PayPal cofounder and Silicon Valley venture capitalist Peter Thiel doubled down on his worries about generational conflict and the future of capitalism after a similar warning he issued in 2020 proved eerily prescient.
After Tuesday night’s election victory of democratic socialist Zoran Mamdani as New York City’s mayor, an email Thiel sent five years ago went viral.
In the correspondence to Mark Zuckerberg, Marc Andreessen and others, he warned that “When 70% of Millennials say they are pro-socialist, we need to do better than simply dismiss them by saying that they are stupid or entitled or brainwashed; we should try and understand why.”
Thiel expanded on those concerns in an interview with the Free Press that was published on Friday, saying strict zoning laws and construction limits have been good for boomers, who have seen their properties appreciate, but they have been terrible for millennials, who are having an extremely hard time buying homes.
“If you proletarianize the young people, you shouldn’t be surprised if they eventually become communist,” he explained.
While Thiel, who backed Donald Trump’s re-election, disagrees with Mamdani’s answers to New York’s housing affordability problems, he credited the lawmaker for talking about the issue more than establishment figures have been.
He also said he’s not sure if young people are actually more in favor of socialism or if they have become more disillusioned with capitalism.
“So in some relative sense, they’re more socialist, even though I think it’s more just: ‘Capitalism doesn’t work for me. Or, this thing called capitalism is just an excuse for people ripping you off,’” Thiel added.
Affordability politics
While Mamdani’s victory highlighted voters’ shift away from Republicans, moderate Democrats also won with campaigns that focused on the cost of living.
The off-year election results were a “wake-up call” for both parties to tackle the affordability crisis, according to polling expert Frank Luntz, who distinguished it from inflation.
Thiel expressed some sympathy for voters seeking bold ideas to solve daunting problems like student debt and housing costs, which previously have been addressed with “tinkering at the margins.”
Such incremental attempts haven’t worked, spurring voters to warm up to proposals outside the typical political discourse, including “some very left-wing economics, socialist-type stuff,” Thiel said.
As a result, he’s not surprised that voters have gravitated toward Mamdani, even though he doesn’t think his ideas will work either.
“Capitalism is not working for a lot of people in New York City. It’s not working for young people,” Thiel said.
‘Old people’s socialism’
He also observed that the growing popularity of socialism among younger Americans comes amid a “multi-decade political bull market.”
This era of increased political intensity comes as people have started looking more to politics to fix their problems, according to Thiel, who leans more libertarian.
Part of that is due to a huge mismatch between people’s hopes and reality, with that chasm growing bigger than ever.
“There are some dimensions in which the millennials are better off than the boomers. There’s some ways our society has changed for the better,” Thiel said. “But the gap between the expectations the boomer parents had for their kids and what those kids actually were able to do is just extraordinary. I don’t think there’s ever been a generation where the gap has been as extreme as for the millennials.”
But when asked if a revolution is on the horizon, he said he thinks that’s hard to believe, given that communism and fascism are “youth movements.”
At the same time, America’s aging demographics are marked by fewer young people, who are not having as many children.
“And so, we have more of a gerontocracy. Which means that if the U.S. becomes socialist, it will be more of an old people’s socialism than a young people’s socialism, where it’s more about free healthcare or something like that,” Thiel added. “The word ‘revolution’ sounds pretty high testosterone and violent and youthful. And today, if it’s a revolution, it’s 70-something grandmothers.”