongest tools we have is our dominance in finance. Capital markets and the reserve currency status of the dollar that we talked about. When it comes to Taiwan, one thing that we should be reminding China about is that if they were to try to coerce — coercively annex Taiwan, we could shut down their entire banking system. In other words, we can bring — we can sanction all their major banks and we can bring a lot to that fight as a way to deter them that is non-military, but could actually carry even more profound costs for China’s economy. I wanted to add that idea.
>>Hugh Hewitt: Thank you. Morgan Ortagus.
>>Morgan Ortagus: Thanks, Peter great to be with you. One of the things that struck me in your book that I really liked, you talked about in the beginning when you’re innovating or starting a new company, if your trying to make the next Facebook or next Google, that you are already behind, that you’re not doing anything innovative and I was wondering, this is a really big and grand question but is there a way to apply this to foreign policy? To what we do? The Secretary could probably concur, that foreign policy and what we do at the state department hasn’t changed in probably100 years. There hasn’t been a lot of innovation. Is there a way to apply what you have done in the business world and innovating and being entrepreneurial, to how we look at foreign policy going forward, and especially hoping that some of us will be working again in 4 or 8 years?
>>Peter Thiel: I think that is a better question for Robert or Mike. I guess, my sort of pro-innovation bias is always that always that people are somehow too anchored on the past, and in business and they are too anchored on doing things that worked in the past, or copying some model that, you know, building a new search engine was the right thing for Google to do in 1999. It’s probably not the right thing to do today ,because it’s very hard to compete against Google by doing the exact same thing they are doing. I think that the foreign policy mistake that I suspect gets made, you know, a great deal and over and over again, is to somehow think that we are still at some point in the past. So, you know, so maybe the — maybe one version of the mistake that was made with China was to think it was going to be like the Soviet Union, and the Berlin Wall came down in ’89, and then surely something like that was going to happen in China. We are sort of anchored on the 1980s and use that as a frame and, of course, the dynamic thing where China can also look at the history and read the history and say that is exactly what’s not going to happen. We’re going to have perestroika, but no glasnost. We can also innovate in certain ways and avoid that and there is, you know, a sort of a version where it is like — well, you know, is this like 1914 or is this — you know, is this 1989? What year is this? I always say it is actually just 2021. It is not very helpful but maybe where we should start.
>>Hugh Hewitt: Monica Crowley?
>>Monica Crowley: Hugh, Thank you very much. Mr. Secretary, Ambassador – so good to see you. And Peter, thank you so much for doing this today. How do you see companies and platforms like TikTok – Chinese-owned, globally hugely popular, and yet a national security threat to the United States? Obviously, the discussion surrounding TikTok’s future are ongoing. And we don’t have a determination yet about that, but how do you see this going forward?
Should the United States have an overarching uniform policy to deal with platforms and companies like this, or should we be dealing with them on an ad hoc basis? Thank you.
>>Peter Thiel: Well, obviously a uniform policy is always better, but I often worry that that’s slow. I think multilateralism is always better than unilateralism in theory, and then in practice multilateralism is often an excuse that you have if you if you want to not do anything, and if you say we need to do it multilaterally that’s one way of saying we need to do it for real, and maybe it’s a way of saying we don’t need to do it at all. I would like to see fast, flexible response, you try to do whatever you need to do to stop the house from burning down, and then you try to formalize it as fast as possible. You know, I think that the thing that is problematic about TikTok is that it again, it has this sort of incredible exfiltration of data about people. You are sort of creating this incredibly privacy-invading map of, you know, a large part of the population of the Western World. And then I think it is also — it is, again, one of these sort of odd things where it’s — you know, it is a fairly powerful application of AI in a certain sense, where it is innovative and they figure out ways to make it especially addictive, and they figure out what videos to show you, so if you watch these you keep watching them more and more. It doesn’t seem like the sort of thing if you shut it down it would be, you know, this economic catastrophe either. I think India banned TikTok and there were sort of less good alternatives that popped up that were local.
I don’t think it was like a tremendous — tremendous loss. So, it is a — I think how to talk about it is often quite tricky and we need to figure out a way where we can say it is both this problematic AI technology on one level, and another level it’s not that valuable of a technology at all, and for which reason we can probably do without it.
>>Michael Pompeo: Peter, let me just pitch in here. When we were thinking about TikTok, two things that you reminded me of. One, our tools weren’t very good to respond to it. Our tools are the historic tools we have had for all these years. How do you stop someone if they’re bringing in contraband on a ship that’s coming across the sea? These export models. They’re really not made fit for purpose for this world, and so we struggled. We worked around them, and worked through them, and got as creative as we could to figure out the toolkit that would best address that problem set as quickly as we could. The commercial response was much greater than the public response, to your point. The Indian foreign minister told me when they banned, I can’t remember the ultimate number but dozens.
>>Robert O’Brien: 150 ultimately.
>>Michael Pompeo: The first group that they did, it was a matter of weeks before there were, call them “knockoffs” if you will, Indian-made Indian-manufactured proxies for the applications of softwares. It might not have been at the same level or as perfect, but the people of India were reasonably satisfied. So I think policymakers are often very concerned if they take something away there will be huge political backlash from something that’s as popular as TikTok. My sense is that innovators and capitalists will figure out a solution to meet the demand, if that demand is in fact real.
>>Hugh Hewitt: We have got three more before we run out of time. Lanhee Chen?
>>Lanhee Chen: Thanks Hugh, and thanks for spending some time with us this evening. Curious to get your thoughts on something that I think China has done relatively well in the last 15 or 20 years, and that’s infiltrate international organizations. I think they’ve done a tremendous job, for example, seizing leadership of the World Health Organization — we have seen how that rot has spread, and in fact gotten in the way of us discovering the origins of COVID-19, along with other potential problems. Other organizations, I think, they have been successful at infiltrating as well. Finally during the last couple years under the leadership of many of the people on this Seminar, we have started to push back on China and started to say, look you can’t do this and have the playing field to yourself anymore. Is that really the right long-term solution here? Are these sort of international organizations, this model of international collective action, is it the right one to deal in areas like intellectual property for example, or health care, or go to something fundamentally different to Peter’s point about innovating. Is this an area where we need to be more innovative to think outside of the box? If so, what is the right answer?
>>Robert O’Brien: One short comment on that Lanhee, and it’s a great question. It’s something that we worked on very hard. Mike’s team and our team at the NSC was that number one, we try to make sure that there were candidates that believed in free men and women, and free markets, at least competing for these international organization top slots. But it’s not just not the top slot. It’s the deputy and functioniers, even to a point the interns. The Chinese were funding a massive number of Chinese interns at international organizations that were cash strapped, and those interns would learn and have the first crack at jobs. So we need to compete there, and we need to compete effectively. There are quota systems at the UN. We were not even filling the quota for Americans at the UN. And there are plenty of young men and women in this country that are constantly asking me, the secretary – Peter, I’m sure, “how do I get in government, I want to get in foreign policy or I want to do foreign affairs.” One of the ways to do it, it’s how I got started, was at an international organization. So we need to make sure Americans are in those places. But going to your second question of can they ever be effective, and they’re generally not super-effective, and we can pick out examples. “Gulf 1” and a few other examples. But there are very few where international organizations have mobilized effectively to protect us. We need to have groupings of like-minded countries. So one of the things we worked on, and that Mike worked on very hard was “the quad” – where we brought Japan, India, Australia together with the United States to address common issues in the Indopacific. So I think pulling together multilateral coalitions of like-minded countries that may not necessarily be institutionalized, but at least are on an ad hoc basis is a way for us to harness the value of working with our allies and friends and partners to address specific threats. And not necessarily getting caught up in the quagmire of the UN, or other UN specialized agencies. So it’s two parts. One, we need to compete and play there. But, two, we also need to put together our own groups of like-minded countries to address some of these global issues. Mike, do you have any thoughts there?
>>Peter Thiel: I think a lot of these are designed to not work at this point. And it’s amazing people still think they work at all. You know, the New Dealers had this fantasy after 1945 that you create these organizations, and sort of American, not quite controlled, but heavily influenced. And the way I understand the history, is already by the time of the Marshall Plan, the Marshall Plan was already a workaround. And it was basically, it didn’t actually go through any of the multi-national post World War II organizations, because they were already deemed ineffective by the time of the Marshall Plan.
>>Michael Pompeo: We should never accept Chinese participation as their desire to make these things functional. It is an instrumentality for them. They’re not a rights respecting nation, and they don’t join these organizations to make them better and effective.
>>Hugh Hewitt: I’m going to go to Kimberly Reed, then Mary Kissel, then Chris Cox to wrap it up. Kimberly.
>>Kimberly Reed: Hi Peter, thank you so much. I just finished tenure as the first woman Chairman of the Export-Import Bank of the United States, and I really want to thank you for all you’re doing in Silicon Valley, but also for sending some great colleagues of yours into USG. Enjoyed working with them. Congress, including Congressman Gallagher and Congressman Waltz who are on the China Task Force , they were really instrumental in recognizing that financing was key in competition with China. And Congress changed the law last year to allow Ex-Im to match the rates, terms, and conditions that the PRC would be offering foreign purchasers around the world for products that we all care about, including transformational exports. I’m just wondering, you wrote your great book in 2014, and you’ve been involved with what’s happening in our government as we are hearing today. Any thoughts on what else the government should be doing with Silicon Valley when it comes to competition with China?
>>Peter Thiel: Well, you know, I think it’s a multi-faceted thing. I don’t think — I don’t think we should be super dogmatic. So I’m probably always going to sort of be a free market Libertarian. And the dogmatic Libertarian thing would be is that you shouldn’t have an Export-Import Bank because it involves all these government subsidies of loans. In a world where we don’t have free trade and we don’t have a balanced playing field, it makes a lot of sense to have something like the Ex-Im Bank and to actually expand it. So, yes, I think they’re sort of, we should be trying a lot of different things and a lot of different areas. And we should try to be practical, and not dogmatic on it.
>>Hugh Hewitt: Let me go to Mary Kissel again. Mary.
>>Mary Kissel: Thanks. Peter, I’ve just taken some notes here. So they’re in a tech war with us, we’re not with them. They’ve infiltrated our campuses, our labs, and our international organizations. They have a big data collection advantage. They will use unethical means to win. Our defense department is a mess. We’re riven by a privacy debate, and they’re ahead in crypto and threatening our currency status. Are you optimistic here? How do you feel after coming to a list like that?
>>Peter Thiel: I think something about the format of this conversation always pushes you to be a little bit more negative, and stress all the problems that there are. I would say, I think if it was a fight between the U.S. and China, I think that’s a tough one for the U.S. But I don’t think that’s going to be the dynamic. I think it’s going to be China against the whole world. And it is one metaphor I heard from China. It’s a weirdly autistic country where everything is sort of drawn to the center. And maybe they can strong arm Taiwan, but I think it’s just — it’s profoundly uncharismatic, and I think that’s a very big limitation they have. And then even if it looks like they’re winning, they’re the rising power, I think that will have the effect of scaring a lot of other countries. It’s like the U.S. has challenges, but countries like Vietnam or India, or Japan, or Taiwan, they’re not threatened by the U.S. at this point. And they’re going to be much more naturally on the U.S. side and on the anti-China side. And so there’s something about the China dynamic that’s been extremely, you know, zero sum in a way that’s sort of borderline autistic.
>>Hugh Hewitt: Peter, I’m going to interject a question before I go to Christopher to wrap it up. Since it’s China versus the world, should the world be going to China in 2022 for the Olympics? The State Department this evening announced that they’re backing away from their earlier story today about having a boycott. And I’d love to hear what the Ambassador and the Secretary think about that too. Should the world descend on Beijing?
>>Peter Thiel: Well, I think — it’s dangerous to make predictions. But my prediction is that it will not. Maybe our athletes will go? I don’t think you’re going to have many political leaders from the Western world. And it will, you know, like maybe it’s not a full boycott like the 1980 Olympics in Moscow. But I think it will be anti-climactic. It will be, the turnout, the validation for China will be, you know, it will be as bad as Sochi in 2014. That’s even with no boycott at all.
>>Hugh Hewitt: You are talking about this next month, but Mr. Secretary, do you want to give us a preview of what you are going to say?
>>Michael Pompeo: I don’t think we should go. I don’t think we should have any American go participate in the genocide Olympics. How you would send your child there to compete, when if they said so much as “boy, the food is bad here today,” you can end up in a Chinese prison for an awfully long time. That’s a modest overstatement. It seems like an awful lot of risk, and I think Xi knows that. He might well not take anyone and hold them, but it’s not a risk that I would suggest to anyone of my family members, if they were good enough athletes, ought to take. I hope we’ll convince the IOC not to hold them there and find another solution. We figured out how to move an All-Star game pretty quickly. Maybe we can figure out how to move the Olympics.
>>Hugh Hewitt: Mr. Ambassador, you want to add anything?
>>Robert O’Brien: Well, they’ve revoked for – Mike and Pottinger and myself – they revoked our invitations, so I don’t think we’ll be going under any circumstances. I agree. It goes back to this double standard we spoke about earlier. It’s amazing how quickly corporate America can justify a move from Atlanta to Denver. But it’s perfectly prepared to continue to support events in China. So it’s an area of real concern. And as the former hostage envoy and having dealt with places in China with the secretary’s full support, he and I have probably seen this movie play out more times than we’d like. And it is somewhat frightening. And the Chinese seem to be getting into the hostage game, or at least the detainee game with the two Michaels – Spavor and Kovrig, the Canadians – the way the Iranians have played the game for many years. I think anyone has to be very concerned and has to think twice about why you’re going to China, what you’re going to do there, and if you want to take the risk of having an extended stay as a guest of Mr. Xi Jinping.
>>Hugh Hewitt: Christopher Cox, last comment or question to you.
>>Christopher Nixon Cox: Sure, thanks Hugh, and thank you to everyone for this wonderful night. My question really is to everyone on the panel. During the Cold War, we had benchmarks of how we’re doing against the Russians – against the Soviets. And we also had a very clear ending – When the Soviet Union disintegrated, it was clear we won. And when the Berlin wall fell, it was clear we won. In an AI arms-race with China, are there similar benchmarks that will show how we are doing in the years to come? And at the end of the day, what will determine whether we won or lost?
>>Peter Thiel: Well, I think AI is a very difficult one to benchmark. But I think one of the big flash points for the last few years has been the Huawei 5G piece. And that’s been fairly straightforward. You just go down a list of countries and what are they doing? And you can sort of see how we’re doing, how successful we are at holding the line there. I think there’s going to be some questions about the semiconductor boycotts, how effective those are. And will China be able to ramp up its production to get around that. That will be benchmarked pretty straightforwardly as well. AI is always this crazy buzzword. It means all these different things. So maybe it’s even a term one has to be careful to use for that reason.
>>Robert O’Brien: Yeah, I think just two things. One is how many Confucius Institutes continue to be allowed to participate, and some of these Chinese student organizations that are controlled by the CCP and keep other students, other students of Chinese descent, from participating in U.S. universities with free speech. So we’ll have to see how that goes, their influence operations, but starting with those, because those are something easy to benchmark if the institutes are closed or removed from campus. That’s something that I think we’ll see as useful. Another thing, the other big fight, and this is something that Larry Kudlow and I started, ran from the White House, and that’s preventing U.S. investment in China. And we’ve literally had U.S. investment dollars going to Chinese companies that are building ships and aircrafts and munitions and tanks that can ultimately be used against either ourselves or allies, or partners in the region. So if we can cut off the flow of investment and limit the overt influences, I’m not talking about the covert influence, but just the overt influence, those are just two benchmarks that the Biden Administration has a chance to gain some traction on, and show that we’re going to stand up to the Chinese. And let me say just one other thing, I think Secretary Pompeo, Mike has not gotten the recognition that he deserves for a number of the measures he took in his last week in office. But especially in labeling what was happening to the Uyghurs, what is happening to the Uyghurs, as genocide. It took a lot of courage. He was the person with the statutory authority to make that decision. There were a lot of people that were angry about it, both overseas and in this country, especially on Wall Street and at the State Department. It took a lot of courage. But history is going to treat Mike very well for having made that decision, just like it’s treated folks well who made the similar calls in the ’30s and ’40s, but were not popular at the time. I just wanted to make that comment before turning the mic over to you.
>>Michael Pompeo: That’s very nice Robert. You know, it’s an important question. I don’t know if there’s a singular answer. In the end, Xi Jinping is afraid of liberty and sovereignty and rules-based order – it’s his enemy. And we will know who ultimately wins this by which ideas dominate the next 10, 20, 40 years. Are they a set of western ideas or are they a set of understandings that flow from the authoritarian regime in China? There is a global component to this. I will take credit for what President Trump allowed us, those of us on this call who served in his administration to do. We had a chance for the first time to go around the world and make the case for why the threat from that central underpinning, that central idea that the Chinese Communist party – this party, not a country, a party puts forward – in an attempt to dominate the world. So ultimately, this will be fought out as an ideological struggle as much as anything else. And we need to remind ourselves of our founding and our history and the power that flows from that. We need to be unashamed about talking about that whether on college campus or at a PTA meeting or at the United Nations. And at every one of those four, we need to put forward the central thesis that our liberty and ideas about freedom, and Peter is talking about being a Libertarian, that’s my background as well. The capacity for individual human beings to engage in rational activity in the way they prefer to do so. That’s how we’ll know if we’ve ultimately won or not.
>>Hugh Hewitt: I want to thank our special guest Peter Thiel, and our co-chairmen Ambassador O’Brien, Secretary Pompeo and the 15 members of The Seminar. Thank you. Next month we will go back to the Olympics as we had promised to do this month, but we had Peter Thiel with us, so we took up the opportunity to do that. Thank you, all, and we’ll talk to you in May.