Peter Thiel: Trump’s Appointees Are Loyal but Not Smart
PayPal co-founder Peter Thiel assessed the two Trump administrations during a discussion hosted by Axel Springer chairman Mathias Döpfner: In the first term, he brought in people who did not get along, leading to continuous internal conflict; in the second term, loyalty tests went too far, resulting in a team of "not-so-smart but very loyal people." He also expressed hope that they would appoint more capable individuals, stating that a comprehensive evaluation would take another ten years.
This assessment of personnel choices was shared alongside his earlier public statements. In a November 2023 interview with The Atlantic, Thiel remarked about the first term that he misjudged many things, which turned out to be crazier and more dangerous than expected, with even the most basic components of the government failing to function, falling short of his already low expectations. He compared the 2016 vote to a "not-so-articulated cry for help" and stated he would no longer donate to Trump or any 2024 candidates. This discussion linked his 2023 remarks with criticisms of the loyalty tests in 2026.
Politically, he did not distance himself from Vice President JD Vance. He still referred to himself as a supporter of Vance, having helped him with his book and Senate campaign in the past, but believes the real issue in 2028 is not whether it’s Vance or Marco Rubio, but whether the Democratic Party will nominate a centrist or far-left candidate after sweeping the midterm elections. He placed the likelihood of a socialist direction winning within the Democratic Party at about 50%. The Democratic Socialists of America expanded from about 5,000 to around 50,000 members after Sanders' campaign, with the median age dropping from 66 to 33, which he used as a contrast to the establishment’s fatigue.
He attributed Trump’s rise to the establishment's failure to address stagnation, globalization, and long-term entanglements in the Middle East. The concern from the U.S. side is that the Republican Party's disdain for the Bush family establishment in 2016 is shifting towards a Clinton-Obama-style center-left establishment; anti-establishment figures have won Republican primaries in several consecutive elections, and the next wave of disdain may push votes towards democratic socialism. From the German perspective, he noted that the rise of the AfD reflects the failure of the centrist parties, but he criticized the AfD's positions on Ukraine, China, and Israel.
Capital and personnel are not disconnected. Thiel does not hold an official government position, but defense companies like Anduril, supported by Founders Fund, and government contracts with Palantir continue to exist within the personnel structure of the second term; Bloomberg previously identified over a dozen individuals connected to Thiel's companies, foundations, or funds entering the administration. The loyalty tests concentrate decision-making power among those who can be verified as loyal, with capability standards yielding to replaceability. The internal conflicts of the first term drained resources through mutual denials among cabinet members, while the second term's drain is whether the execution layer can get the basic machinery running.
In market mechanisms, buyers are defense contractors, data companies, and Silicon Valley funds that seek predictable policies, while sellers are political appointments trading loyalty for positions and publicly traded companies exchanging contracts for valuations. The event-driven nature stems from a discussion during an awards week, not a new funding bill, but the rhetoric directly discounts the personnel of the second term: loyalty premiums are rising, while capability premiums are declining. Beneficiaries are contractors who can pass the tests and sign contracts, as well as the Vance line still named by Thiel; those under pressure are industries that require professional bureaucrats to navigate budgets, procurement, and regulation, as well as the Republican establishment that needs to build a winning strategy for 2028. Funds have not flowed out of the White House immediately; what has flowed out is the pricing power regarding whether this team can put the government components back together.
Source: Public Information
ABAB AI Insight
Thiel's relationship with Trump has never been that of a career politician making party investments, but rather a hedge against the establishment's failure. In 2016, he publicly supported and funded Trump, in 2018 he stated that the first year did not meet expectations but was still better than Hillary or a "Republican zombie," and by 2020 he withdrew campaign funding. In 2023, he used the phrase "cry for help" to summarize the first term, and in 2026, he labeled the second term with loyalty tests. The same person first treats destruction as a reckoning, then complains that after the reckoning, there are no engineers to put the machine back together. Palantir and Founders Fund seek state clients who can sign contracts, not cabinet members who can fight among themselves.
The capital path follows personnel standards. First-term cabinet members came from traditional Republicans, the military, and Wall Street, leading to mutual vetoes, slow contracts, and reforms; the second term uses loyalty screening, speeding up decision-making while decreasing professional density, making it easier for defense and data companies to align with "their own people." Anduril secured significant contracts related to the Army, and Palantir's stock price surged after the election, indicating that the market is not assigning ideological divisions but procurement channel divisions. Thiel's continued backing of Vance means he is writing the next round of options on "the person who is relatively more readable within the loyalty system," rather than on Trump's execution capability in the second term.
The analogy is not a typical financier's regret but a cycle of regulatory personnel changes after the financial crisis: first replacing "disobedient experts," then discovering that the system can only operate with experts. The Republican establishment was rejected in the later years of George W. Bush, leading to the external figures of 2016; if the Clinton-Obama establishment is similarly rejected, external figures could emerge from democratic socialism, rather than another vice president priced by a Silicon Valley financier. The industry position is the exit period for political risk investment: the destructive transaction has already been completed, while the integrative transaction has not yet been booked.
Structural judgments belong to the transfer of personnel pricing power within regulatory changes. When positions are first cleared based on loyalty and then supplemented based on capability, the pricing power of the state machine shifts from professional bureaucrats to a network of verifiable loyalists. The mechanism is rigid: the first term proved that "smart people disagreeing" can lead to a halt, while the second term proved that "agreeable people not being smart" can also lead to a halt; both halts transfer the premiums of long-term contracts and budgets to the few companies that can still interface with the White House. The election market will next trade not on slogans, but on who will take over this already calibrated machine of loyalty after the next midterm elections.
ABAB News · Cognitive Laws
- Loyalty tests filter out opponents, but also filter out those who can put the machine back together.
- The first term died from internal conflict, the second term will die from incompetence.
- Destroying the establishment is easy, but it is harder for those who set the pricing for the destruction to exit.