In late May last year, OpenAI CEO Sam Altman testifies before the Senate Judiciary Committee Altman’s motivation for appearing at the Senate hearing on the emerging technology of generative AI was presumably to assuage concerns among lawmakers that stemmed from a combination of ignorance and dystopian novels like The Matrix, The Terminator, and Robocop. The real motivation was a combination of protectionist concerns about the technology’s negative distributional effects on the nation’s labor market, the spread of misinformation, and resentment that the technology is outpacing the regulatory apparatus of the administrative state.
Congress’s response to tech companies has often been adversarial, as seen in the case of Sen. Josh Hawley (R-Missouri). Aggressive Treatment As Google CEO Sundar Pichai has said, the relationship between corporations and nation states is usually one of mutual parasitism, with consumers as hosts. A plea for regulation-include Recent Calls Given his experience as an international AI regulator, which has included closed-door meetings with senators and dinners with representatives, it’s not at all surprising that he found a “friendly audience among the members of the subcommittee” on privacy, technology and law.
Altman was effectively inviting policymakers to protect him in the name of public welfare. The former president of Y Combinator has no excuse for vague excuses like, “If this technology doesn’t work, it’s going to be pretty bad.” If Altman really had specific concerns that worried the public, he should have voiced them openly.
OpenAI was founded as a non-profit in 2015 but became a capped for-profit organization in 2019. in fact The change to a for-profit model was a mistake. OpenAI needed huge capital to buy tens of thousands of H100 GPUs (at about $40,000 per GPU), attract top talent, and needed tens of millions of dollars to train its large language model, ChatGPT. To cover these costs, OpenAI needed to attract strategic investments from shareholders, top talent including startups like Inflection and Adept, and corporate competitors, as all companies do: the promise of higher discounted returns in the future.
The result? Especially user-friendly generative AI now available For free It will be open to the public.
However, because OpenAI is in a (constrained) profit-maximizing business, it is subject to perverse incentives to capture rents (and profits for shareholders) through regulatory capture.
Instead of maintaining high profit margins through costly, relentless efforts; innovation Iterative improvements to ChatGPT will enable OpenAI to reduce the number of companies entering the market at the government’s behest.
What proposal did Altman make at the hearing? The New York Times reports“An agency that issues development licenses for large-scale AI models, safety regulations, and tests that AI models must pass before they are released to the public.”
Read: Hurdles, obstacles, barriers to entry.
Capital investment makes market entry difficult and regulations make it virtually impossible.
Don Lavoie claims: National economic planning: what’s left? (1985), central planning was “nothing more than a government-sanctioned move by leaders of major industries to protect themselves from the risks and fluctuations of market competition.”
Regulation is merely the less ambitious consequence of central planning; in Lavoie’s words, it is a way for corporate elites to “use government power to protect their interests against the threat of rivals.” For a sharp analysis of Don Lavoie and his contributions to knowledge issues, see: By Cory Massimino For EconLib.
In practice, OpenAI employs both of these strategies, benefiting from first-mover effects from its research and development efforts, and recently partnering with Apple to bundle ChatGPT into its services like Siri, leveraging the incumbents’ networks of devices and apps. At the same time, OpenAI seeks to maximize rents through regulatory capture. All strategies reduce allocative efficiency, but the first two are dynamically efficient while the latter are not. Two increase total surplus while the third destroys it.
One would think that the current neo-Brandeisian FTC regime would sound the alarm about such an apparent attempt to restrict market access and encourage collusion. Bureau of Competition and Bureau of Technology officials said in a statement:Generative AI raises competitive concernsNot surprisingly, but still disappointingly, regulators Collusion is government intervention.
please think about it!
As AI advances rapidly, Luddism grows, and Congress holds more regulatory hearings, we need to view purported public censure with vigilance against the almost inevitable regulatory grab that will follow.
Samuel Crombie, Action Base Former Microsoft AI Product Manager.
Jack Nicastro is executive producer at the Foundation for Economic Education and a research intern at the Cato Institute.
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