The Singularity and Externalities

The unique dangers of artificial intelligence are often used to argue that development should be taken out of the hands of profit-driven private actors. The government is presented as a force for good that can develop AI responsibly for the common good. While this line of reasoning can soothe the minds of well-meaning citizens, it fails to take into account the nature of the externalities involved. Government AI development would force the people to bear the massive risk that frontier labs are taking on. While OpenAI and Anthropic believe that this risk will pay off, the people do not have the information or expertise needed to make that choice for themselves. The labs pouring billions into model training could be wrong, but they will be responsible if they are. The negative externalities of AI innovation would become even more pronounced if the government took control of development. Most significantly, the AI industry is in such an early and undefined stage that eliminating the market process would fundamentally stunt the revelation of information. State AI development would damage the public in the same ways as private development, but with far greater risks. 

Private industry should develop AI because the payoff is by no means guaranteed, and the firms rather than taxpayers should bear that risk. It is almost impossible to tell which leading voices on artificial intelligence actually believe in the singularity, and which are just promoting it for the sake of marketing or fear mongering. Recursive model improvement is expected to overcome power and compute restrictions and get better exponentially. While the singularity seems ever more imminent, it is not certain to happen or even to fundamentally change the world if it does. The causal chain from recursive learning to unbounded benefits for the developers seems strong, but how often have dramatic predictions about the future failed to account for some seemingly innocuous factor? Technology changes, markets adjust, and wealth transfers, but the winners are never certain before the change. The financial burden of AI development would just put one more involuntary and risky bet on the backs of citizens who want nothing more than stable and responsible institutions. The best thing the government can do to accelerate AI development is create a stable and transparent institutional environment. …