Vice President JD Vance recently warned that artificial intelligence could “unleash a lot of wealth creation” but cautioned that if that wealth “all goes to some segment of people, you’re going to have communism.” Speaking on The Joe Rogan Experience, Vance highlighted a tension that has long haunted economic policy: how to distribute the gains from a transformative technology without turning the state into the dominant owner.
One answer is to expand private ownership. Another, more alarming to free-market advocates, is to let the government take a direct stake in the companies themselves. That latter approach has been the central economic prescription of communism for over a century, and it now has surprising bipartisan support in Washington.
President Trump is exploring ways to give the public a financial stake in leading AI companies. Senator Bernie Sanders has gone further, calling for the government to own half of the largest AI firms and receive board representation. But critics argue that such proposals would fundamentally alter the incentives driving AI development.
If Washington becomes a shareholder, AI companies will no longer answer first to users. Instead, they will face a powerful new incentive to answer to politics. Government ownership would not merely redistribute gains; it would reshape which companies succeed, steering innovation toward bureaucrats’ whims rather than market demand. The federal government already shapes AI through standards and guidance, procurement rules, and export controls. Adding an ownership stake would give it a direct financial interest in the market value and market share of particular firms, turning the government into a regulator, shareholder, and policymaker all at once.
History offers a cautionary tale. During the 2008-2009 auto bailout, the Treasury Department became a controlling shareholder in GM and a direct shareholder in Chrysler. Both companies faced political lobbying over dealership and facility closures. But those stakes were crisis measures meant to be unwound. Today’s AI ownership proposals would make Washington a permanent owner of cutting-edge companies as a matter of policy. Even if officials insist they would act objectively, the market would still hear a different message. Companies would learn that political favor can matter as much as technical merit. Investors would look not only for better products or stronger teams but for signs that a firm has Washington’s blessing. Startups would face pressure to hire lobbyists, cultivate the right officials, and structure themselves around political access.
AI is still young and dynamic. Trying to identify today’s permanent winners is like trying to pick the internet giants of 2026 from the vantage point of 1996. Government ownership would freeze favored players into a preferential market position at a time when robust competition is essential. The risks extend beyond economics. AI is a powerful tool for accessing information, and government investment could influence how companies provide users with information or develop their models, lest they lose favored status.
Recent experience shows how disruptive political decisions can already be for AI users. In June, after the Trump administration abruptly imposed export controls on Anthropic’s Claude Fable 5 and Mythos 5, Anthropic suspended access to both models for all users. The episode illustrated the broader risk that sudden government action can change the availability and reliability of tools businesses increasingly depend on. Government ownership would add another layer of political uncertainty.
There is a better path. Congress should reject federal ownership stakes in AI companies and clarify the limits of existing authorities so that executive agencies cannot use regulation, procurement, export controls, or informal pressure to pick winners. Agencies and industry can develop transparent, voluntary frameworks that address legitimate safety and security concerns without turning Washington into a market participant. The heart of the issue is simple: Will AI winners be chosen by users or by Washington? The answer should be obvious. The greatest risk to AI isn’t that government fails to pick the right winner but that it gets the power to pick them at all.
Jennifer Huddleston is a senior fellow in technology policy at the Cato Institute. Tad DeHaven is a policy analyst on general economics for the Cato Institute.
