The AI Regulation Dilemma: Innovation vs. Security

A Historical Perspective

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Lessons from History, Greed, and the Art of Forgetting Consequences

"History doesn’t repeat itself, but it often rhymes." – Mark Twain

The world stands at the precipice of a new era of artificial intelligence (AI). With China making staggering progress through models like DeepSeek, and the US desperate to maintain its technological dominance, we are witnessing the early stages of a global AI arms race.

And what happens in an arms race? Rules get thrown out of the window.

To keep pace, the United States has announced that it will loosen AI security and privacy regulations, following the classic philosophy of:"Move fast, break things, and if we break democracy in the process… oops."

The key argument?

• Regulation slows down progress.

• Security can come later.

• Innovation must come first.

If this sounds familiar, it’s because we’ve seen this play out before. Many times.And the consequences were almost always disastrous.

A Brief History of How Deregulation Never Reverses Itself

History is littered with examples of deregulation in the name of progress – decisions made to prioritise short-term economic gains over long-term stability.

The pattern is always the same:

1. Regulations are deemed "burdensome" and removed.

2. At first, everything seems fine (even spectacular).

3. Then, the hidden risks manifest – sometimes years later.

4. A crisis occurs, but by then, too much money is at stake to turn back.

5. The system adapts to normalise the damage – and the original regulations? Never reinstated.

Let’s take a stroll down memory lane and revisit some spectacular examples of deregulation gone wrong.

1. Financial Deregulation: How to Manufacture a Global Crisis

   "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently." – Warren Buffett

   
   

   The Glass-Steagall Act (1933) – The Law That Kept Banks Honest

   • After the 1929 stock market crash, the US passed the Glass-Steagall Act, which separated commercial banking from investment banking.

   • Why? Because letting banks gamble with customers' savings had, shockingly, turned out to be a terrible idea.

   
   

   1999: Enter Deregulation (aka Let the Gambling Resume!)

   • Under President Bill Clinton, the law was repealed through the Gramm-Leach-Bliley Act.

   • The argument? "Regulation is old-fashioned, markets are efficient, and banks are responsible."

   • Banks immediately started creating high-risk financial instruments (remember mortgage-backed securities?) that were so complex, even their creators didn't fully understand them.

   
   

   2008: Boom, Bust, Bailout

   • The Global Financial Crisis was a direct result of this deregulation.

   • Instead of fixing the mistake, governments bailed out the banks – but never reinstated Glass-Steagall.

   
   

   Lesson?

   • Deregulation made short-term profits explode, but nearly collapsed the global economy.

   • The cost? Trillions of dollars in taxpayer bailouts.

   • The solution? Keep the deregulation intact, because "the market has learned its lesson."
     

2. Net Neutrality: When the Internet Stopped Being Free

   "Power tends to corrupt, and absolute power corrupts absolutely." – Lord Acton

   Once upon a time, all internet traffic was treated equally. Your small online business had the same speed and visibility as Amazon.Then, in 2017, the US government killed net neutrality – why?

   • "Telecom companies need freedom to innovate."

   • "Regulations stifle investment."

   • "Let the market decide!"

   The result?

   • Internet providers started selling fast lanes – pay more, get faster speeds.

   • Small businesses and startups were pushed into the slow lane, making competition harder.

   • Telecom giants made billions, consumers got screwed.

   Was net neutrality reinstated?Of course not. Because once corporations get a new way to make money, they don’t give it back.
   

3. The USA PATRIOT Act: The Perfect Excuse for Mass Surveillance

   "A society that will trade a little liberty for a little order will lose both, and deserve neither." – Thomas Jefferson

   • After 9/11, the US government passed the Patriot Act, which gave intelligence agencies unprecedented access to personal communications.

   • The justification? "Terrorists are everywhere! Trust us."

   • The problem? Mass surveillance never stays limited to its original scope.

   Then came Edward Snowden’s 2013 leaks, revealing:

   • The NSA was spying on citizens, allies, and world leaders.

   • The government collected data indiscriminately, without warrants.

   Did we restore privacy laws after the scandal?

   • Nope. In fact, mass surveillance has expanded further since then – now with the help of AI algorithms.
     

4. Environmental Deregulation: The Price of Short-Term Profits

   "Only when the last tree has died, the last river has been poisoned, and the last fish has been caught, will we realise we cannot eat money." – Cree Proverb

   • In the 1970s, the US introduced strict Clean Air and Water Acts to reduce pollution.

   • In 2017, the Trump administration reversed many of these regulations.

   • The argument? "Environmental regulations hurt businesses."

   Consequences?

   • CO₂ emissions increased as companies no longer had to limit pollution.

   • Climate change accelerated, but who cares? Profits were up!

   Were the regulations reinstated?

   • Partially. But much of the damage remains, because once businesses get used to polluting cheaply, they resist stricter laws.
     

5. Media Deregulation: Who Controls the Narrative?

   "If you don’t read the newspaper, you’re uninformed. If you do read it, you’re misinformed." – Mark Twain

   • In the 1990s, the US relaxed media ownership laws, allowing giant corporations to buy up newspapers, TV stations, and radio networks.

   • Today, five corporations control 90% of US media.

   • The result?

     • Fewer independent voices.

     • News is driven by corporate interests.

   Did we fix it? Of course not. Because consolidated power is rarely given up voluntarily.
   

6. AI Deregulation: Will History Repeat Itself?

   The US is now following the same path with AI.

   • "Security will come later."

   • "Data protection slows us down."

   • "We must beat China at all costs."

   What could possibly go wrong?

   Possible outcomes:

   1. AI-powered surveillance will become the norm.

   2. Tech giants will control information.

   3. Once regulations are gone, they won’t return.

      
      

Final Thought: Will Europe Hold the Line?

Europe has tighter regulations (GDPR, AI Act), but will they last?

• If China and the US accelerate without restrictions, can Europe afford to stay behind?

• Or will it cave under pressure, as it has in the past?

History suggests one thing:Once AI regulation is gone, it will never come back.

Discussion Questions:

• Should AI security and privacy be addressed before deployment, or can they be adjusted later?

• Will Europe maintain its regulatory stance, or will it eventually cave?

• How much regulation is necessary to prevent AI misuse without stifling innovation?

...let’s discuss before it’s too late.