July 03, 2023
The New York Times, like other major media outlets, continues to push its ideology, about how we have a choice of the market or the government. The latest is a piece by Evgeny Morozov, warning about the profit-driven pursuit of AI and the threats it poses to humanity.
In keeping with the official ideology, Morozov distinguishes between when the government controls a sector and when the private sector controls it. He ignores the obvious fact that the government always sets the rules in which private firms operate. These rules are infinitely malleable and make an enormous difference in outcomes.
I will start with my favorite, government-granted patent and copyright monopolies since they are relevant to the matter at hand. While in the official ideology, these government-granted monopolies are facts of nature, that is what is known as a “lie.” We can make them longer or stronger, or shorter or weaker, or to not have them at all and instead rely on alternative mechanisms to finance innovation and creative work.
An economy that doesn’t rely on patent and copyright monopolies, or relies on them less than the U.S. economy, is no less of a market economy. Of course, we would see radically different outcomes in terms of income and wealth distribution if we did not rely to the same extent on patent and copyright monopolies. Bill Gates would likely still be working for a living if the government didn’t threaten to arrest people who make copies of Microsoft software without his permission.
And, to take my other favorite example, we made at least five Moderna billionaires by paying the company nearly $1 billion dollars to develop a Covid vaccine and then letting it keep control of the vaccine. While many might want to see the government step in and limit Moderna’s profits by price controls or reverse this inequality with progressive taxes, but how about not having the government create the problem in the first place?
Suppose that a condition of getting the money is that all the technology is open-source, meaning that there are no patent monopolies and any non-disclosure agreements related to technology are not legally binding. That would mean that anyone working for Moderna can share their knowledge with anyone worldwide. This would likely mean both much cheaper vaccines and fewer Moderna billionaires.
And, this sort of contracting is every bit as much capitalist and market-oriented as the contract the Trump administration wrote with Moderna. It just leads to far less inequality.
Morozov gives us his basic story halfway through the piece:
“Yet neoliberalism is far from dead. Worse, it has found an ally in A.G.I.-ism [artificial general intelligence], which stands to reinforce and replicate its main biases: that private actors outperform public ones (the market bias), that adapting to reality beats transforming it (the adaptation bias) and that efficiency trumps social concerns (the efficiency bias).”
Let’s focus on biases number one and number three here, since I really don’t know what number two means. Suppose our contract with Moderna had specified that all the technology developed would be fully public. Would this sort of contract be consistent with a market bias? It seems it could be, since the government would be contracting with a private company rather than directly hiring the researchers themselves. Is there a problem with this?
Suppose we treated AI or AGI that way. Suppose that the government put up money for research, but everything was fully open. I realize that some self-imagined or real geniuses would refuse to take that deal because they envision they will be the next Bill Gates or Elon Musk. But some researchers will take it, either because they have a better sense of probabilities or they actually care about doing research for the betterment of humanity.
In that situation, we would have government-funded research that would be fully open and free, directly competing with patent-protected technology. (We could also change the patent laws so they don’t apply to AI. In the recent past, it was not possible to patent life forms, software, or business methods. The government, not the market, determines the scope of patent protection.)
Being free would give government-funded research a large advantage. We can also write liability rules to make AGI less profitable for private corporations. For example, suppose that the makers of AGI could be held liable for any harm caused by their technology, even if a customer had misused it. This could mean, for example, that Elon Musk is held liable for when a Tesla operating in self-driving mode, hits a pedestrian, even when that person was clearly ignoring a traffic light. Again, laws on liability are determined by the government, not the market.
To take my favorite example in this vein, the market does not require that we grant giant Internet platforms like Facebook and Twitter, Section 230 protection. This means that these huge companies don’t face the same risk of defamation suits for third-party content as their competitors in print and broadcast media.
Twitter and Facebook would likely be worth considerably less, and have a far less important role in shaping public debate, without this special protection. However, we would be no less of a market economy if Section 230 protection did not exist.
The supposed market bias that Morozov rails against runs directly into the “efficiency bias.” Can anyone who has looked at the U.S. financial system for even five minutes say that we have an efficiency bias? We waste hundreds of billions of dollars annually paying people to shuffle assets.
The asset shuffling makes some Wall Street types incredibly rich, but how is the economy more efficient because we have $40 trillion in stock trades a year ($180 billion a day)? Can anyone say with a straight face that we would have less efficient capital allocation if we had $20 trillion in stock trades a year instead of $40 trillion?
Suppose we got to the lower level of trading volume with a modest tax on trades, similar to the sale tax that we pay on clothes, furniture, and other items. In that world, we would have much less inequality, but it’s hard to see how it is any less capitalist or market-oriented.
There is much else about the financial system that is demonstrably inefficient. Forcing people to file their own tax returns, rather than having the government do it for them, as European countries have done for decades, is incredibly inefficient. The current I.R.A/401(k) system wastes tens of billions annually compared with a centrally run system.
We can point to many other areas where inefficiency is allowed to flourish as a result of the way we have structured the market. (See Rigged for more examples [it’s free].) It’s absurd to claim that we have structured the economy to maximize efficiency.
We have structured the economy to redistribute income to those at the top. It is understandable that the winners prefer to say that the structure was created to maximize efficiency, but it is not true. It is positively bizarre that critics of this outcome, like Morozov, are so eager to accept the claim of efficiency, but I suppose that’s what you must do to get published in major outlets like the New York Times.
The simple reality is the market is a tool, like the wheel. It is infinitely malleable. There is no given structure and there is nothing inevitable about market outcomes. The rich have rigged the market to make themselves ever richer and more powerful. But rather than having serious discussions about different ways to structure the market, major media outlets would rather just run pieces ranting against the market.
Needless to say, ranting against the wheel will not get very far. But, I suppose it makes some people feel good.