Would You Want Donald Trump or Bernie Sanders to Run Your Portfolio?

Bipartisanship in Washington isn’t always a good thing. President Donald Trump and Senator Bernie Sanders have both hit upon versions of the same bad idea : The federal government should take, tax, or otherwise acquire equity stakes in AI companies so the American public can share in the upside. The two approaches are not identical, but the family resemblance is clear enough. Critics correctly highlight plenty of dangers with these redistributionist schemes, including politicized capital allocation, cronyism, and the creation of a bad precedent in a country with a fundamentally free-enterprise economy. But perhaps the biggest risk is more basic: the assumption that today’s big AI winners will also be tomorrow’s big AI winners. Financial history would like a word. Set aside, for a moment, the possibility that government involvement might make those equity stakes less valuable through ongoing political meddling. Even without that risk, what basis is there to think that today’s AI champions will generate huge future returns for taxpayers? It is a shakier premise than the politicians suggest. For starters, there is a good case that market values have raced far ahead of the fundamentals. In a recent research note , the bank Goldman Sachs calculates that AI-related companies have added about $27 trillion in market value since the introduction of OpenAI’s ChatGPT. (Using more conservative measures, the amount is closer to $14 trillion to $17 trillion.) Yet Goldman’s baseline estimate of the present value of future AI-related profits that companies can capture is far less,  about $9 trillion. That massive gap can be filled only by fairly optimistic assumptions, including rapid AI adoption and unusually large productivity gains. In other words, the federal government could be buying into the AI trade with much of the expected long-term future value already accounted for. Then there’s the history of technological booms and who ultimately benefits. The companies that pioneered breakthrough technologies of the past often weren’t the ones who ended up reaping the largest long-run rewards. That distinction tends to go to the people actually using the technology, explains Vanguard Chief Economist Joseph H. Davis. From his new op-ed: Electricity created more wealth for manufacturers that could run assembly lines around the clock than for power utilities. The automobile enriched suburban developers and retailers more than the automakers themselves. AI may well reproduce this pattern. The current buildout phase—dominated by hyperscalers, chip makers, and foundation-model developers—will give way to a consumption phase where end users across industries derive the greatest benefits. Such businesses are currently trading at value-oriented multiples, and many are outside the United States in service-oriented economies with aging populations, where more productive workforces will be a blessing. Are OpenAI and Anthropic better bet going forward than, say, healthcare providers or financial services firms, to cite two of Davis’s examples. (“Such companies are starting to explore where they can automate tasks, and they will reap the rewards if AI eventually augments workers’ skills and fulfills its promise.”) Of course if new big AI winners emerge, perhaps Washington will turn its sights on them, too. As was mentioned earlier, these ideas would all set a terrible precedent. The post Would You Want Donald Trump or Bernie Sanders to Run Your Portfolio? appeared first on American Enterprise Institute - AEI .