By John Q. Hosedrinker 
Representative Alexandria Ocasio-Cortez has stated the federal government should not bail out the artificial intelligence industry, citing potential economic instability mirroring the 2008 financial crisis. Echoing industry concerns, she noted the AI investment boom may be a bubble, and a bailout would be unconscionable while denying essential resources to everyday Americans. Similar concerns were raised by Senator Elizabeth Warren regarding potential plans to use taxpayer funds to support AI companies. There are worries the Trump administration may be favoring AI executives with regulatory changes and public funds.
Read the original article here
Ocasio-Cortez’s stance, articulated with a clear and firm voice, sets the stage for a critical debate. She’s essentially saying: “We should not be entertaining a bailout of the AI industry.” That’s the core argument, a line drawn in the sand against the idea of taxpayer money being used to prop up a potentially faltering sector. The reason? Growing fears of an AI bubble, and the potential for a spectacular crash.
This is a sector populated by the wealthiest individuals on the planet. Why should the public shoulder the burden of their potential failures? Let them use their vast resources, the argument goes. Let them liquidate assets, even their extravagant toys, to clean up their own mess. This industry, after all, is the one actively seeking to replace human workers with AI. Perhaps, in a twisted sense of poetic justice, AI should be the solution to its own problems. The very nature of a bailout should be questioned. The primary benefit would be to those who have the resources to absorb the blow, not the people who the current economy is supposed to be supporting. A bailout should be reserved for industries that have the capacity to recover from failure and repay their debts.
The question of why to subsidize an industry that seems to offer very little of value should be on the table. The market caps of these companies are astronomical, but the potential for a substantial decline, even a significant one, doesn’t necessarily pose an existential threat to the global economy. However, the fear is real. The concern about the value of the market, particularly the potential impact on retirement funds, adds another layer of complexity. If anything, the argument goes, if there are bailouts, the funds should go directly to the American people.
The projected size of the AI market in the coming years is huge. The question is, who bears the responsibility if the industry stumbles? The argument is clear: the players can collectively deal with it. The American taxpayer owes no bailout to the free market. The history of bailouts, particularly the one in 2009, is fresh in memory. The wealthy must take responsibility for their own risks.
The concentration of wealth in the hands of a few leaders is a concern. The irony is stark: the possibility of “socialism” for the rich while the working class bears the brunt of the losses. It is feared that this situation will happen again. Rather than supporting an industry that is potentially harmful to humanity, the argument is, we should be investing in things that actually help.
The parallels to the 2008 financial crisis are hard to ignore. The fear is that the playbook of privatizing profits and socializing losses will be deployed once again. The consequences of a bursting bubble, the potential for market crashes, and the implications for people’s retirement savings are very serious concerns. The bailout, if it comes, will likely benefit the same people as always, while the employees will be laid off anyway.
The bubble is part of the plan. The goal is survival. A bailout should not be taken seriously, due to the industry’s lack of benefit and its minimal contribution to employment. The call is for a break from this cycle of financial irresponsibility.
The potential for disaster is real, particularly for those with retirement funds invested. If the bubble bursts, the market will suffer. The broken structure of executive compensation needs examination. The fact that bailouts seem to offer no real risks for the high-level executives is a point of contention. There should be a strict cap on executive compensation for industries receiving bailouts, especially in light of the executive skill level.