This is a "startups = wealth inequality" [1] formatted argument but:

This is 100% about money. The only way to pace the frontier is to make everyone (read: investors) lose all their money (read: no longer expect returns). Then nobody will pay the GPU bill or pay celebrities 10 million dollar salaries to stay at the hot lab. Suddenly the development is paced, almost like magic.

Conversely, it is hard to see how pacing development makes the current bubble justified, i.e. how development could be significantly paced without investors losing their faith in hot returns at current valuations. Faith in a bubble literally equals money, exactly in the way that loans created by a bank literally equals money. You can't have one without the other.

In fact if the whole industry goes bankrupt and investors are burned bigtime (many trillions wiped), this would spread transnationally, fixing the "if we don't do it, China will" loophole.

OpenAI had it right originally, the idea to be a NON profit and vow to never participate in an arms race. It's too bad that was tossed out the window now that there's money.

[1] https://paulgraham.com/ineq.html