The Unwinding: An Inner History of the New America

After the global recession, Thiel developed a theory about history and the future. He thought that 1973 was the last year of the 1950s because it was the year of the oil crisis as well as the year median wages in the US began to stagnate. That started the descent. The 1980s were full of optimism, and the 90s had the miracle of the internet. But then came wars in the early 2000s and the global financial crisis. The decades had gone down, up, up, down. So everything had basically stayed flat, as hard as it was to see from Silicon Valley. East of there, though, people were struggling. All those financial bubbles and all the erosion of key institutions had gone on while people thought the world was doing well. It was clear things were fundamentally not working in the US.

In the spring of 2011, Mitt Romney was looking for supporters in Silicon Valley. He had breakfast at Thiel’s house, and Romney told him his campaign was going to focus on the economy. Thiel was impressed by Romney but told him the most pessimistic candidate would be the one to win, as anyone optimistic would appear out of touch. Romney didn’t understand that, because he still thought things were basically working. Thiel now even disagreed that the information age was working, even though it had obviously made Thiel quite rich. Thiel told others that he didn’t think the iPhone was a technological breakthrough. He noted that the forty years leading up to 1973 had been marked by huge technological advances and massive wage increases. Since then, Americans had new gadgets but had forgotten how expensive progress was.

One of Thiel’s favorite books was The American Challenge, a 1967 book by the French author J.J. Servan-Schreiber that argued America was leaving the rest of the world behind technologically and that computers would set people free someday. Thiel felt the author was right about the information age, but it didn’t bring utopia. Transportation had not improved much since 1973, and rising oil and food prices showed that technology had not solved any problems. Apple was innovative at design, but it didn’t create much for the entire economy. In fact, all the companies Thiel invested in didn’t even employ 15,000 people. The information age had made virtual worlds people could escape into, preventing progress in the real world. Now America was in a tech slowdown, as was evidenced in part by the sci-fi novels he loved to read. Sci-fi in the 50s and 60s used to focus on utopian visions of space travel and new technologies that made the world unrecognizable; now all sci-fi was focused on technology that failed or made the world worse.

There were several causes of the slowdown. Perhaps the lack of federal funding for sciences caused them to lose their prestige, or perhaps science was overregulated by the government. Regardless, Thiel directed most of his intellectual fire at the mega rich like him and the professionals a couple pegs lower on the economic hierarchy. Their own success had skewed them to thinking optimistically and led the establishment to coast for a long time. The failure of the establishment suggested two volatile paths, one Marxist and one libertarian. His argument ran into resistance on all ends of the political spectrum. On the left, pessimism reigned but mixed with an idea that innovation just needed more funding. On the right, serious talk about innovation was replaced by a blind faith in the marketplace to continue to innovate.

Thiel was no longer a titan in the hedge fund world, but he became the intellectual provocateur he had always wanted to be at Stanford. He published essays and was invited to tech conferences. At one in 2012, he debated Eric Schmidt, the chairman of Google. Thiel asked Schmidt how good doubling computer power would be for humans and the economy. Back in 2009, he published an essay in which he argued that the 1920s had ruined American politics by granting women the right to vote and increasing public assistance programs, both of which had made it impossible for the country to be a capitalist democracy. That same year, he funded James O’Keefe whose undercover videos took down ACORN. In 2011 and 2012, he donated millions to Ron Paul’s Super PAC and other conservative groups. He now imagined that he was the one person who could save the world by making a machinery of freedom that would allow capitalism to survive.

One spring morning in Silicon Valley, Thiel drove to a meeting at Halcyon Molecular, a company that was working on reading a person’s entire DNA sequence through an electron microscope. That technology would theoretically allow doctors to figure out a patient’s entire genetic makeup for $1000. The founder of the company had realized life was too short to do everything he wanted to do in life so he decided to focus on curing aging. Thiel was the biggest investor in the company and sat on its board. He had never lost the fear of death he had developed as a child and refused to believe that death was not another problem that could be solved by technology. If people were immortal, everyone would treat each other better because they would know they’d have to continue to see each other.

Halcyon’s combination of computing and biology excited him. So did robotics which might end traffic congestion, so he invested in self-driving cars. Elon Musk had founded SpaceX to make commercial space exploration affordable, and Thiel’s new Founders Fund became the first outside investor in his project. Through another foundation, he donated money to nanotechnology research and the Methuselah Foundation, which was devoted to reversing human aging. He also supported a nonprofit called HumanityPlus which was dedicated to transforming humans through technology, a movement known as transhumanism. Thiel was also the largest patron of the Seasteading Institute, a libertarian nonprofit interested in building floating city-states on international waters, free of national laws and regulations. Finally, Thiel was convinced that the next breakthrough technology was most likely going to be artificial intelligence.

Computers might someday become capable of improving themselves and ultimately become smarter than humans, an event known as the singularity. Founders Fund invested in an AI company called DeepMind Technologies, and the Thiel Foundation donated money each year to a think tank called the Singularity Institute. Thiel was excited about the singularity because it was so hard to imagine that it would be impossible to regulate. But he chose not to invest in food or energy, the two areas that would most improve the lives of normal and struggling Americans. They were too regulated and too caught up in politics. He knew that all technology was somewhat unequal at first, rationalizing why it was okay that he would be able to live longer through technology because he was rich. But all technology would eventually improve everyone’s life.

Thiel was convinced the latest bubble in America was education. Rich people continued to be complacent about the establishment at schools believing that a degree from the right school was an insurance policy against the future and rendering higher education a status game. In Silicon Valley, it was easy to see problems in schools. The public schools in California were now ranked 48th in the nation, and private schools were becoming the main option for more families. In Silicon Valley, some public schools had become privately funded too, depending on lavish fundraisers, while schools in places like East Palo Alto lacked basic supplies. The same was true at universities. The University of California system had seen its budget cut by a quarter between 2008 and 2012, while Stanford raised $6.2 billion from donors. Stanford built new buildings all over campus and earned $1.3 billion in royalties from inventions at the same time. To Thiel, the education chase in an increasingly stratified society proved things were not working. He thought of starting his own college, but then came up with the idea of the Thiel Fellowship which would offer twenty grants of $100,000 each to people under the age of twenty to start companies that might change the world.

After visiting Halcyon's offices, Thiel went to Clarium’s offices in San Francisco to interview finalists for the Thiel Fellowship. To a young man pitching educational video games, Thiel warned that when people worked in education they didn’t work as hard because they thought they were doing something good and not just making money. That night, he hosted a small dinner party at his mansion in the Marina. His guests included David Sacks, his Stanford and PayPal friend; Luke Nosek, also of PayPal and now the Founders Fund as well as a nonprofit devoted to cryonics; Eliezer Yudkowsky, an AI researcher who had cofounded the Singularity Institute; and Patri Friedman of the Seasteading Institute. Thiel argued at dinner that there were four cities in America that ambitious people went to: New York, Washington, Los Angeles, and Silicon Valley. Only Silicon Valley was not used up. The Thiel Fellowships would help even more of them avoid the trap of college and the establishment. He ended the party at 9:45 and went upstairs to answer e-mails alone.

Connaughton moved to Savannah and bought a house twice the size of his Georgetown house for the half the money. Savannah was another city hit hard by the crisis. He noted a huge house in his neighborhood marked down in price from $3.5 million to $1.5 million. Connaughton volunteered once a week at a legal services officer, and he acquired a shelter dog, Nellie. In Washington, he used to spend every Sunday morning reading the Times and the Post while flipping between the TV talk shows like everyone else in town did. In Savannah, he thought it seemed stupid to do that. With Nellie at his feet, he began writing a book that would say everything about what he saw in Washington. He called it The Payoff: Why Wall Street Always Wins.

Hurricane Isaac delayed the start of the Republican National Convention in Tampa by one day. After the violence at the 2008 convention in Minnesota and the Occupy Wall Street phenomenon, officials predicted there would be riots. Downtown Tampa became even less welcoming than usual with the area cordoned off by dump trucks, concrete barriers, chain link fences, and flanks of security officers. Tampa was safer than ever but also essentially deserted. Matt Weidner noted on his blog how sad it was that so much effort was made to protect national political figures from the regular public. His own radicalism had no home in politics. He had become a Ron Paul supporter and decided to renounce the Republican party once and for all when Paul wasn’t allowed to speak at the convention. He couldn’t support the Democrats though. Instead, he and his new wife and one-month-old baby drove to rural Florida to wait out the spectacle.

Mike Van Sickler covered the Florida Republican party’s role at the convention for the Tampa Bay Times, the new name of the St. Petersburg Times. The Florida delegation was being punished for jumping the gun on the primary schedule and now had to bus in to the convention each day from an hour away. He wrote a piece about how things might have been different for their commute if Tampa had light rail like Charlotte, the home of the Democratic National Convention. After the convention, Van Sickler was nervous about his new assignment of covering Governor Rick Scott.

Inside the convention halls, practically no one mentioned the foreclosure crisis or spoke for Usha Patel or the Hartzells. The Republicans felt nothing for their nominee while praising him for being a risk-taking investor. They hoped that other people might like Mitt Romney more than they did, and no one at the top of the ticket could energize the base as much as their hatred of Obama empowered them. Newt Gingrich was there. He hated the nominee but told Morning Joe that he was there to support Romney because in the end, they were both Americans who could come together. To another reporter, though, he said that Obama stood for radical things that would destroy America, apparently unaware of his contradiction.

Gingrich was one of Karen Jaroch’s personal heroes, and she supported him in the primary after her first choice, Herman Cain, dropped out. She didn’t go to the actual convention though, not loving the nominee. But the Tea Party had made it there indirectly. The party even had a plank condemning Agenda 21. Karen was working full time at a new job as county field director for the Americans for Prosperity, the pro-free-enterprise organization funded by the Kochs. She had a purpose now. Beneath her politics was the simple belief that she and her husband had never asked for help and never cut corners.

The Hartzells only watched a little of the convention. They were more interested in politics than ever before because working at Wal-Mart shoved politics in your face. Danny hated that the pay was so low ($8.50 an hour), that he had to be called an “associate,” and that the store rented a phony police car to park out front to deter theft. He missed blue-collar work where he could feel like he had accomplished something at the end of the day and was surprised to read that a full 47% of people were too poor to pay income taxes due to, he assumed, corporate greed. Danny was beginning to get madder at Wal-Mart and ended up skipping work after being yelled at by a manager for complaining to a coworker. So they were back to where they started; Danny was unemployed again.

Brent was now in Junior ROTC, and Danielle was enrolled in the Hillsborough Virtual School for sixth grade (which was fine until they lost their internet service). The last day of the convention, Ronale was still complaining about the nominee’s wife’s speech in which she talked about surviving cancer. Ronale couldn’t understand how she could say that while trying to cut Planned Parenthood, the place that helped poor women diagnose cancer. Danny’s view was that the way to change the country was to put a normal guy like him in charge. It was August 30, and the Hartzells had $5 left for the month as they watched the Republicans conclude their $123 million convention a short drive away.

In the spring of 2012, Tammy went to find the house on Tod Lane. It looked different, but she knew it was the house. She knocked on the door and told the old woman who answered that she used to live there as a girl and didn’t know what else to say. The woman, Mrs. Tupper, had purchased the former Purnell home for $200,000 in 1976, and now it was worth less than that. Her husband had been an executive at Packard Electric. She invited Tammy inside and told her the house was being redone a bit. Mrs. Tupper’s rich parents had sent her to a children’s home in Washington as a girl, and she had gone back to visit it, so she understood Tammy’s desire to revisit the past. The area around the house had deteriorated quite a bit. The high school Tammy’s ex-husband had attended nearby was torn down, and Mrs. Tupper was glad it was gone. The house between hers and the school had been a drug house that saw fights between the Crips and Bloods. As Tammy left, she felt the house was smaller and less luxurious than she had remembered. It had not been kept up well, and the neighborhood was closing in on it.

In a cafe in Akron, Miss Hattie was lecturing a group of mostly Black men. Days before that, she and one of her leaders, Miss Gloria, talked about Social Security and Medicare at a community center in Cleveland. They showed a cartoon in which Charles and David Koch were shown as two heads growing out of an octopus. The audience was surprised it had never heard of them before. Tammy was busy in Cleveland and then at a Food Policy Council meeting in Youngstown, and she was also getting ready for her wedding on a beach near Tampa. She was marrying a roofer named Todd who she had known in high school. Tammy told the group at the cafe that she used to be able to sit on her porch as a kid and smell sulfur, that the jobs left and turned Youngstown into what it was, and that the story of Youngstown was the exact same for every older industrial city in the US. She told this story and others so she could tell the audience how to tell their own stories. And she tied all the stories to the presidential campaign.

By 2012, jobs were slowly coming back to Ohio. So far though, the opportunities had not gone to the people that needed them most, especially the people who had done time in prison, like so many people she was speaking to that day. MVOC put effort into getting out the vote for Obama’s reelection. Tammy canvassed on the east side, and found herself more emotional when the election was called. She had gotten caught up in the polls and the fear that Obama might lose. She had not allowed herself to think of what it meant if he won and now thought it meant they might actually have a chance to do something real.

In the spring of 2011, Dean read a study on waste cooking oil in North Carolina. The problem at Red Birch Energy had been that canola couldn’t be profitable if gas didn’t cost more, but waste cooking oil was cheap and plentiful, especially with what most North Carolina restaurants cooked. The companies hired to haul the oil away were called renderers, and they collected animal carcasses too, mashing meat and bones into canned pet food and turning the fat into grease that went into lipstick and soap or became yellow grease, ideal for making fuel.

Dean knew the restaurants either had big contracts with one rendering company or just gave it to whoever asked. Dean wanted to figure out how to get all those restaurants to give their waste oil to him, and he thought of how schools had almost had to shut down after Katrina because of a gas shortage. Millions of dollars a year were being wasted on fuel for schools that could barely afford to stay open. He believed schools were the future of the country and came up with a plan to go county to county and collect local restaurant oil to process into fuel for schools in a county-built facility used to fuel school buses. He would call the plan the “ultimate school fundraiser.” But close to home, he found excitement from the Rockingham County commissioners when he pitched his plan but got the cold shoulder after a local businessman had warned them not to do Dean’s plan. Dean figured it was Reid Teague again. So he bought a used car and drove around the state.

He had a basement apartment that he rented to a 25-year-old local veteran named Matt Orr. He had done a tour in Iraq and now worked at the same copper tubing factory Dean had worked at once, but he was paid just $8 per hour, less than Dean had made in 1981. Then he worked at Kmart busting shoplifters. Kmart started him at $10 an hour and then lowered his pay. What depressed Matt more than anything was how money had become the only big entity in America. He loved watching old episodes of The Andy Griffith Show and dreamed he could have lived in Mayberry in the fifties, America’s last great era. Matt couldn’t afford rent for five months, and Dean had to kick him out.

He had not spoken to Gary in months because he didn’t want Gary to steal his idea. Plus, they had never had the mastermind connection Napoleon Hill had spoken of, and now Gary was a Tea Party Republican. In Mount Airy, the inspiration for Mayberry, Dean met a woman on the county commission who had lost her race for mayor to a Tea Party person, and she liked Dean’s idea but warned him to use the phrase “alternative sources” instead of “sustainable” to win over conservatives. But he never got a deal from Mount Airy, anyway.

He drove around the state, getting a lot of positive feedback. To Black audiences, he liked to talk about a utopian Black community called Soul City which had failed because no businesses were established there. And he took to quoting Martin Luther King, Jr., something the younger Dean would have never considered doing because he had previously thought King was just a Black leader, not a leader of all men. Now, he was telling poor Black people that they could make their own energy even in the poorest counties in the state. Dean no longer had much faith in Obama. He thought the best chance he’d had to get cap and trade passed was when the Democrats had control of Congress, and Obama had failed. Change wasn’t going to come from Washington, only from the rural areas.

Those months were the toughest tests of Dean’s faith. Everywhere he looked was brokenness, and he was still receiving summonses for debts owed from his previous businesses. One county manager told him that nearly a third of citizens couldn’t afford food and that the suicide rate was twice the national average. At an outreach ministry, he saw a sign saying it could not offer fuel or kerosene assistance that year. Dean felt awful, realizing he could just as easily be a person so poor that one flat tire could have changed his world. And then he had his breakthrough.

He was reading The Prosperity Bible when he came across an insight telling him to not go to the second thing first. He realized he should have been focusing on getting the oil, not the buses. He could tell the schools he would collect oil in their names, sell it to an existing company, and then give the schools half the profits to invest on whatever they wanted. Around the same time, Dean met a man who had set up a waste oil recycling company called Green Circle. They agreed to combine his infrastructure with Dean’s plan and rechristen it “Biodiesel 4 Schools.” Dean got a meeting with the chief financial officer of the Pitt County schools who loved the simple pitch. In March of 2012, a year after Dean originally thought up his idea, the school board voted unanimously to enter into a deal with Green Circle.

He was reading a Steve Jobs biography that discussed the special air someone breathes when they have an idea that will change the world. Dean believed he was breathing that air. He got other restaurants on board, finding Chinese restaurants the easiest to sell because their owners wanted to contribute to the community. By August, they had nearly a hundred restaurants and were pumping 2,000 gallons a week.

Now he was dreaming of what he would do with his fortune. First, he’d build a big house that would be off the grid. Then he’d fill the house with abandoned children he would teach to farm.