Peter Thiel: East Bay is 'basically a failing state,' will probably go broke in 'next recession'

Peter Thiel in his condo in Manhattan, Jan. 7, 2017. Peter Thiel in his condo in Manhattan, Jan. 7, 2017. Photo: ANDREW WHITE, NYT Photo: ANDREW WHITE, NYT Image 1 of / 35 Caption Close Peter Thiel: East Bay is 'basically a failing state,' will probably go broke in 'next recession' 1 / 35 Back to Gallery

Peter Thiel knows Silicon Valley well. The Paypal co-founder and Trump supporter attended one of the region's foremost universities and made billions during its technology booms. But he made no mistake about his take on the East Bay Wednesday, suggesting the area is poised to go bust.

Thiel had some choice words to describe the East Bay while in conversation with friend and LinkedIn founder Reid Hoffman at Stanford University's new Hoover Institution speaker series Tuesday night.

When asked how political events had impacted Silicon Valley in the last year, Thiel re-framed the question to discuss contemporary technological and scientific progress (Thiel starts speaking at about the 19-minute mark of this recording).

Silicon Valley, he said, is divided into three ideological camps. The "official Silicon Valley-Google propaganda" narrative espouses the acceleration of tech, exclaiming the fast pace at which science is progressing. A second group claims technology has fostered "an unequal world," and a third believes Silicon Valley has a "stagnation issue," that "the future isn't happening at all."

"I think there are some truth to all three," Thiel said. He stressed that the latter ideology is often omitted from conversations surrounding scientific progress, though its truths are "reflected in stagnant wages" and the "lower expectations" of the Millennial generation.

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Thiel then turned his critical lens on California:

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"It's amazing we have this incredible tech thing going on in Silicon Valley," he said, "and if you go just to the East Bay, across the Bay Bridge or the Dumbarton Bridge, you're in this basically failing state, this failing state that, you know, in the next recession probably will go broke."

The conversation then meandered back to national politics, where it stayed for most of the evening.

Thiel, the only major Silicon Valley figure to back Donald Trump's presidential campaign, chided Silicon Valley for being a "one-party" state: "The other side doesn't care for you, and your side doesn't care for you because they don't need to."

Hoffman, who has spent heavily on Democratic candidates, said there is "unquestionably a crisis of democracy" in today's society, and everyone from Silicon Valley tech companies to individual citizens have a responsibility to do something about it.

Both agreed that the current political polarization of the U.S. will ultimately hinder Silicon Valley.

Trisha Thadani contributed to this report, read more of her reporting from the event.

Michelle Robertson is an SFGATE staff writer. Email her at mrobertson@sfchronicle.com or find her on Twitter at @mrobertsonsf.