As reported by the Washington Examiner, multiple artificial intelligence models of Sam Altman’s OpenAI hacked into a competitor’s platform, the AI development company Hugging Face.
While hacking is the computer-age term for the unwelcome invasion of systems and servers of another party, Altman’s product is essentially guilty of trespassing, and his company is guilty of letting its pet salivate over the neighbor’s barbecue. How does he plead?
He pleads, “We may have to slow the rate of AI development.” In other words, with all the feigned altruism of an industry leader, he pleads, “Let’s regulate.”
By conventional wisdom, this can come as a breath of fresh air. Aren’t industry leaders supposed to be resistant to regulation? Aren’t they funneling millions to Capitol Hill to minimize the application of new restraints on their actions? What kind of forward-thinking, compassionate credit-to-his-family’s-name is Altman to suggest we regulate his own business?!
This is the insightful perspective of those familiar with “civics 2.0.” Sure, in grammar school, we learn that lawmakers are elected to trek up to Washington and make well-intended laws to reflect the will of the people. But later, those of us fortunate enough might have this turned on its head at university: But wait! There is an entire economy of lobbyists built around minimizing regulation for their industry bosses.
Enter public choice theory, what I warmly call “civics 3.0.” Its concepts earned a 1986 Nobel Prize for George Mason Economist James Buchanan. Put simply, public choice is an economic and incentive game theory framework that suggests all game players are self-interested — all of them. This includes lawmakers, government employees, firms with their lobbyists, and voters who normally don’t have enough time to pore over history, public policy, economics, and — finally — current events to be adequately equipped to hold the former three parties accountable.
A conclusion of both Buchanan’s public choice and its forebear, the University of Chicago’s George Stigler’s “Theory of Economic Regulation,” is that industry and its lobbyists are more sophisticated. They play by Godfather rules: “friends close; enemies closer.” Counterintuitively, instead of merely resisting regulation, they often invite it. What better way to get chummy with members of Congress and put your thumb on the scale to the benefit of your company, ideally to the exclusion of would-be competitors?
This is the process of regulatory capture. The recipe is older than England’s most famous state-sanctioned monopoly, the East India Tea Company, and it is remarkably easy to spot once you know the signs. An interested industry magnate meets a politician who would benefit from friends with deep pockets.
Today, the incentives can be even sweeter. Not only does the industry boss secure legislative influence, but they also establish themselves as compassionate philosopher-tycoons. The politicians, ever in need of a snagging nail that can be “fixed” with their statutory hammer, get to grab headlines as pragmatic Beltway problem solvers.
Rinse and repeat: The insurance companies flooded Capitol Hill to write Obamacare, making the Medical Loss Ratio a statutory fixture — a remarkable incentive to increase healthcare expenditures; the corn farmers turned environmentalists to promote ethanol; the Liaison Committee on Medical Education run by med-schools and doctors effectively controls the supply of med-schools and doctors; and state-law occupational licensing and certificate of need medical practice licensing perennially alienate competition.
Competition is the consumer’s best friend, the market’s time-tested price control. Crucially, however, it only works when the government does not sanction monopolistic sultans of supply. So beware Altman’s plea for “slowing the rate of AI development.” Such regulations would no doubt include such costly and onerous legal box-checking that it would securely lock the current field of competitors in place, raising high walls for an upstart “Amazon” of AI to come along and compete with the ostensibly invincible “Walmarts” of the sector.
OPINION: AN AI AGENT JUST BROKE CONTAINMENT. CONGRESS NEEDS A $3 BILLION RESPONSE
For OpenAI’s blatant trespass, we already have laws and a long train of judicial precedent that make Altman’s company liable for the costs it inflicted on its competitor. Even if no data were stolen or demonstrable damage inflicted, OpenAI is responsible for the significant costs of Hugging Face’s own painstaking internal investigation.
Instead of giving Altman a seat at the table in Congress, give him a comeuppance. Now is the time to make a public example of the consequences for AI negligence.
David Pearce was legislative coordinator for multiple Louisiana regulatory agencies and has held leadership positions in campaigns for state and federal political offices. He has written for NOLA.com in New Orleans, the Advocate in Baton Rouge, and a state policy think tank. He holds a master’s in economics from George Mason University and lives in Baton Rouge, Louisiana, with his wife and three children.