Sam Altman offers a Trojan Horse to American taxpayers

The government runs the risk of regulatory capture if it accepts the ‘gift’ of a 5 per cent stake in OpenAI.

- Gautam Mukunda

Sam Altman just offered the US - meaning every American — US$42.6 billion (S$55 billion). (Not each, sadly).

He said giving the government a 5 per cent stake in the company he runs, OpenAI, is the best way to ensure that Americans share in the promised bounty from artificial intelligence.

Before the Trump administration takes him up on the offer, it should organise a group trip to see Christopher Nolan’s new movie The Odyssey, whose opening act is the most famous gift in Western literature: a giant wooden horse, wheeled through the gates of Troy by the people it destroyed. The lesson translates. Beware of CEOs bearing gifts.

Start-up CEOs usually guard their equity with a fierceness that lions standing over a fresh kill would envy. So why was this offer made?

That question was answered 55 years ago in a 1971 paper by the economist George Stigler, who would later win a Nobel prize in economics. He described the theory of regulatory capture, which is the argument that regulation tends over time to be acquired by the industry it governs and operated for that industry’s benefit.

While capture tends to affect all regulatory regimes, it’s far more likely when the regulations were requested by industry in the first place. Capture is a tendency rather than a law, and economists still argue over how far it reaches. The incentive it names, though, only runs one way.