‘It’s kind of like Saudi Arabia': Peter Thiel tells Joe Rogan why California hasn’t self-destructed despite ‘wokeism’ — explains how it works even with a ‘bloated, inefficient’ government

Rogan noted that California has raised its top income tax rate to 14.4% and observed that people are leaving. Thiel, who has lived in California since 1977, brushed off this issue.

“The crazy thing about California is there's always sort of a right-wing or libertarian critique of California that it's such a ridiculous place, it should just collapse under its own ridiculousness — and it doesn't quite happen,” Thiel said.

“The macroeconomics of it are pretty good, you know, 40 million people, the GDP is around $4 trillion. It's about the same as Germany with 80 million, or Japan with 125 million. Japan has three times the population of California — same GDP means one third the per capita GDP.”

Massive economy

California indeed boasts a massive economy. It’s not only the largest in the U.S. by GDP but also ranks among the largest in the world.

“California is the fifth largest economy in the world for the seventh consecutive year, with a nominal GDP of nearly $3.9 trillion in 2023 and a growth rate of 6.1% since the year prior,” Governor Gavin Newsom’s office announced earlier this year, citing data from the U.S. Bureau of Economic Analysis.

Newsom commented that his state “continues to punch above its weight, overperforming all but a handful of the largest countries in the world.”

While Thiel commended the overall macroeconomic strength of his home state, he acknowledged that not everyone shares in its prosperity.

“There's some level on which California as a whole is working, even though it doesn't work from a governance point of view, doesn't work for a lot of the people who live there,” he stated.

Critics have noted that the state still grapples with significant challenges, such as stubbornly high unemployment. According to the Bureau of Labor Statistics, California had an unemployment rate of 5.2% in July 2024 — tied for the third highest in the U.S.

Compounding the issue is the state’s high cost of living. Housing prices, in particular, have skyrocketed, making affordability a critical concern for many Californians.

According to data from real estate brokerage Redfin, the median sales price of homes in California escalated to $838,200 in July 2024, marking a 6.9% increase from the previous year. This figure starkly contrasts with the national median home sale price of $439,455, underscoring the affordability crisis many Californians face.

Cali vs Saudi

While Thiel has compared California's economy, GDP-wise, to powerhouses like Germany and Japan, his most striking comparison involves a different country altogether.

“The rough model I have for how to think of California is that it's kind of like Saudi Arabia,” he said. “And you have a crazy religion: wokeism in California, Wahhabism in Saudi Arabia. You know, not that many people believe it, but it distorts everything.”

Thiel went on to explain why both California and Saudi Arabia continue to thrive despite their respective criticisms.

“You have, like, oil fields in Saudi Arabia, and you have the big tech companies in California, and the oil pays for everything. And then you have a completely bloated, inefficient government sector. And you have all sorts of distortions in the real estate market, where people also make lots of money… the government and real estate are ways you redistribute the oil wealth, or the big tech money in California. It's not the way you might want to design a system from scratch, but it's, it's pretty stable,” he elaborated.