Chuck Schumer Is Dead Wrong on AI

30.11.2024 06:11

As Congress finishes its work for the 2024 calendar year, outgoing U.S. Senate Majority Leader Chuck Schumer is racing to regulate algorithmic artificial intelligence (AI).

Republicans are understandably wary. As House Speaker Mike Johnson put it, “We want to resist overregulating” because “the innovation aspect of AI is very important.”

Artificial intelligence, especially AI-based pricing systems, benefits American families in many ways. It is making it easier for everyone in the economy — both consumers and businesses — to get better pricing deals.

Services like Hotwire and Carvana help consumers get better car prices, while software like Atomize and RealPage help businesses ensure they aren’t pricing their hotel rooms, apartments, and other products and services too high or low. (READ MORE: Saving Us From Scheming Landlords? Biden DOJ Sues Real Estate Tech Company RealPage)

However, the efficiency and cost-savings generated by innovations like algorithmic artificial intelligence do not seem to matter to politicians who need a boogeyman.

For months, the Democratic Party has blamed algorithmic AI for the price inflation that Congress and the White House’s runaway tax-and-spend agenda (coupled with the Federal Reserve’s easy money policies) have caused.

President Biden and Vice President Kamala Harris instigated much of the Democratic Party’s current ire over the tech. In the weeks leading up to the presidential election, they continually made AI a scapegoat, labeling algorithmic AI software “price-fixing software.” However, the artificial intelligence software only reflects marketplace realities. It’s not the tech’s fault that they have made inflation out of control. Nevertheless, their activism against this tech propels Democrats in Congress into action.

The Biden Department of Justice has only made this issue more front and center in Democratic lawmakers’ eyes. In August, it filed a suit against algorithmic pricing software that property managers use to help them determine the monthly rent sweet spot for their properties. In late October, it also filed an amicus brief in a federal appeals court against hotels that use AI-driven algorithms.

A district judge originally threw out the case, correctly noting that the algorithms don’t set prices. They just provide recommendations, which the hotels sometimes ignore. Nevertheless, the court’s findings are not stopping Democrats in the executive and legislative branches from demonizing and scapegoating artificial intelligence.

If Schumer ultimately gets his wish and regulates this technology, there’s a lot more at stake than whether businesses and consumers will be able to continue leveraging AI to get good pricing deals.

While serving as chair of the Federal Trade Commission during the Trump administration, Joseph Simons said the theory DOJ is using in its recent cases on algorithms “would raise considerable obstacles for the commercial use of algorithms, proprietary data, and artificial intelligence, resulting in significant harm to innovation and efficient operation of markets.” (READ MORE: Will Trump Fix Insidious FTC, DOJ Abuses?)

That would be troubling because artificial intelligence is already improving Americans’ lives in many tangible ways, both in the private and public sectors.

Last year, researchers at Stanford University created an AI tool that helped transportation authorities more efficiently apply congestion pricing to busy highways. By raising tolls as “demand” for the road increases, this new algorithm could eliminate stop-and-go traffic jams and help get people to work on time. Worker productivity goes up, carbon emissions go down — a win-win.

In October, the U.S. Treasury Department announced that its new AI tools halted or recovered over $4 billion in improper or fraudulent payments, up from just $652.7 million in the previous fiscal year.

The Department of Veterans Affairs uses an AI-driven tool called Recovery Engagement and Coordination for Health (REACH VET) to identify veterans who are at risk of committing suicide. Since its introduction in 2017, the system has flagged around 6,700 veterans per month, potentially saving thousands of lives.

But like all AI tools, REACH VET’s effectiveness depends on how good the inputs are. A report published in March found that the program ignored risk factors that largely apply to female veterans such as sexual assault or endometriosis. The VA is adjusting the algorithm accordingly.

Policymakers should let this be a lesson about the artificial intelligence industry more broadly — when programmers aren’t worried about running afoul of byzantine regulations, they can constantly tinker with their models, achieving better outcomes for everyone.

How much better? Well, PricewaterhouseCoopers International Ltd. (PwC) projects that the tech will contribute over $15 trillion to the global economy by 2030, while Goldman Sachs expects it to boost U.S. productivity by roughly 1.5 percent annually starting in 2027.

If the U.S. doesn’t capitalize on this pivotal moment in time, it will be left behind and will be forced to watch the economies of adversarial countries like China (which is already projected to reap 42 percent of the $15 trillion in global economic benefits from AI) gain a significant leg up.

If policymakers are worried that artificial intelligence will cause mass unemployment, they shouldn’t be. These algorithmic tools aren’t going to take jobs. Instead, they’ll make employees more productive by giving them a personal assistant who can automate tasks that once ate up hours of their day. They might be doing different work, but they won’t be doing no work.

This is nothing new. The same process played out during previous waves of automation. Sometimes, efficiency-boosting technology actually creates more jobs.

As Oren Cass pointed out in his book The Once and Future Worker, the invention of the ATM lowered banks’ cost of doing business and freed up employees to focus on higher-ROI tasks, enabling the banks to open more branches and hire more people.

If the benefits of AI are incalculable, then so are the costs of creating a hostile regulatory environment around it. We might never know we’re paying these costs because the AI tools that might have improved our lives will never be invented. Or perhaps we’ll be painfully aware of what we missed out on when we watch foreign adversaries assume global leadership after winning the AI race.

When the American people stand to gain or lose so much, it becomes their government’s duty to encourage innovation, not stifle it.

Mark Anthony is a tech analyst and former Silicon Valley executive with Forrester Research, Inc. He is now the host of the nationally syndicated program, The Patriot and The Preacher Show.

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