While President Donald Trump has shifted some long-held conservative positions on things like trade and immigration, the majority of voters still perceive the Republican party to be more friendly to business than the Democratic party. The belief that economic growth should be an important priority for our government is a core reason that many Americans choose to support the Republican party.
Today, many people believe that the development of artificial intelligence, or AI, will be the catalyst for economic growth in the next decade, and its impact on the nation’s economy and society could be transformative. Many analysts believe that AI will soon be the primary driver of innovation in healthcare, defense, and energy, to name a few.
However, for the AI revolution to take hold, we will need significant investment to create new data centers. In the last five years we have seen a large increase in their creation, but the pace is poised to accelerate in the next decade. One forecast suggests that there might be as much as $5 trillion in investment in data center construction by 2035.
However, communities have begun pushing back against new data center construction in their vicinity, fearing that they will increase energy prices--data centers are very power intensive--and that they will pull down property values as well.
While data centers do increase energy demand--I recently completed a study examining this very issue--the rational response to a necessary ingredient for the next radical change in our economy should be to pursue policies to increase energy production so that we meet the new demand and not shut it down altogether. Reflexively opposing AI because of energy concerns is a short-term, parochial perspective that the federal government should not tolerate.
Fortunately, it appears that the Trump Administration--and lawmakers on both sides of the aisle--are taking steps to support investments in AI and the concomitant data center construction both for the economy and national security reasons. For instance, a White House action plan on the development of AI includes a section that prioritizes the need to expedite permits for data centers and semiconductor fabs. And while residents in densely populated urban centers tend to reflexively oppose any and all new development, the tax revenue that data centers portend for these communities has led places like the Virginia suburbs of Washington D.C. to embrace them and provide them subsidies to locate in their jurisdiction. While it may take years to get a permit to construct a residential complex anywhere in the greater Washington area, developers wanting to build a new data center can often begin mere months after their initial proposal.
The other benefit of data center development in a region is the creation of new jobs. The construction of a typical data center takes up to a year and--like any construction project--entails the employment of a variety of skilled tradesmen. And while the standard operation of a plant may only entail employing few people, the servers inside them must be maintained and replaced, a process that usually begins about a year or so after their inception.
But the long-term benefits of data centers come in the form of the jobs and economic activity that come from the businesses that ultimately rely on the data centers for their AI operations. Data centers cluster in Northern Virginia because that’s where the defense intelligence agencies that depend on them happen to be located. In the next decade we’ll no doubt see clusters of other businesses emerging to take advantage of AI and data centers located near them.
An economic and regulatory environment that either unfairly drives up the cost of constructing data centers or puts up roadblocks to prevent them from meeting their energy demands would inevitably result in more data centers and AI companies going abroad to places like China. While I deplore the rise of jingoism, one doesn’t have to be a Pentagon official to realize that AI development is crucial to our future economic and military security.
China’s big advantage over the U.S. when it comes to development is that ours is an increasingly litigious society that worries more about process than outcomes. Conversely, China is preoccupied with building. While both have their proper role in decision making, the U.S. must put aside its predilection to dither when it comes to AI development and data center construction and help voters and politicians understand that it is crucial to our standard of living.
