Are Politicians Pitching Pitchforks?

The New York Times published an interesting piece this weekend titled “With A.I. Riches at Stake, Pressures Mount to Share the Wealth.” It describes a growing political backlash against the AI data-center buildout as elected officials begin asking who should benefit from AI and who should bear its costs. The article caught my attention because I recently raised a related question in “Can Capitalism Survive Its Own Success? — Profits and Pitchforks.” There I wondered what happens if AI increasingly shifts income and wealth toward the owners of capital and away from labor. The Times article suggests we may not have to wait for that process to fully unfold before the political reaction begins. It appears to have already begun.

The Way It Was

For decades, the economic development bargain was fairly straightforward. States and communities offered companies tax breaks, infrastructure, cheap land, and other incentives in exchange for the prospect of jobs, economic activity, and a larger future tax base. Communities were willing to sacrifice some revenue today in the expectation that the investment would pay them back tomorrow in the form of increased tax revenues and, importantly, jobs. But the AI data-center buildout does not seem to offer the same bargain. These facilities can require enormous amounts of electricity, water, and infrastructure while employing relatively few people once construction is completed. This raises the obvious question: what is the return on investment when the jobs aren’t associated with it? If AI creates enormous economic value but requires fewer workers to create it, the old political tradeoff between corporate incentives and future employment becomes much harder to sell.

And politicians appear to be noticing. Virginia has imposed a new tax on data centers tied to their electricity consumption. Nebraska has pulled back incentives, with its Republican governor declaring that Big Tech needs to pay its own way. New York has imposed a temporary moratorium on new data-center development, while Democratic- and Republican-led states elsewhere have reconsidered subsidies and electricity costs. All of this suggests another potential roadblock—or at least another friction point—to consider in the AI expansion process: political and social permission. Thus far, capital, chips, memory, electricity, construction capacity, and other physical limitations have been the major constraints along the road-to-riches AI highway. Now an AI project can be technologically possible and financially viable yet still encounter resistance from the communities and governments whose cooperation is required to build it.

What’s the Public’s ROI?

Politicians don’t have to create the resentment that may arise when enormous private wealth is created while communities begin questioning what they are receiving in return. They merely need to ask, “What’s the public’s ROI?” and convert the answer—or the absence thereof—into political capital.

And when profits become political capital, can the pitchforks be far behind?

For further reading, see the New York Times' With A.I. Riches at Stake, Pressures Mount to Share the Wealth.