By Neland Nobel

Written by Neland Nobel

Estimated Reading Time: 6 minutes

No doubt you have watched the public frenzy build over the last few weeks around artificial intelligence and the social problems caused by AI Data Centers.

The latest burst of hysteria came from viral comments by young engineers and even some company executives,  who suggested that AI is now programming itself and will run wild and destroy the human race.

Many advocates for government control come from a movement called Effective Altruism, a philanthropic movement funded by tech giants.  One of the biggest funders was Sam Bankman-Fried, now incarcerated for fleecing investors in a cryptocurrency scheme.  He was also a huge donor to the Democratic Party.

Critics are coming mostly, but not exclusively, from the Left.  Many are calling for Federal Regulation or, in the case of Bernie Sanders, at least half government ownership of companies developing AI.

Most Democrats are now reliable critics of AI and AI Data Centers.

President Trump has expressed some support for AI, but many on the Right differ with him and see it as a threat as well.  However, Republican positions are not uniform.

What is a common-sense, non-expert to make of all of this?

First, we see a distinction between AI and AI Data Centers.  Data centers do the heavy lifting to process the tremendous flow of information required.  Critics say they use too much water and too much electric power.

The fix seems rather simple.  Don’t build them where water is scarce, and require developers to provide their own power so they don’t drag on an already overburdened grid.  Also, public policy should encourage water storage and management, and not pump millions of gallons out to sea to save an obscure fish.  Likewise, public policy should encourage the expanding electrical output and upgrading of the current grid.  The latter can be defended on many grounds, including the growth in EVs and supporting economic growth with low-cost and reliable energy.

This position rubs the environmental Left the wrong way, but hey, they have been wrong on just about every issue from overpopulation to global warming.

So we will need data centers for “good AI”, or what some perceive as “bad AI”.  Data centers process the massive amounts of information; they don’t write the software.  Requests for a new chicken stew recipe or commands for cyborgs to take over the world would all be routed through data centers.  They are, in this sense, neutral in this fight.

As to the programming of AI, if it is dangerous as some say, why would we want that in the hands of a centralized power, the government? Our government, somewhat better than others, has lied repeatedly about the Vietnam War, weapons of mass destruction in Iraq, the origins of COVID, the effectiveness of government vaccines, global warming, the population bomb, the origins of Hunter’s Laptop, the destruction of the black family, and dozens of other examples of blatant government lying, manipulation, and skullduggery.

No, thanks.  Other than government use of AI for the Department of War, keep them out, and the same goes for corrupt international organizations such as the WHO and the World Court.  The United Nations is thoroughly corrupt and often in the control of Islamists and the Red Chinese.

Victor Davis Hanson also recently noted in a podcast that many of these “scares” occur regularly during the critical phase of the election cycle.

Looking back at that thesis, it is easy to spot.  Among the best are the so-called missile gap, global cooling, global warming, the population bomb (too many people and we will all starve), nuclear winter, nuclear freeze, and nuclear war (the famous girl picking daisies ad), and now mankind will be wiped out by AI.

The Left has specialized in model-driven, expert-certified, species-level or civilizational deadlines (nukes, population, climate, now AI). The Right has specialized in crime, Soviet/Chinese power, immigration, and cultural breakdown. Both use fear in politics, but the Left has often been more successful because it controls society’s communication nodes.

Another concern is that the very companies making these frightful claims are calling on government to regulate them, rather than control themselves.

If programmers are writing code and giving instructions that are harmful, the best solution is for these companies and programmers to stop doing what may be harmful.

George Stigler, a prominent member of the Chicago School, won the 1982 Nobel Prize in Economic Sciences “for his seminal studies of industrial structures, functioning of markets and causes and effects of public regulation.”

The prize recognized work across industrial organization, how markets actually operate, and especially how regulation arises and what it does. His most cited piece of that agenda is the 1971 paper “The Theory of Economic Regulation.”

His core claim: industry often acquires regulation and designs it primarily for its benefit. Incumbents have concentrated interests, resources, and existing compliance staff; they can use licensing, standards, reporting, testing mandates, and other fixed costs to raise entry costs. New firms and smaller rivals bear those costs more heavily. The result looks like public-interest protection but functions as a barrier. That idea is now usually called regulatory capture.

The timing of this scare seems directed at getting an election issue; it seems suspicious because most of the “AI-will-kill-us” advocates have been peddling similar scares for years.  It’s also more than suspicious that companies are calling on the government to regulate their industry.

If AI has the potential to create harmful products, how does a free society protect itself?

Competition among companies, rather than collusion, is always better.  Often competitors point out to the public what they are doing right and what their competition is doing wrong.  It is easy to imagine companies saying they will only develop and support safe AI that benefits people.

Our tort and lawsuit system allows and encourages the public and the government to sue companies that engage in dangerous behavior and make dangerous products. You can only imagine the fee-chasing horde of attorneys just waiting to win billions from trillion-dollar tech companies.

Private regulatory bodies can be developed, such as Underwriters Laboratories (you have seen the UL-approved sticker), that test electrical devices and products.

Regulation can often be performed by the industry itself, with government supervision.  A good example is FINRA, wherein securities firms regulate themselves and punish those who fleece or mislead the public.

There is no evidence at this time, other than unsupported scare claims, to justify government regulation or ownership of AI companies. We have gone through wrenching change with electrification, automobiles, airplanes, drug companies, and computers and the internet.  Most of these technological shifts displaced workers and whole industries.  But that is part of what Schumpeter called “creative destruction.”  There is no divine right to remain employed making buggy whips or wagons.  Things change over time.  We used to call that progress. None of that required the heavy hand of government or socialism.

Any new technology can cause harm because flawed, morally compromised beings undertake every human endeavor. Mistakes will be made, and they will be corrected. But we should not presume government regulators are angels.  They often have their own axes to grind, and they can hide behind a government monopoly.  Moreover, history shows regulators are almost always captured by the very industries they allege to regulate, so their regulation for the public benefit is largely an illusion. For the latter reason, they are to be feared more than those in the private sector, who can only get your consumer dollars by voluntary cooperation.

Government, on the other hand, uses force to get its way.  And because government is a monopoly structure, it is inherently less likely to innovate or produce products the public wants.

It can also be extremely difficult to change. Government can also “legally” kill people. They can further declare themselves immune to lawsuits and maintain a monopoly on law enforcement. Communist Russia ran a bloody losing enterprise for almost 70 years before it collapsed.  No business with a bottom line can be incompetent for that long.

Insofar as AI may be needed for reasons of national defense, such as directing or defeating drone swarms, that kind of AI does legitimately fall under the Constitution as a legitimate function of government.  Otherwise, government should stay out.

The promise of AI is considerable.  Its impact on productivity, medical research, the development of wonder drugs, and robotics could be breathtaking.  Already, forms of AI are integrating into our lives.  The Chinese are diligently working on it as well. We should not sacrifice potential for unsubstantiated, wildly emotional accusations.  Freedom can handle technological and social change better than other systems. We need to have faith in our freedom and not let this technology be exploited by the Chinese Communists.

-Neland Nobel

Neland ‘Neil’ Nobel was born in Uniontown, Pennsylvania, and moved to Arizona in 1961. He attended ASU and earned a B.A. and an M.A. in history, with a specialty in economic and military history.  He graduated Summa Cum Laude and received a Richard M. Weaver Fellowship from the Intercollegiate Studies Institute.  He spent the next 45 years in the financial services industry, ending his career with a 25-year run with UBS as a portfolio manager and Certified Financial Planner. In retirement, he remains active, having founded the Prickly Pear in 2020 and continuing to contribute content.  In his spare time, he is a certified firearms instructor and runs a hiking club and two shooting clubs.  He is married with three children and three grandchildren.

The author’s views are their own and do not constitute financial, investment, or legal advice. Investing involves risk; please consult with a qualified professional before making any financial decisions.

 

Sourced from PRICKLY PEAR