My previous belief was primarily based on adults telling me as a child that democracy was the mechanism keeping us free.
"Democracy keeps us free" is a very different claim from "democracy is compatible with freedom". Even if you now think democracy and freedom are not correlated at all, as long as they are not anticorrelated, why would you think they are incompatible?
Thiel in his essay appears to be saying that specifically in the contemporary US, the people don't want freedom, so it is incompatible with effective democracy. (His relevant definition of freedom seems to be pure free markets without government intervention, or without intervention of certain kinds.)
First world countries are much better places to live materially and have more freedom than many third world ones
That's a tautology. Because they are better places, you call them first world countries.
The reasons why they might be anti-correlated Thiel explores seem mostly about the US and not some hypothetical country of mostly Libertarian voters. The thing is no such country exists in the world and this is I think no coincidence.
Democracy is like having dinner in a expensive restaurant with a few million people where everyone knows they will be splitting the bill at the end of the evening. The incentives are both on a organizational and individual level messed up and we rationalize our choices afterwards to make them seen less like defecting against ...
Or is the convention against discussing politics here silly?
I propose a test. I'm going to try to lay down some rules on voting on comments for the test here (not that I can force anybody to abide by them):
1.) Top-level comments should introduce arguments (or ridicule me and/or this test); responses should be responses to those arguments.
2.) Upvote and downvote based on whether or not you find an argument convincing in the context in which it was raised. This means if it's a good argument against the argument it is responding to, not whether or not there's a good/obvious counterargument to it; if you have a good counterargument, raise it. If it's a convincing argument, and the counterargument is also convincing, upvote both. If both arguments are unconvincing, downvote both.
3.) Try not to downvote particular comments excessively, if they're legitimate lines of argument. A faulty line of argument provides opportunity for rebuttal, and so for our test has value even then; that is, I want some faulty lines of argument here. If you disagree, please downvote me, instead of the faulty comments, because this post is what you want less of, not those comments. This necessarily implies, for balance, that we not excessively upvote comments. I'd suggest fairly arbitrary limits of 3/-3?
Edit: 4.) A single argument per comment would be ideal; as MixedNuts points out here, it's otherwise hard to distinguish between one good and one bad argument, which makes the upvoting/downvoting difficult to evaluate. (My apologies about missing this, folks.)
I'm going to try really hard not to get personally involved, except to lay down a leading comment posing an argument against abortion, a position I don't hold, for the record. The core of the argument isn't disingenuous, and I hold that this argument is true, it just doesn't lead to my opposing abortion. I do not hold the moral axiom by which I extend the basic argument to argue against abortion, however; I'm playing the devil's advocate to try to help me from getting sucked into the argument while providing an initial point of discussion.
Which leads me to the next point: If you see a hole in an argument, even if it's an argument for a perspective you agree with, poke through it. The goal is to see whether we can have a constructive political argument here.
The fact that this is a test, and known to be a test, means this isn't a blind study. Uh, try to act as if you're not being tested?
After it's gone on a little while, if this post hasn't been hopelessly downvoted and ridiculed (and thus the premise and test discarded as undesirable to begin with), we can put up a poll to see whether people found the political debates helpful, not helpful, and so on.