ResourceInsights: "Here's comes the AI bailout: Why government stakes in AI companies are a sucker's bet." There is good reason to argue that AI based on current models is likely to be a much smaller and less impactful technology than advertised. "If the government is lured into taking an ownership stake in AI companies, it will be walking into a trap." The first clue is that the CEO of the most prominent AI company, OpenAI, proposed the idea to Trump early last year. Why would the top executive of the best-known AI company offer to dilute his wealth and the wealth of his shareholders to give the government a share? "Why would that CEO want the government looking over his shoulder as he runs his company?"
Unless of course he knows he is going to need a bailout. When a duplicitous CEO + a transactional, self-interested president shake hands—then the rest of us can look forward to paying the bill. Kurt Cobb argues there are 2 reasons for this outcome.
First, "the AI industry has convinced lawmakers and the current administration that AI is somehow the future of technology and therefore the industry (as opposed to the technology) cannot fail."
Second, "the AI industry's capital expenditures are the main thing driving the economy and the stock market and a bust among major industry players (again, as opposed to the technology) would lead to too much pain in pocketbooks and portfolios." Remember the phrase—'too big to fail?'
"Governments are actually very poor at making financial investment decisions, in part, because they are not set up for that." When the current AI bubble bursts, the federal government [could] be tempted to throw good money after bad to bail out its investment since the government has something private industry lacks, the power to tax and the ability to print money as needed.
"The entire global software industry had revenues of about $719 billion in 2025...for products that presumably work and have a marginal distribution cost close to zero." Aside from stringent regulation, I share Cobb's skepticism about the government getting any closer to AI than with a 10-foot pole.
