The oligarchs of artificial intelligence are tearing a page from the Wall Street industrial complex, lobbying to turn AI over to regulators who will outlaw the competition.
To sell the lobby, they’re using a paid army of AI doomers who’ve graduated from AI will eat all the jobs to AI will hack everything and maybe finish off humanity even faster than global warming.
Will they capture -- or strangle -- the biggest technology since the internet. Arguably since electricity.
Last week, Anthropic CEO Dario Amodei penned an open letter — well, an open tweet — arguing to “pace the frontier” and slow down AI.
OpenAI’s Sam Altman and Google DeepMind piled on, making it a trifecta of the big 3 making up nearly 90% of AI revenue.
The AI equivalent of bankers spending the weekend on Jekyll Island.
The Hack that Started the Party
What kicked it off was a July cybersecurity exercise where OpenAI created a bunch of AI agents that broke into online platform Hugging Face by the decidedly low-tech method of finding logins that engineers had lazily left on public posts.
That is serious. But it was also a security test exposing a security failure, which is why tests exist. If a crash-test dummy goes through the windshield, we redesign the restraint system. We do not pace the automobile industry until horse breeders feel comfortable.
The most revealing failure came during the defense. Hugging Face tried to use Anthropic’s Claude to analyze the attack, but Claude refused specifically because of the kind of rules Anthropic now wants. The defenders turned to a Chinese model instead.
So the burglar was inside the house, Hugging Face was locked out by “guardrails.” So we need more guardrails.
Now, the oligarch’s fears may be sincere. Powerful AI can be dangerous.
Something else that’s dangerous is guns. Yet gun-control laws have a nasty habit of disarming people who obey laws without touching criminals.
Slowing AI would not bind actual criminals, hackers, or Chinese military laboratories. And given the IQ of Washington regulators — and the conflicts of interest in Anthropic’s proposed left-wing activist gatekeepers — we’ll come out more exposed, not less.
Defenders need models at least as capable as the models used against them. Regulation cripples that.
The Missing AI Job Apocalypse
Before AI hacks the panic was AI would eat all the jobs.
A widely cited 2013 Oxford study predicted AI would take half the jobs in 20 years. Here we are 13 years in and US jobs have actually grown by 19 million.
You literally cannot see AI in the jobs numbers. The closest you get it IT layoffs, which are over-hiring during Covid that was well known before they started using AI as the excuse.
All this despite AI now being used in almost 90% of companies. If AI were a giant pink slip, something should show up in jobs numbers. Instead, crickets.
In fact, a recent study of 22,000 companies found the heaviest AI adopters increased white-collar employment by 10.2% -- and entry-level employment by 12%. Another study found 79% of AI interactions augment workers — make them more valuable — rather than replace them.
Internet 2.0
Interestingly, we had the same sequence with the internet: First it was supposed to gut existing jobs -- the 1990s quip was the internet’s great at turning billion-dollar businesses to million-dollar businesses.
Next, shadowy super-hackers were going to y2k the electric company and steal your Lexus.
What’s different is the early internet didn’t have a gaggle of oligarchs who know how to buy regulation. Not until the 1999 Microsoft trial did tech realize it had to start buying politicians or be regulated to oblivion.
So unlike the internet, but very much like Wall Street, the AI oligarchs are weaponizing regulation, licensing, mandatory evaluations, approved auditors, release restrictions and coordination among the companies controlling the market.
Each rule creates fixed compliance costs the giants can absorb and startups cannot. OpenAI can employ a building full of lawyers. Anthropic can fund activist auditors. Three guys in a garage cannot.
Moreover, with Anthropic and OpenAI now mapping IPO’s, this is an unusual moment to discover that progress requires locking in their dominance to stem the collapse in revenue per token.
What’s Next
If the danger from AI is as serious as Anthropic and OpenAI claim, let them voluntarily pause.
Stop the next release, the revenue and the IPO valuation. Then maybe we’ll believe them.
Until then, it’s another crony industry trying to buy the finish line. The public gets the fear, the incumbents get the moat. All while China happily scoops up the dominant technology of the next 20 years, complete with military dominance that actually would leave us defenseless.
Enjoyed this article? Get the next one free.
Join 23,000 readers for weekly articles on the economy and freedom, with regular deep dives like the Fall of Rome, the Weimar hyperinflation, and FDR’s Great Depression.
Want to go further? Paid subscribers also get my monthly investment guide including real-money picks that have made 41% annualized returns so far this year on a $100,000 portfolio.
Also check out my weekly interview series. This week I’m joined by Larry Lepard, author of The Big Print, to talk about the coming age of Permanent Inflation. Driven by $40 trillion of debt now running over $2 trillion per year.
We ask whether America has already crossed the point of no return. Why the 1970’s Volcker solution won’t work this time, and how ordinary Americans can protect themselves.
Well stated! These Big Boys [BBs] don't want any competition. They have the pull & bucks to buy the legislation that will give them a fence around their own sandbox. And Congress is mostly filled w/ COWARDS + few will take the effort to look behind the curtain these BBs have drawn to shield the skeptical from truth.
Hello everyone - It's literally not the politicians They're just the salesman.
Washington and the administrative state are getting nervous, and they want a piece of the pie. So they reach out to the so-called oligarchs, hand them the script, and suddenly everyone starts singing the same tune.
And what do the oligarchs and their organizations get out of it? Essentially, exclusive rights to lead the AI rollout.
It becomes a pretty convenient arrangement for everyone involved: Washington gets its oversight, the oligarchs get a protected position at the front of the AI rollout, politicians get to play defender of the realm and take the acclaim, and life moves on.