The Two Boundaries: Why Behavioral AI Governance Fails Structurally

Every system that performs effects has two boundaries: what it can do (expressiveness) and what governance covers (governance). In nearly all deployed AI systems, these boundaries are defined independently, creating three regions: governed capabilities (the only useful region), ungoverned capabilities (risk), and governance policies that address non-existent capabilities (theater). Two of the three regions are failure modes. We focus on the governance of effects: actions that AI systems perform in the world (API calls, database writes, tool invocations). This is distinct from the governance of model outputs (content quality, bias, fairness), which operates at a different level and require...

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