The Folly of AI Pre-Approval

The European Union’s Artificial Intelligence Act requires developers to obtain government permission before releasing many AI models. Similar licensing and pre-approval regimes are spreading in other jurisdictions. Supporters claim these rules will make AI safer. In reality, mandatory pre-approval is epistemically impossible, destroys the entrepreneurial discovery process that generates both innovation and genuine safety knowledge, and systematically favors large incumbents.

Government Failure Is Still Failure

Introductory economics textbooks devote considerable attention to market failure: monopoly power, externalities, public goods and asymmetric information. However, government failure deserves the same scrutiny.

Markets are made up of imperfect human beings and so are governments. Legislators, regulators, and civil servants possess limited knowledge, imperfect foresight and incentives of their own. Evidence of market failure is not evidence that government intervention will improve the outcome. The relevant comparison is between feasible alternatives.