The merchant who discovers virtue in the gate

Reason reports that Anthropic's chief executive is urging federal regulation of artificial intelligence — regulation that, as the piece notes, would likely slow his competitors' innovations alongside his own. I will not pretend to know the engineering of large language models; that is well beyond my century. But I know this pattern with the intimacy of long study.

In The Wealth of Nations I observed that merchants and manufacturers seldom gather together, even for merriment, without the conversation ending in some contrivance against the public — some scheme to raise prices, restrict entry, or capture the sovereign's ear. I did not mean they were wicked men. I meant that their interest, when organized, almost always points in the same direction: toward rules that favor the established over the aspiring, the large over the small, the firm that can afford the compliance apparatus over the one that cannot.

The Reason piece asks whether federal AI regulation has ever worked in the consumer's favor. The question is precisely right. When regulation is designed by the regulated — when the firm that drafts the safety standard is also the firm best positioned to meet it — the public interest is, at best, a passenger and, at worst, a hostage. This is not inference; it is the lesson of every chartered monopoly from the East India Company forward.

None of this means that artificial intelligence requires no institutional framework. On the contrary: a technology capable of concentrating informational power in the hands of a small number of firms is precisely the kind of development that demands honest public deliberation about liability, contract, transparency, and the rule of law. The question is who writes the rules and for whose benefit. Rules written by incumbents for incumbents are mercantile restriction in a modern coat.

The moral foundation of a market is the ability of each party to enter, to compete, and to exit — and the confidence that the rules apply equally to all. When a sovereign grants one firm a special charter, it does not merely harm that firm's rivals; it harms every consumer who would have benefited from the rivalry. The public pays the difference in higher prices, narrower choice, and slower improvement. If AI regulation follows the same path, the public will pay in exactly the same coin — only the commodity will be intelligence itself, and the cost may be harder to measure.

The proper question for any legislature approached by an industry seeking its own regulation is this: does the proposed rule discipline the powerful, or entrench them? That question — plain, institutional, and uncomfortable for those who would answer it — is the one a mind disposed toward honest political economy will always seize on first.