In this week’s Grumpy Economist Weekly Rant, John Cochrane examines three recent economic stories: a multistate challenge to the Paramount–Warner Bros. deal, a $1.4 trillion lawsuit against Meta, and a proposed pipeline to transport gasoline from Texas to California. Across all three, he argues that government policy reflects political bargaining, litigation incentives, and the consequences of earlier regulatory decisions, not the choices of a neutral, unified “policymaker.”
Cochrane connects these examples to the debate over whether government should steer artificial intelligence toward socially beneficial outcomes. Before granting regulators greater authority over AI, he argues, advocates should examine how existing institutions govern competition, technology, and energy in practice. The relevant question is not what an ideal policymaker might do, but how the regulatory system we actually have would exercise that power.
Transcript
Hi, I’m John Cochrane, senior fellow here at the Hoover Institution, and welcome to my Grumpy Economist Weekly Rant.
Today, a few small, recent economics news items add up to a bigger picture.
First, California led a group of 12 state attorneys general in a suit to block the Ellisons and Paramount from buying Warner Brothers.
In case you haven’t been following this saga, the Ellisons made a big deal of their support for President Trump in order to get the Federal Trade Commission to approve the merger in the first place. Now, as the Wall Street Journal’s Holman Jenkins reports, the Democrats inevitably counterattacked.
Ideas are being desperately floated to restore the peace: fire Bari Weiss, outreach to Kamala Harris, a board to guarantee CNN’s independence. Obviously, none of this has anything to do with the supposed antitrust issue—the “silly claim” that the companies are out to monopolize the dying cable TV and theatrical movie business.
The lesson: antitrust is now completely a way for politicians to extract political support from businesses, and it has nothing to do with protecting consumers from monopoly.
Second, California is also leading four states in a $1.4 trillion suit against Meta for allegedly misleading the public about the dangers of social media for teens’ mental health. And here, they’re piling onto an avalanche of private multimillion-dollar suits.
Add up the ideas in all of this. Social media is addictive, like heroin and cigarettes, but not like the video games and comic books that my generation rotted their minds with. Social media is a pervasive danger to mental health, and, of course, big corporations knew about it all along and conspired to lie. Everyone’s a victim. Dumb teenage behavior is now mental health. How 2022?
The hysteria bandwagon has moved on to young people using AI to cheat on homework, and they won’t learn to read an ad. But it’s not too late to grab Meta’s cash and spend it on, oh, I don’t know, million-dollar homeless apartments or high-speed rail consultants rather than data centers.
Hilariously, the attorneys general charged that the company designed Facebook and Instagram to maximize profits. How evil. Of course, they can be sued for not doing that.
Third, Phillips 66 announced it wants to build a $6 billion pipeline to export gasoline from Texas to California.
Now, remember, California used to produce and refine oil and export it to other places, but the state pretty much shut all that down and now imports 75% of our oil and gasoline. Two refineries closed just last year. Gas averages $5.60 a gallon.
With imports from Asia and the Middle East off the table, the only thing keeping California afloat has been imports by sea from Texas. And those are only possible thanks to the Trump administration’s temporary Jones Act waiver.
Normally, shipments between US ports have to be on US ships, and there aren’t any US ships. Say “national security industrial policy,” and I’ll always start with, “What about the Jones Act?”
So, thanks, Phillips, for spending $6 billion pointless dollars to save California from our self-inflicted wounds. And explain to me, California, just how moving oil extraction and refineries from California to Texas does anything to help the climate.
Now, you might dismiss all this as my three lighthearted libertarian bar stories about incompetent government for the week. And they are.
But put it in the context of the big AI debate: whether we should demand that policymakers must act now to steer AI in a direction that complements humans and benefits society.
I remind you, there is no such thing as a policymaker. I hate that word. There are politicians, lawyers, regulators, legislatures, pressure groups, lobbyists. That’s how policy’s made.
And this is how they steer anti-monopoly, social media, tech, and energy. Do you really want them to steer AI in the same way?
You go to war with the army you have. You steer AI with the regulatory state you have. You don’t get to invoke a wise, apolitical, benevolent, technocratic aristocracy that, like communism, just hasn’t been done right yet.
Well, thanks for listening. And if you enjoyed this Weekly Rant, click to subscribe.
John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow of the Hoover Institution at Stanford University. An economist specializing in financial economics and macroeconomics, he is the author of The Fiscal Theory of the Price Level. He also authors a popular Substack called The Grumpy Economist.
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