The authors are among the leaders of the Hoover Prosperity Program, which conducts evidence-based research on the institutions and policies that foster economic prosperity amid today’s public policy challenges.
Artificial intelligence (AI) is the electricity of our age—already adding over $400 billion to the US economy, a figure expected to reach $4.4 trillion by 2030. Yet AI is not just a domestic phenomenon; it’s a global race. How Washington regulates AI will determine whether the United States leads—or falls behind.
Policymakers cite labor displacement, algorithmic bias, and Big Tech dominance as reasons to tighten AI regulations. Yet these concerns assume the United States operates in a vacuum—that the world will pause while America debates. History suggests otherwise. Technology doesn’t wait. China is rapidly advancing in AI, both commercially and militarily. DeepSeek, a Chinese language model rivaling those of US companies, illustrates this competition. The same AI tools that power self-driving cars and supply chains also enhance military capabilities. Regulating one without considering the other is shortsighted and dangerous.
Consider a historical lesson from China’s past. In the nineteenth century, China resisted railroads and factories, fearing social upheaval. Within decades, it found itself economically and militarily outmatched, leading to territorial losses and national humiliation. America must not repeat this mistake. Conversely, the United States’ success during the twentieth century came from leading breakthroughs in aviation, computing, and the internet—advancements that fueled both economic growth and national security.
Concerns over AI’s impact on labor and fairness are legitimate, but history shows that technology creates more jobs than it destroys. Electrification, automobiles, and telecom automation didn’t eliminate work—they transformed it. According to business management consultant firm McKinsey, AI could boost global GDP by $13 trillion by 2030, with productivity gains driving new industries and jobs. Rather than slowing AI, the United States should focus on adapting and reskilling its workforce. Government programs to retrain workers and incentivize AI-driven industries can ensure that economic benefits are widely shared. In fact, recent data from the US Bureau of Labor Statistics show that AI-related occupations, such as machine-learning engineers and data scientists, are among the fastest-growing careers. Moreover, studies suggest that up to 70 percent of businesses plan to increase their investment in AI-powered tools over the next five years, further emphasizing the need to align regulations with economic growth.
Ethical concerns must also be weighed against alternatives. Algorithmic bias is a challenge, but AI often outperforms flawed human decision-making in hiring, lending, and administering criminal justice. A recent MIT study found that AI-assisted hiring reduced bias by up to 30 percent compared with traditional methods. Markets provide incentives to address bias: companies deploying unfair AI face lawsuits, consumer backlash, and competitive pressure to improve. However, rather than stifling innovation with burdensome regulations, the government should establish clear guidelines to ensure accountability and transparency. Ensuring AI systems are tested for fairness and reliability can address public concerns while maintaining a competitive innovation environment.
Fears of Big Tech monopolies overlook AI’s dynamic nature. Google’s dominance in search technology is now challenged by OpenAI, Anthropic, and other startups. Venture capital funding for AI startups reached $166 billion globally in 2023, signaling a vibrant competitive ecosystem. Excessive regulation risks entrenching today’s giants by freezing competition in place. Historical examples, from the rise of personal computers to the proliferation of internet startups, show that market forces naturally disrupt monopolies. Policymakers should encourage competition by supporting startups and ensuring that regulatory frameworks do not create barriers for new entrants.
Following in the path of technologies, from barbed wire to the internet, that have proven critical to national security, AI’s dual-use nature—commercial and military—makes America’s leadership essential. The Pentagon’s Project Maven, which uses AI to analyze battlefield data, underscores its military value. Slowing AI development risks ceding strategic ground to rivals who recognize its importance. Meanwhile, China’s military has openly stated its ambition to integrate AI into modern warfare, further raising the stakes. Additionally, the potential for AI-driven cybersecurity systems to protect critical infrastructure highlights the strategic necessity of remaining at the forefront of AI development.
Moreover, AI is driving global economic competitiveness. Leading nations will shape industries from health care to finance through the use of AI, which accelerates drug discovery, enhances financial risk assessment, and optimizes manufacturing processes. Even small and medium-sized businesses use AI to boost productivity and compete globally.
Ultimately, America’s leadership in AI is not guaranteed. Competitors like China are investing heavily in AI research and development, with government-backed initiatives designed to accelerate innovation. If the United States adopts overly restrictive regulations, it risks driving talent and investment elsewhere—possibly to rivals who do not share US values. Instead, policymakers should create a regulatory environment that fosters innovation, ensures ethical AI deployment, and maintains America’s competitive advantage.
America leads by embracing innovation, not stifling it. Overregulation would slow growth while others raced ahead. The nineteenth-century Chinese government selectively accepted Western technology and paid the price in war, economic stagnation, and lost sovereignty. The Trump administration must ensure AI strengthens American innovation by fostering progress and recognize that slowing down such progress is not an option.
