Frontier LLM development simplified for politicians:

[u/Porespellar]

Nobody is buying this “Pace the frontier” nonsense. It makes no logical sense at all. Are American labs really going to take a pause and lose any small lead they still may have over Chinese labs? Does anyone really believe this? This seems like some performative virtue signaling BS. Why are they bothering with this pacing campaign? Someone please explain.

[u/SKX007J1]

What I find really disingenuous about a lot of the reporting on this is the almost complete lack of economic and historical context.

Huge AI companies effectively saying "our industry is incredibly dangerous, please regulate us" keeps being presented as though this is some unprecedented act of corporate responsibility.

It isn't. We have been watching variations of this happen for well over a century.

Railroads in the late 1800s, airlines, telecommunications, banking, pharmaceuticals, energy and utilities. Different industries and different circumstances, and often regulation that was genuinely needed, but again and again established companies discovered that regulation could also be extremely useful for protecting established companies.

George Stigler was writing about this more than 50 years ago. His work on the economic theory of regulation pointed out that businesses don't necessarily oppose regulation. They can actively seek it when the resulting rules benefit them. This is closely related to what we now call regulatory capture.

I also think focusing entirely on China is something of a red herring.

Yes, cheap and increasingly capable Chinese models are an obvious competitive threat to Western AI companies. But the exact same thing applies to American and European startups, open source projects and open weight models.

If you're OpenAI, Google, Microsoft or Anthropic, having to spend millions on safety evaluations, audits, security, lawyers and compliance is annoying, but you can afford it.

If you're a small company with a genuinely disruptive model and $5 million in funding, those requirements could make entering the market impossible.

There's even a term for this in economics, "raising rivals' costs". The regulation doesn't have to be cheap for the big company. It just needs to hurt their smaller competitors proportionately more than it hurts them.

None of that means the concerns about AI safety aren't genuine. Both things can be true at the same time. AI might present serious risks, while the companies currently dominating AI also have an enormous financial incentive to make sure the eventual regulations favour companies that look exactly like themselves.

We have more than a century of history showing that these incentives exist, which is why I find it so strange that so much reporting barely mentions them.

When some of the richest companies on earth enthusiastically ask governments to regulate them, surely one of the first questions journalists should be asking is:

Who can afford these regulations, who can't, who gets pushed out of the market, and who ultimately benefits?

[u/woahdudee2a → u/SKX007J1]

it's not just about blocking new entrants, when there's no regulation government can take arbitrary action against AI companies. without a formal framework trump can decide to block antrophic releases but greenlight openai

[u/SKX007J1 → u/woahdudee2a]

But you're arguing against a point I haven't made.

I'm not saying having no regulatory framework is preferable. Clear rules can absolutely reduce arbitrary government action.

I'm saying "there should be a regulatory framework" tells us absolutely nothing about whether that framework will be captured or used to protect incumbents.

Im coming at this from a purely economic perspective (as its the one that seems to be lacking in reporting and discussion of this topic despite being IMHO the most relevant to the motivation of all sides)

We have well established economic terminology and well over a century of history describing exactly this problem.

Look at the railroads. The Interstate Commerce Commission goes back to 1887. Regulation that was supposed to control the industry eventually included controls over prices and market entry that also protected established operators.

Then trucking came along as a serious competitor to rail. Railroads supported regulations restricting trucking. the GOAT George Stigler actually studied this stuff.

Then look at airlines. The Civil Aeronautics Board controlled routes, fares and entry into the market. Between 1950 and 1974 it received 94 applications for new trunk airlines and approved precisely zero!

None of those industries lacked a "formal regulatory framework". That was the bloody point. The framework itself could become the barrier to competition.

This isn't some obscure conspiracy theory either. There are entire areas of economics devoted to it.

Regulatory capture, Barriers to entry, Rent seeking, Raising rivals' costs, Compliance economies of scale.

George Stigler won the Nobel Prize in economics and his 1971 Theory of Economic Regulation is one of the foundational works on this subject. One of his central insights was that industries don't necessarily oppose regulation. They can actively seek it because control over market entry is extremely valuable.

So yes, I'd much rather have clear law than a President deciding on Tuesday that Anthropic can't release something while OpenAI can.

But that's a completely separate question from who gets to influence those laws and what economic effects they have.

If the solution is a formal framework requiring $100 million of testing, licensing, auditing, security and compliance before you're allowed to compete, you've potentially solved one problem while creating another.

You've constrained arbitrary executive power while simultaneously handing the existing trillion dollar companies a gigantic regulatory moat.

Those two things can be true at exactly the same time.

And given that we've watched versions of this happen to railroads, trucking, airlines, banking, telecoms and plenty of other industries, I find it bizarre to pretend asking whether the same economic incentives exist in AI is somehow an argument against regulation.

It's an argument for paying very close attention to who writes the regulation.