THE MORNING RANT: “Yes” to Data Centers that Are Privately Funded, Without Taxpayer Subsidization

I support the construction of privately funded data centers whose utilities are not taxpayer-subsidized. Investors in data center projects are welcome to bring to my state and county all the economic activity that comes with their construction and operation. I’m also excited that the data center era has finally caused tech bros to abandon their green-energy obsession. They understand, finally, that they can’t have energy-hungry plants without the abundant, reliable electricity that comes from natural gas.

But I do not support the construction of data centers for which tax abatements, incentive payments, and subsidized utilities must be paid by taxpayers.

In the raging battle between pro-data center and anti-data center forces, the two sides may not even be talking about the same thing. It is understandable that many of those who oppose data centers are skeptical, given the horrendous track record of corporate welfare, corporate cronyism, and taxpayer-funded industrial boondoggles they’ve been forced to pay for.

In my part of the country, the Republican governors of Tennessee and Georgia have repeatedly gambled taxpayer money on “venture communism” projects, redistributing money from taxpayers to favored industrial developers, especially when it’s for the next big thing (usually EVs and battery manufacturers.) As I’ve frequently documented, Georgia Governor Brian Kemp has flushed away billions and billions of taxpayer dollars on failed EV-related endeavors. Republicans of the Chamber of Commerce persuasion applaud Governor Kemp’s naïve profligacy as being “pro-business.”

Governor Bill Lee of Tennessee is also addicted to wasting taxpayer money. This includes Ford’s mothballed, never-used EV plant near Memphis, for which Tennessee taxpayers contributed a billion dollars. Just a few weeks ago, Governor Lee announced a $30 million payment to Starbucks for relocating from Seattle to Nashville. Starbucks was fleeing Seattle anyhow, and would have come to Tennessee for nothing, but Governor Lee felt it very important to take a boatload of taxpayer money and give it to a left-wing corporation as a “thank you.” Starbucks sneers at Tennessee values. Now its executives (they/them) can also sneer at us for being easy marks.

Data centers are the new “next big thing,” and it is rational for exhausted taxpayers to expect they’ll again be asked to subsidize the capex and utility costs for these projects.

There shouldn’t be a binary choice between either banning economic progress, like New York has done with data centers, or subsidizing it, like Republican governors reflexively do.

My understanding is that most data centers are building their own natural gas power plants, with diesel generator backup. Millions of dollars are flowing to local contractors doing the grading, construction, electrical, etc. The data center buildout, combined with Trump’s reshoring efforts, are creating an industrial explosion in this country. It is similar to what politicians would call “stimulus spending,” but it’s privately funded.

However, those of us supporting data center construction need to be careful about insulting opponents as being anti-progress. Taxpayers have a legitimate fear of their elected officials betraying them in favor of promoters hustling the next big thing.

And finally, because much of the data center buildout is to support growing AI use, it doesn’t help for AI promoters to crow about all the people AI will put out of work. I genuinely believe that AI will be disruptive, eliminating some jobs while creating many more. But if AI is being sold as a way to eliminate labor expense and put people out of work, that will motivate people to oppose the data centers that fuel AI.

The blue-collar jobs and industrial development resulting from data center construction are what MAGA Republicans have been fighting for. Let’s take the win – so long as the developers are not being subsidized by local taxpayers.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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