Wise and Salutary Neglect: Why Competition Is the Best AI Regulation
As Washington weighs how to regulate artificial intelligence, it is worth revisiting a classic question in political economy: why did the Spanish Empire — the world’s largest and richest state in 1600 — decline into oblivion by 1900, while plucky England ascended to liberal democracy, industrialization, and world superpower status in the same time frame? According to the economists Daron Acemoglu, Simon Johnson, and James Robinson, the answer lies in Albion’s relative lack of monopoly.
For centuries, the Spanish port town of Seville monopolized the Empire’s trans-Atlantic trade. A cabal of oligarchs consolidated lucrative gains while lobbying to crush merchant competition. At their behest, the Spanish Crown even criminalized trade between its own Latin American possessions to maintain the city’s preeminence.
By contrast, Britain witnessed the rise of a small band of adventurers — merchant “interlopers,” as their aristocratic rivals called them — who defied Crown monopolies to build independent fortunes in the New World. These same men backed 1688’s “Glorious Revolution,” which enshrined parliamentary sovereignty and limited the King’s ability to grant monopolies to his favored merchants. Henceforth, markets rather than political connections would determine who prospered.
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