Speaker 1: Hello, Odd Loads listeners.
Speaker 2: I'm Joe Wisenthal and I'm Tracy Alloway.
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Speaker 5: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the ad Thoughts Podcast.
Speaker 2: I'm Tracy Alloway.
Speaker 1: And I'm Joe Wisenthal.
Speaker 2: Joe, there are a lot of interesting angles when it
Speaker 2: comes to AI.
Speaker 1: Yeah you think so.
Speaker 2: Yeah, Just to put it mildly, but one of the
Speaker 2: most interesting things I think is that we think about
Speaker 2: it as this like ephemeral digital technology. Yeah, you know,
Speaker 2: in some sense, it's like the sass of yours.
Speaker 1: That's right.
Speaker 2: There's a window that you open on your browser and
Speaker 2: you type stuff into the Internet, and the Internet spit
Speaker 2: stuff out at you, hopefully not literally. But there is
Speaker 2: also this very physical component to AI because it involves
Speaker 2: huge amounts of power, huge amounts of things like memory chips,
Speaker 2: and of course put those two things together, huge numbers
Speaker 2: of data centers.
Speaker 3: No, this has been like what is sort of fundamentally
Speaker 3: different about this, at least from a markets perspective, Yeah, right,
Speaker 3: which is that when we had the boom of the
Speaker 3: prior decade et cetera, Like, by and large, the successful
Speaker 3: companies they didn't need to go into debt to build
Speaker 3: or whatever. They're like building data centers, but like they
Speaker 3: were not so computationally, they were not so massive that
Speaker 3: it was like they had to borrow money. They funded
Speaker 3: them from free cash flow quite easily. The company is
Speaker 3: building on top of that. I just plug into there.
Speaker 3: There was always availability on an Amazon cloud. There's not
Speaker 3: like some compute scarcity. You're not like using Slack one
Speaker 3: day and then it's like, oh, your four hour window
Speaker 3: is up. It will reset in a few hours. Like, yes,
Speaker 3: we're their physical constraints to the air buildout, which basically
Speaker 3: in the history of the Internet is totally novel.
Speaker 2: Right, And I think that's really emerging as in many
Speaker 2: ways the prime constraint because it feels like investors still
Speaker 2: are very happy to more or less fling money at
Speaker 2: the hyperscalers, at data center projects, at all of those things.
Speaker 1: There's no capital short right, There's.
Speaker 2: No capital shortage. What there is is a shortage of
Speaker 2: again power, land, regulatory and political approvals for actually building
Speaker 2: these things totally.
Speaker 3: And you know, this is like such a big country
Speaker 3: that it's like I always think, like, yeah, data centers
Speaker 3: are great, just like put them out in the middle
Speaker 3: of nowhere. And then I'm like, oh, that's literally nimbiism, right,
Speaker 3: It's like that's literally what everybody has that thought, Oh,
Speaker 3: there must just be somewhere out in the middle of
Speaker 3: nowhere to put it.
Speaker 1: But a it's going to be in theory near somewhere.
Speaker 3: And if we could just solve all of our issues
Speaker 3: by putting everything in the middle of nowhere, there wouldn't
Speaker 3: be an issue. There are reasons why they're located where
Speaker 3: they are, they.
Speaker 1: Have to be.
Speaker 3: Ideally there's some sort of power infrastructure, some water infrastructure.
Speaker 3: These are things that also attract people.
Speaker 2: It's not hard to imagine that the middle of nowhere
Speaker 2: might not have a lot of energy and.
Speaker 3: Water infrastructure exactly, Otherwise there'd be a bunch of people
Speaker 3: there right.
Speaker 2: The other interesting thing about data centers and AI is
Speaker 2: that it's become one of the very few bipartisan issues,
Speaker 2: I think in America. And you have people both on
Speaker 2: the left and the right now who are saying that
Speaker 2: they don't like data centers, they don't want the data
Speaker 2: centers in their backyard. We interviewed Kathy Hockel, the New
Speaker 2: York governor, about her moratorium on building new data centers.
Speaker 2: So there seems to be a lot of, let's say,
Speaker 2: feelings when it comes to data centers.
Speaker 3: And you know, it did not get as much attention
Speaker 3: as Kathy Hokeel, I imagine because she's a Democrat. But
Speaker 3: Texas Governor Greg Abbott just in the last few days
Speaker 3: also announcing curbs on the state. People were a little
Speaker 3: quieter about that one. That has some reasons why maybe
Speaker 3: it didn't map to Peopil's view of Texas as a
Speaker 3: state that's just open for business in a way that
Speaker 3: big blue states aren't. But as you say, it's bipartisan.
Speaker 3: And then I'd say, like, one other thing that I
Speaker 3: think is interesting about it is like, so we know
Speaker 3: the data center controversy, but AI in general is sort
Speaker 3: of like riven with anxiety on multiple levels. Obviously, for
Speaker 3: years people have been talking about, you know, mass job laws.
Speaker 1: Lately we've been.
Speaker 3: Talking on the podcast about you know what people called
Speaker 3: like X risk and stuff like that, like truly rogue AI,
Speaker 3: And in my mind, I feel like the people inside
Speaker 3: the labs are very anxious about those other two these
Speaker 3: sort of like effects on society and again literal like
Speaker 3: safety issues, what are they going to be responsible if
Speaker 3: everyone loses a job, et cetera. But on the ground,
Speaker 3: it does not feel like those things are the fears,
Speaker 3: even though I'm you know, anxious, like that are really
Speaker 3: like driving the policy, the backlash politics.
Speaker 2: If I could sum it all up, it feels very
Speaker 2: much like data centers are the physical manifestation of a
Speaker 2: new technology that is in some ways very hard to
Speaker 2: sell to America. Right, Like, here's this thing that is
Speaker 2: not only going to take your job, but like, maybe
Speaker 2: it don't kill you too.
Speaker 3: Well, I was gonna say, you don't like data centers
Speaker 3: because you're worried about the noise complaints. I don't like
Speaker 3: data centers because I'm worried they're gonna kill me.
Speaker 1: We are not the same. We are not the same, all.
Speaker 2: Right, Well, that is the perfect way to put it.
Speaker 2: And we have the perfect guest to try to talk
Speaker 2: through all of these various things. We're going to be
Speaker 2: speaking once again with Jasmine's son. She is an independent
Speaker 2: writer covering AI and Silicon Valley culture, and she just
Speaker 2: published an amazing piece of reporting called No Data Centers
Speaker 2: in My Backyard on her sub stack. So, Jasmine, thank
Speaker 2: you so much for coming back on odd Lots.
Speaker 4: I'm so excited to be here again.
Speaker 2: So congrats on the piece. We were saying earlier. It
Speaker 2: kind of sounds fun just to hop in a car
Speaker 2: with a few friends and research assistants and go on
Speaker 2: a road trip through Middle America looking at data center sites.
Speaker 4: Yeah, I mean it was fun. I was trying to
Speaker 4: decide where in the country I wanted to go to
Speaker 4: do this data center road trip. I remember this was
Speaker 4: the last question I asked Claude Fable before it was
Speaker 4: taken away from me for several days. And so it
Speaker 4: was either going to be Michigan, Wisconsin, which is where
Speaker 4: I ended up going, or it was going to be
Speaker 4: Texas or maybe the Southeast like Memphis, etc. And to
Speaker 4: be entirely honest, part of the reason I ended up
Speaker 4: doing Michigan, Wisconsin the Upper Midwest is because it sounded
Speaker 4: a lot more pleasant to spend July by the Great
Speaker 4: Lakes than it did driving across the Texas Desert. I'm sorry,
Speaker 4: Greg Abbott.
Speaker 3: No, I think that's a totally good reason. The Upper
Speaker 3: Midwest is absolutely lovely this time of year. It's beautiful,
Speaker 3: and there's lakes and all of that stuff. When we
Speaker 3: think about data center activity, I do tend to think more,
Speaker 3: I guess still in my head northern Virginia, so there
Speaker 3: can't be that much space left out there. I do
Speaker 3: think a fair amount about Texas, in part because of
Speaker 3: sort of like the Elon verse, et cetera, and how
Speaker 3: much tech activity is happening there. I probably do think
Speaker 3: a little bit about the Southeast. How active though is
Speaker 3: that area? Like how much interest is there in Wisconsin
Speaker 3: Michigan in general about data centers and what is it
Speaker 3: about those locations that Okay, it's like these could be
Speaker 3: attractive geographies for them given what they need.
Speaker 4: Yeah, I mean, so Michigan and Wisconsin sort of rank
Speaker 4: near the middle to the upper middle of the pack
Speaker 4: when you look at how many data centers are being
Speaker 4: built across the fifty states. I think each of them
Speaker 4: have maybe around like fifty maybe two one hundred projects
Speaker 4: or proposed projects in the states, So it's not an
Speaker 4: incredible amount compared to again, Virginia and Texas, where you
Speaker 4: have six hundred eight hundred active data centers or data
Speaker 4: centers being built. The thing that drew me to Michigan
Speaker 4: and Wisconsin one is that I had heard that proposals
Speaker 4: for new data centers were ramping up. And that's because
Speaker 4: one Wisconsin, for example, has the sales tax exemption on
Speaker 4: the chips and on some construction costs, so that made
Speaker 4: it a somewhat attractive state. Reretchen Whitmer, governor of Michigan,
Speaker 4: who has always taken a pretty pro growth standpoint for Michigan,
Speaker 4: how do we bring business back, was also sort of
Speaker 4: actively courting data centers, and so she did a very
Speaker 4: controversial photo op with Sam Altman at the Stargate site
Speaker 4: in Saline, which has become one of the big data
Speaker 4: center fights in Michigan. And so they're both things that
Speaker 4: these two states did in order to explicitly attract data
Speaker 4: center investment. I think there also was enough, like you said,
Speaker 4: grid access and water access to make these reasonable places
Speaker 4: to build data centers, like an hour out of the cities,
Speaker 4: an hour out of Detroit, an hour out of Milwaukee,
Speaker 4: for example. And then the other thing that was really
Speaker 4: interesting to me personally as a reporter was I wanted
Speaker 4: to know how the data center story intersected with a
Speaker 4: the history of de industrialization. I think this is part
Speaker 4: of why a lot of the politics in those states
Speaker 4: is about bringing business and bringing industry back, bringing the
Speaker 4: skilled trades back. Even in some of these very specific
Speaker 4: sites where their data center is being proposed, they were like,
Speaker 4: you know, the site of a former GM plant in
Speaker 4: Janesville that sort of devastated the community when thousands of
Speaker 4: jobs disappeared during the financial crisis. Do we now want
Speaker 4: to build a data center there and will that be
Speaker 4: the way to revive the community is a question that
Speaker 4: people are asking or you know in Mount Pleasant with
Speaker 4: the Fox consite, there was a huge fiasco where Trump
Speaker 4: said they were bringing all these manufacturing jobs back they
Speaker 4: weren't built. So the d industrialization history was really interesting saying.
Speaker 4: And then the second thing was the primaries, which I
Speaker 4: think have now both come to pass, but I thought
Speaker 4: it was going to be a really interesting place to
Speaker 4: look at as you mentioned that bipartisan politics of data centers,
Speaker 4: the fact that in both states you were seeing roughly
Speaker 4: seventy thirty opposition to data centers from both Democrats and
Speaker 4: Republicans in a very very polarized battleground states where Dems
Speaker 4: and Republicans rarely agree on anything. And then AI was
Speaker 4: also showing up in the Wisconsin governor's race where Francesca
Speaker 4: Hong was running on a data center moratorium, or in
Speaker 4: the Michigan Senate race where Abdula Sied was talking a
Speaker 4: lot about data centers as sort of one of the
Speaker 4: examples of money infecting politics.
Speaker 2: Yeah, so we're recording this on August twelfth, and Francesca
Speaker 2: Hong just lost the Democratic primary in Wisconsin to David Crowley,
Speaker 2: which is kind of interesting because one of the people
Speaker 2: I remember you spoke to on the ground was someone
Speaker 2: who was saying she explicitly was going to vote for
Speaker 2: Hong because of her policies around data centers. And I
Speaker 2: know one primary does not a trend make, but do
Speaker 2: you get the sense that data centers can be like
Speaker 2: a winning political platform.
Speaker 4: Yeah, this is one of the things I was trying
Speaker 4: to get a handle on because I was wondering, like,
Speaker 4: will the local or state politics be a bit of
Speaker 4: a microcosm or about weather for the national politics of AI.
Speaker 4: And my sort of summary here is that I think
Speaker 4: that if you live in a community where a data
Speaker 4: center is being built or proposed, you don't like it,
Speaker 4: and it's very high sealience. It's very important to you,
Speaker 4: like the fact that there is a gigantic construction project
Speaker 4: that will bring in traffic and noise and whatever for
Speaker 4: two to six years nearby that really really bothers people
Speaker 4: in the community. When I went to Port Washington, for example,
Speaker 4: which is another city in Wisconsin, and just talk to
Speaker 4: random people at fish Giving, which was this like funny
Speaker 4: fish festival that we went to in order to talk
Speaker 4: to them, like you've.
Speaker 2: Never heard about it before, I kind of want to
Speaker 2: go even though I like.
Speaker 4: No, it was a real event. It was amazing. There's
Speaker 4: an Elvis impersonator.
Speaker 2: Obviously, it's fish giving.
Speaker 4: America is so good that there was life liberty in
Speaker 4: the suit of fish. It was amazing. It was on
Speaker 4: Lake Michigan. But every single person we talked to you
Speaker 4: there had an opinion on the data center. Because when
Speaker 4: there is a gigantic I think, seven hundred acre facility
Speaker 4: being built near you, you will care about it, and
Speaker 4: so salience is super high if you live nearby. But
Speaker 4: then if you don't live near a data center, like
Speaker 4: if you're in a zip code where there's nothing being proposed,
Speaker 4: the polls still show that seventy thirty you're roughly against
Speaker 4: data centers. I talked to Charles Franklin and Marquette who
Speaker 4: had done this explicit pulling, but the salience is much lower.
Speaker 4: Data centers does not rank in like the top five
Speaker 4: issues electorally unless you were literally living in one of
Speaker 4: those communities.
Speaker 3: These are always very sensitive questions to ask a journalist,
Speaker 3: and we're supposed to just be like open minded, etc.
Speaker 3: Of thep you talk to who were concerned about data centers,
Speaker 3: in your view, like, there are some really wacky reasons
Speaker 3: to oppose.
Speaker 1: There's some like I would.
Speaker 3: I'm very sensitive to noise, so when I hear a
Speaker 3: voter talk about noise complaints, I'm like, yeah, I do
Speaker 3: not like I.
Speaker 1: Totally get that.
Speaker 3: On the other hand, if I hear you know, some
Speaker 3: conspiracy theory, you know, some maybe less informed water takes,
Speaker 3: or you know, my pet has started vomiting because a
Speaker 3: new data center was nearby, I'm like, maybe you're reading
Speaker 3: too much like Instagram reels, et cetera. Generally, speaking of
Speaker 3: the people you talk to who are passionate about the issue,
Speaker 3: how well informed did you find them about both the
Speaker 3: sort of like economics and sort of like lifestyle consequences
Speaker 3: of a data center in their proximity.
Speaker 4: I think this is actually one of the biggest shifts
Speaker 4: for me. I think I came in with expects maybe
Speaker 4: a bit more similar to you. I am generally based
Speaker 4: in San Francisco, and I feel like the caricature of
Speaker 4: data center opponents that people believe is they are all
Speaker 4: just watching too many tiktoks about water. And while that
Speaker 4: certainly was true for some people, like I remember talking
Speaker 4: to this guy outside of a Francescahung event, who was
Speaker 4: wearing a Hotties for Hong t shirt and he was like, yeah,
Speaker 4: like they're building them out here because they want to
Speaker 4: drain the Great Lakes. And I'm like, that's not how
Speaker 4: these things work, Like, that's not why they're here, and
Speaker 4: they are not like sucking up water out of the
Speaker 4: Great Lakes. But I would say that the folks who
Speaker 4: were actively involved in organizing against the data centers, like
Speaker 4: the activists themselves, were much better informed than I expected
Speaker 4: them to be. People knew the difference between say, closed
Speaker 4: loop and open loop cooling systems, one of which uses
Speaker 4: more water than the other. People could tell the difference
Speaker 4: between an AI hyperscale data center and the old kind
Speaker 4: of Internet data centers. Some people said I use AI
Speaker 4: helped me, orite emails whatever. I would say the biggest
Speaker 4: difference was not like were people informed, but how much
Speaker 4: trust is they have in their government and in these
Speaker 4: AI and data center companies, right, And so it was
Speaker 4: much less of a like we're just mistaken about how
Speaker 4: data centers work. It was much more When DT and
Speaker 4: open AI say they're going to cover the cost of
Speaker 4: electricity rate hikes, we don't believe them because DT has
Speaker 4: razor rates for out of the past five years, right
Speaker 4: or yeah, sure, you know they say they're going to
Speaker 4: bring five hundred jobs. But like we saw how Fox
Speaker 4: Con went, we know that corporations break their promises all
Speaker 4: the time, and so I would say the gap among
Speaker 4: anti data center activists was much more about trust than
Speaker 4: it was about information.
Speaker 2: Can you talk a little bit more about what the
Speaker 2: exact pitch is that an AI, a hyperscaler, or you know,
Speaker 2: a data center builder might make to a community when
Speaker 2: they say, we want to take that ugly slab of
Speaker 2: concrete that's just been sitting there for years, and we
Speaker 2: want to put something on top of it.
Speaker 4: For sure, I would say the pitch for why let
Speaker 4: us build a big data center in your community is
Speaker 4: almost entirely about property taxes. So data centers pay a
Speaker 4: lot in property taxes. In Laden County, Virginia, the data
Speaker 4: center capital of the United States, data centers, I think
Speaker 4: pay and make up over fifty percent of the property
Speaker 4: tax base. And part of the reason that Northern Virginia
Speaker 4: and public schools are very well funded is because of
Speaker 4: the data centers, and so people have sort of accepted
Speaker 4: that trade. Or when Microsoft brought their Fairwater data centers
Speaker 4: into Mount Pleasant on the site of the former Fox
Speaker 4: con factory that was supposed to be Microsoft is now
Speaker 4: paying on track to pay about twenty million in property
Speaker 4: taxes for twenty twenty six, which is a huge boon
Speaker 4: to the tax space. And so for a lot of
Speaker 4: local officials who are thinking, how do we bring back
Speaker 4: our commercial tax spase in a time after these factories
Speaker 4: have left our community, a data center is a very
Speaker 4: appealing way to do so. They say, we're going to
Speaker 4: be able to remove the wheel tax in this community.
Speaker 4: We're going to be able to avoid raising property taxes
Speaker 4: on residents. We're going to pay for all these city
Speaker 4: fire services and police services that are expensive. I think
Speaker 4: part of the struggle with data centers is that that's
Speaker 4: really kind of the only pitch that they're making. Sure
Speaker 4: there are some jobs, for sure, like five hundred one
Speaker 4: thousand jobs, but those last two to four years. Sometimes
Speaker 4: they're outsiders, they're not people from the community.
Speaker 2: These are the actual jobs associated with the construction of
Speaker 2: the data Yes, right.
Speaker 4: Okay, yes, you might only have like fifty permanent jobs,
Speaker 4: you know, like a solar farm or something like. People
Speaker 4: aren't really needed to keep it going very much. It's
Speaker 4: mainly a construction effort, which also means it's more out
Speaker 4: of town residents who are coming in, so there's not
Speaker 4: a great jobs pitch. And then also people just I
Speaker 4: think aren't that excited about AI. It's not that they're
Speaker 4: necessarily like worry that AI is gonna go rogue and
Speaker 4: kill them all. Like people didn't bring up those kinds
Speaker 4: of years as much. It was just like, why are
Speaker 4: we as a community taking the hit of having this giant,
Speaker 4: ugly thing in order to produce some coding agents that
Speaker 4: help people in San Francisco. Like people just didn't see
Speaker 4: it as essential to their lives in the way that
Speaker 4: I think a car factory it's like, okay, well we
Speaker 4: all drive cars. Solar farm, well I don't need energy.
Speaker 4: I think the trade with the data center just didn't
Speaker 4: feel as compelling to people because taxes are kind of
Speaker 4: diffuse and hard to grock, and it's kind of unclear,
Speaker 4: like how is that going to benefit me directly? Jobs
Speaker 4: not really a big benefit. And then AI itself, people
Speaker 4: are kind of whatever about.
Speaker 3: In some of the places where data center projects are
Speaker 3: like well off the ground. Some of these like tax
Speaker 3: benefits or whatever are real, right, Like isn't Facebook in
Speaker 3: luis or Meta in Louisiana, Like they are cutting really
Speaker 3: big checks? Yea, Like in your view, if they're like Jasmine,
Speaker 3: come here and like bring both sides together and solve this, Like,
Speaker 3: would you argue that like no, like.
Speaker 1: There it is likely that these can meaningfully move the.
Speaker 3: Dial on terms of pure dollars coming in and like
Speaker 3: would there be inferior solution of like, well, we're gonna,
Speaker 3: you know, let us like pay.
Speaker 1: Your taxes for two years. That will show us, you.
Speaker 3: Know, even before we break ground, like setting aside all
Speaker 3: the complicated things. Could you imagine as we go forward
Speaker 3: eventually like some structures where it's like, okay, the company
Speaker 3: does give some tangible upfront commitment. People get to feel it,
Speaker 3: they get to see their taxs and reduced, they get
Speaker 3: to see their teachers get higher salaries, and then it's like,
Speaker 3: all right, the green light is in for data centers.
Speaker 4: Yeah. I mean, one thing that I think is important
Speaker 4: to recognize is that the landscape of how people feel
Speaker 4: about data centers and how the deals are made has
Speaker 4: changed so dramatically in the last one to two years.
Speaker 4: So at the time that a lot of the proposals
Speaker 4: show up to say your city council in twenty twenty three,
Speaker 4: twenty twenty four, twenty twenty five, there is no data
Speaker 4: center backlash, right, and so at the time it almost
Speaker 4: feels like the opposite. Like the mayor of Port Washington,
Speaker 4: where this seven hundred acre big data center facility is
Speaker 4: being built in Wisconsin, he was telling me like Port
Speaker 4: Washington had just lost a bid to bring a chip
Speaker 4: factory into the city. There again one of these cities
Speaker 4: where factories have closed down and they want a commercial
Speaker 4: tax space again, and reeling from that, this guy Ted Niskei,
Speaker 4: He's like, well, of course, we thought a data center
Speaker 4: could be a great way to do that. At the time,
Speaker 4: they even set up a tax subsidy district for the
Speaker 4: data center because they're also worried if we don't do this,
Speaker 4: maybe the data center is going to go uptown to Sheboygan, like,
Speaker 4: what if we lose the bid to another city. In
Speaker 4: the same way, if you guys remember with HQ two,
Speaker 4: Amazon's sort of like dangling, like who's going to give
Speaker 4: us the most subsidies to bring our data center here?
Speaker 4: Because at the time there was no backlash communities want
Speaker 4: the tax benefits of the data center. Now, of course,
Speaker 4: it's really changed, and so the data center deals that
Speaker 4: are being made today are very, very different from the
Speaker 4: ones that were being made two years ago. Three years ago.
Speaker 4: People are now realizing that you don't need to give
Speaker 4: Meta a tax subsidy. In fact, Meta should probably pay
Speaker 4: more upfront. They should give these fifty k bonuses to
Speaker 4: public school teachers. Before there are a lot of NDAs
Speaker 4: being signed, and that was extremely controversial. Almost everyone I
Speaker 4: talked to, including all the pro data center people, said
Speaker 4: we really regret doing the NDAs. They actually really increase
Speaker 4: community distrust in backlash. Now Microsoft is saying we don't
Speaker 4: want to do NDAs anymore, and I don't think local
Speaker 4: officials are willing to sign them anymore because they've seen
Speaker 4: how it amplifies distrust in the community. So I would
Speaker 4: say that the data center deals that are getting made
Speaker 4: in twenty twenty six and beyond, in light of the backlash,
Speaker 4: are much more how much can we offer your community
Speaker 4: to let us build here? Whereas two years ago it
Speaker 4: was what can your community offer us for us to
Speaker 4: come in.
Speaker 2: Yeah, it feels like the balance of power has shifted
Speaker 2: a little bit. But that said, reading or reporting, there
Speaker 2: does seem to be the sense that small local governments
Speaker 2: are perhaps not evenly matched against big tech companies with
Speaker 2: a lot of money. Yeah, and a lot of lawyers.
Speaker 2: And so even if you construct the world's most beneficial
Speaker 2: tax arrangement, you had a lot of people in your
Speaker 2: piece who were talking about, well, the company is just
Speaker 2: going to figure out some way to kind of wriggle
Speaker 2: out of it.
Speaker 4: Yeah. And again, I think this is so informed by
Speaker 4: things like the Fox confiasco, where people felt that they're
Speaker 4: part time city councilmen or whatever like just made a
Speaker 4: bad deal because they were not equipped, they were not
Speaker 4: informed to Again, like almost every local official I talked to,
Speaker 4: they were good people, they were trying to do the
Speaker 4: right thing. They were also getting paid like five thousand
Speaker 4: dollars a year to do this on top of a
Speaker 4: normal day job, and so it is a big power
Speaker 4: asymmetry between them. And like open AI's lawyers and people
Speaker 4: in the community recognize that you're not going to have
Speaker 4: the best deals when it comes from that, and so
Speaker 4: they'd say, you know, we don't know what carve outs
Speaker 4: that the data center developer is going to write in.
Speaker 4: So let's say that the AI bubble pops or you know,
Speaker 4: open ai goes out of business, and so they don't
Speaker 4: want the data center capacity anymore. Like what's going to
Speaker 4: happen to the building? Is it going to be a
Speaker 4: stranded asset? What kinds of guarantees are there going to be?
Speaker 4: And again, there might be ways to set these up
Speaker 4: in more beneficial ways, like I think tex guarantees are
Speaker 4: some of these, or making deals to say we're going
Speaker 4: to pay for eighty percent of our forecasted electricity demand
Speaker 4: upfront because sometimes those forecasts are wrong and we don't
Speaker 4: want to leave you guys on the hook. I think
Speaker 4: those are really important to make, but fundamentally is just
Speaker 4: such a power symmetry. I mean, one of the most
Speaker 4: egregious examples that I came across was that Selene Stargate
Speaker 4: Center in Michigan, where Selena is a city town of
Speaker 4: literally less than three thousand people. It's super earal, it's
Speaker 4: a little bit out of an arbor, and their city
Speaker 4: council actually voted for one against the data center development
Speaker 4: that Oracle and open Ai brought in. And after they
Speaker 4: voted against it, the data center developer just sued them
Speaker 4: over exclusionary zoning. And there is no way your town
Speaker 4: of like less than three thousand people is going to
Speaker 4: even bother with a lawsuit against like open Ai, Oracle
Speaker 4: and related digital. It's just not going to happen. And
Speaker 4: so they immediately settle, of course, for some improvements to
Speaker 4: like a fire truck and some investments in farms and whatever.
Speaker 4: But like again, the power symmetry really just made residents
Speaker 4: feel like, okay, like this is not how democracy is
Speaker 4: supposed to work, Like a gigantic company should not be
Speaker 4: able to sue us out of our democratically chosen decisions.
Speaker 1: So it did agree.
Speaker 3: One thing that you did write about in the piece,
Speaker 3: which I was very interested in, and it's something I've
Speaker 3: been thinking about, is the data center boom is sort
Speaker 3: of a rare moment in recent decades in American history
Speaker 3: where you have the capitalists, the tech companies, and the
Speaker 3: hard hats are actually really into it. And it is
Speaker 3: They're not a huge number by volume, but also like
Speaker 3: when people think about like quote working class unquote jobs,
Speaker 3: the kind of jobs that we lost, et cetera, the
Speaker 3: jobs that are being created are those jobs that people
Speaker 3: might have in their head as like a good middle
Speaker 3: class job or the jobs that we had in our
Speaker 3: glory days. How influential within these communities are the sort
Speaker 3: of construction companies or workers, some of them unionized in
Speaker 3: some of these cases, who are like, no, we want
Speaker 3: that activity.
Speaker 4: Yeah, I mean, I think one of the most memorable
Speaker 4: conversations I had was with this guy, Terry McGowan, who's
Speaker 4: a senior VP at the International Union of Operating Engineers.
Speaker 4: So people who operate like cranes and I don't know
Speaker 4: what these gigantic machines are called, but earthmovers people like that.
Speaker 4: He was awesome because he was thinking about this from
Speaker 4: a historical perspective. He was talking about growing up in
Speaker 4: Milwaukee as a teenager, and he's like, when I was
Speaker 4: growing up, noise was money. So like, I get that
Speaker 4: is noisy and there's pollution and whatever, but he's like,
Speaker 4: when I was growing up in Milwaukee, like we knew
Speaker 4: that when we saw like the smokestocks and we heard
Speaker 4: the noise, that was what was going to feed our kids,
Speaker 4: that was going to send our kids school, that was
Speaker 4: what was the lifeblood of our community. And so to him,
Speaker 4: it was kind of surprising to see the shift over
Speaker 4: the past few decades of people losing trust in industry,
Speaker 4: seeing it not as this is what keeps our economy going,
Speaker 4: this is what helps working class families, and much more,
Speaker 4: this is something to be distrusted. And he was saying
Speaker 4: that he tried to get, for example, some of his
Speaker 4: union members to speak up at city council meetings and
Speaker 4: say like, hey, this is helping me, like this is
Speaker 4: these are the jobs that are getting created, but even
Speaker 4: his guys were like scared to do it because there
Speaker 4: was so much opposition that being pro data center was
Speaker 4: just going to get your neighbors really pissed at you.
Speaker 4: And I think part of the problem is that there's
Speaker 4: again not that many of these folks, and that even
Speaker 4: of the people there, some of them come from out
Speaker 4: of town because there are so many labor shortages, Like
Speaker 4: these workers are getting great jobs like one hundred dollars
Speaker 4: cash per dms because people want to compete between sites,
Speaker 4: apprenticeship programs and skilled trades. I've heard from multiple people
Speaker 4: have been like doubling in size over the past couple years.
Speaker 4: But again, it's just not that many people. So if
Speaker 4: you're working on a project you're going to be excited
Speaker 4: about it, but it's kind of hard to convince someone
Speaker 4: else in the community who is not. And then I
Speaker 4: also just think that trust again in corporations has cratered
Speaker 4: over the past few decades. Like GM in Janesville was
Speaker 4: sort of revered as this is what the community is
Speaker 4: built on, this is the thing that keeps us going.
Speaker 4: But when the company goes bankrupt, when they lay off
Speaker 4: thousands of workers, when they fail to clean up the
Speaker 4: contaminated brown field that the factory was built on and
Speaker 4: leave thirty million dollars of hazardous waste in the ground
Speaker 4: for the community to deal with, Like, that's a lot
Speaker 4: of broken trust. So people are not thinking, oh, let's
Speaker 4: bring GM back there, thinking, man, like, we trusted that
Speaker 4: company and they screwed us over right. Yeah.
Speaker 2: I wanted to ask you actually about the social dynamic
Speaker 2: between the construction workers being brought in for these projects
Speaker 2: and the you know, lifelong citizens of small towns, because
Speaker 2: I know you like to take a sort of anthropological
Speaker 2: approach to some of your reporting. How did they actually
Speaker 2: feel about each other? And I kind of I got
Speaker 2: to say, this is a free idea to anyone in
Speaker 2: Hollywood but I really think someone needs to come up
Speaker 2: with a TV series where it's like a giant data
Speaker 2: center being built in a really small town and the
Speaker 2: dynamic between like the influx of all the contractors and
Speaker 2: the locals, we could have some interesting storylines. Sorry, that's
Speaker 2: just an aside. But what was that relationship?
Speaker 4: Like? Oh, yeah, I mean just the not exactly what
Speaker 4: you're talking about. But my friends and I who went
Speaker 4: on the trip, we all watched Eddington before we went over,
Speaker 4: and I didn't know what kind of movie it was.
Speaker 4: I just knew it was like kind of about a
Speaker 4: data center, and I was just like, you know, shooting
Speaker 4: each other up, and I'm like, oh God, is this
Speaker 4: what we're see?
Speaker 5: Yeah?
Speaker 2: I was sinking something a little bit more lighthearted, but
Speaker 2: you know, you never know what direction I could go in.
Speaker 4: No, totally. I mean, so one thing I'll say is
Speaker 4: I talked to three folks from the trades, but it
Speaker 4: wasn't an incredible amount. We actually found construction workers and
Speaker 4: trades people pretty hard to get in touch with. I
Speaker 4: think partly because they'd all signed NBAS and also I
Speaker 4: just heard it incdotally from so many people that pro
Speaker 4: data center folks are very scared of talking because they
Speaker 4: have seen how vicious to get their death threats. You
Speaker 4: have city councilors resigning bad blood between neighbors. The opposition
Speaker 4: is pretty intense, and so my guess is that these
Speaker 4: trades people are a little bit worried. I mean, everyone
Speaker 4: I talked to in the trades was aware of the backlash.
Speaker 4: They were like, yeah, we know some people were worried
Speaker 4: about the environment. We think it's worth it, but like
Speaker 4: we understand. But fundamentally, I think the folks I talked
Speaker 4: to were more focused on themselves and their work and
Speaker 4: sort of their benefits. One actually surprising tidbit that I
Speaker 4: heard was that from Terry to this guy who's a
Speaker 4: CEO of an electrical contracting company I talked to, to
Speaker 4: an HVAC engineer I talked to, they all thought that
Speaker 4: AI was maybe a bubble or like probably a bubble.
Speaker 2: Yeah, that was interesting.
Speaker 4: That was really odd because even the people who are
Speaker 4: excited about this, who are making their money from it,
Speaker 4: they were like, yeah, like it does worry me that
Speaker 4: like the mag seven hold like fifty percent of the
Speaker 4: stock market, or like, yeah, it's a bubble, but we'll
Speaker 4: just move on to the next bubble, we'll diversify, right,
Speaker 4: And so I think one thing that was really clear
Speaker 4: to me was that folks in these communities far away
Speaker 4: from Silicon Valley, they are deeply unsure about how sustainable
Speaker 4: the AI boom is. And I think that really informs
Speaker 4: whether you're willing to take the bet on like a again,
Speaker 4: a gigantic construction project that may not even start paying
Speaker 4: taxes until ten years in the future. Is why I
Speaker 4: keep reading on the news it's a bubble. I don't
Speaker 4: know if this technology is that helpful to my life,
Speaker 4: and if it's a bubble that makes the economic trade
Speaker 4: offs very, very different.
Speaker 2: Just to quickly go back to the influx of contractors things,
Speaker 2: are there any local businesses like I don't know, restaurants,
Speaker 2: sandwich shopped, gas stations that are happy that like you
Speaker 2: now have five hundred workers who maybe weren't there before
Speaker 2: and they're all getting their their lunch at your shop
Speaker 2: or something like that.
Speaker 4: Yeah. I mean, so I heard this more anecdotally, not
Speaker 4: from the shops themselves, but yeah, like the mayor mentioned
Speaker 4: that sales taxes in Port Washington have like doubled over
Speaker 4: the last year, that the sort of home I don't
Speaker 4: know what it's called, like the low's equivalent in their
Speaker 4: community that's sold Like where's they got a ton of
Speaker 4: revenue that tips were up on weekdays? I know. Sharon
Speaker 4: Goldman has also done some reporting about some of the
Speaker 4: projects in Louisiana, and she talked to some restaurant owners
Speaker 4: who were saying, like, yeah, we're just getting like crazy
Speaker 4: amounts of borders now. So I do think that small
Speaker 4: businesses in the area are probably happy about the influx
Speaker 4: of new workers.
Speaker 3: Right prior to the data center explosion that we've really
Speaker 3: seen basically for two years now. Just prior to that,
Speaker 3: everyone or lots of people were really excited about the
Speaker 3: Inflation Production Act and all of these reindustrialization efforts. But
Speaker 3: like some of these issues are going to be exactly
Speaker 3: the same. Like if you're gonna like build like an
Speaker 3: evy battery plant, that's going to be noisy, that's going
Speaker 3: to bring in a lot of temporary workers. You know,
Speaker 3: if you're actually going to have a state of the
Speaker 3: art it's going to be an electricity user, that's going
Speaker 3: to be a water user. And if it's a state
Speaker 3: of the art factory, or if it's going to be
Speaker 3: a cutting edge factory, it is not going to employ
Speaker 3: people ever at this scale of like the old like
Speaker 3: River Rouge GM factory, Like modern factories just aren't like that.
Speaker 3: Do you think some of these concerns, these fights, these
Speaker 3: issues where it seems like it's not democratic in the
Speaker 3: ideal sense if for certain proponents simply do not feel
Speaker 3: comfortable making their voices known because they are like just
Speaker 3: do not you know, sort of not good for sort
Speaker 3: of liberal norms about speech, Like do you think these
Speaker 3: concerns are generalizable to any attempt at what we all
Speaker 3: love the idea of, like industrial revitalization.
Speaker 4: So I think any big heavy manufacturing, any big industrial
Speaker 4: development does face some opposition for sure, And that's kind
Speaker 4: of the classic NIMBI stuff, right, Yeah, But one thing
Speaker 4: that was really surprising to me is how much more
Speaker 4: intense data center opposition is even when compared head to
Speaker 4: head against these other kinds of things. So hemav News
Speaker 4: has done some really good pulling on this, where data
Speaker 4: centers are more unpopular than solar farms and nuclear plants,
Speaker 4: than power plants, than battery storage facilities. Like people are
Speaker 4: relatively okay with the chip factories and with the Amazon
Speaker 4: fulfillment centers, and with all of these other things that
Speaker 4: are again environmentally often dirtier like from a pollution perspective,
Speaker 4: that also do bring in lots of construction workers and stuff.
Speaker 4: But there is something about AI data centers. Whether it's
Speaker 4: people don't really vibe with AI, they're not excited about that,
Speaker 4: whether it's the expedited, like sort of secret processes that
Speaker 4: are used for data centers that aren't as commonly used
Speaker 4: for the others, or whether it's seeing national narratives about
Speaker 4: data centers and that amplifying local concern But I do
Speaker 4: think that the data center opposition is of a unique
Speaker 4: and different scale to the opposition to these other things.
Speaker 1: Well, then I.
Speaker 3: Wonder, I mean, if even people are more comfortable with
Speaker 3: solar firms or nuclear facilities, which you know, a couple
Speaker 3: of decades ago people did not want them around at all.
Speaker 3: Is it also get back to there's something about AI,
Speaker 3: like maybe they don't articulate the X risk the way
Speaker 3: people in Silicon Valley talk about it, et cetera. But
Speaker 3: there is something about AI specifically that just like has
Speaker 3: these sort of drives, these very anxious vibes in a
Speaker 3: way that something with a similar ecological footprint, doesn't.
Speaker 4: That did end up being my hypothesis because again, on
Speaker 4: one hand, people didn't bring up like deep fakes or
Speaker 4: job loss or X risk or whatever. People were much
Speaker 4: more likely to bring up water and the NDAs or
Speaker 4: something like that. But I think that's what made it
Speaker 4: feel like there was no pro faction for data centers right,
Speaker 4: Like it didn't feel like a trade off that's like, yeah,
Speaker 4: we're going to deal with this big construction project, but
Speaker 4: we're going to get more energy or something, or yeah,
Speaker 4: we all need cars, like the car has got to
Speaker 4: be made somewhere. I think with AI people were just like,
Speaker 4: but do we need it at all? And so then
Speaker 4: if you're not even sure whether you need it at all,
Speaker 4: then the trade of like let me accept this big
Speaker 4: cost is pretty significant. Again, one of the things that
Speaker 4: distinguishes I think the classic NIMBI story from the data
Speaker 4: center story is that people who do not live near
Speaker 4: data centers are as opposed to data centers as people
Speaker 4: who live near them. And normally with NIMBI, it's like
Speaker 4: I do want housing somewhere else, I do want a
Speaker 4: nuclear plant somewhere else. With data centers, people are saying
Speaker 4: I don't want them anywhere because I don't really think
Speaker 4: we need this AI thing, and so I think it's
Speaker 4: a failure of Silicon Valley frankly in the AI industry
Speaker 4: and also governments as well to make the positive case
Speaker 4: for why is it important to our society that we
Speaker 4: actually enable the AI build out.
Speaker 2: Yeah, it feels like there's a lot of generalized downside,
Speaker 2: given that people are worried about things like jobs and
Speaker 2: maybe even a robot apocalypse, or at the very least
Speaker 2: they don't feel the technology is that relevant to them.
Speaker 2: And then even if there's hyper localized upside in the
Speaker 2: form of like well, maybe some more jobs, although not
Speaker 2: that many, and maybe some additional income, although you don't
Speaker 2: even trust how much income that will end up being,
Speaker 2: it feels like this is a very hard dynamic to escape, Like,
Speaker 2: if you're a big hyperscaler or a data center company,
Speaker 2: how are you supposed to fix this? Because you can
Speaker 2: promise the moon basically, and it feels like people still
Speaker 2: aren't going to accept the offer.
Speaker 4: Yeah. I mean, it's really interesting coming back to USUF
Speaker 4: and talking to folks I know in the AI industry,
Speaker 4: some even involved in building data centers, And one of
Speaker 4: the questions that I'll hear is like, do we just
Speaker 4: need to make the bribes bigger? Like what if we
Speaker 4: just like mail checks everyone's house, And like one is
Speaker 4: that might work. But I think one other thing I
Speaker 4: realized when I was out in the Midwest is actually
Speaker 4: sometimes the bigger the numbers, the more suspicious people get,
Speaker 4: because the more it feels like this sort of dark money,
Speaker 4: shady like is this a bubble type situation? I think that,
Speaker 4: like getting the community benefits right is certainly part of it.
Speaker 4: I think another and I actually became much more sympathetic
Speaker 4: to the statewide moratoriums after my trip than before. I
Speaker 4: think before I was sort of like, this seems like
Speaker 4: a kind of blunt tool. I don't think stopping data
Speaker 4: centers will actually regulate AI. But now I see the moratoriums,
Speaker 4: whether it's Kathy Hochels or Greg Abbotts or whatever, as like, again,
Speaker 4: we know that there's this powery symmetry between these tiny
Speaker 4: towns and these big companies. We shouldn't expect a town
Speaker 4: of three thousand or twenty thousand people to get a
Speaker 4: good deal to extract the right guarante. I think that
Speaker 4: actually bringing that up to the state level and maybe
Speaker 4: taking a pause for the state officials to figure out,
Speaker 4: like we want, you know, x millions of community benefits
Speaker 4: per megawatch, or we're going to mandate these environmental standards
Speaker 4: closely cooling, x percent renewable energy, etc. These are going
Speaker 4: to be the rate prayer protections we implement at the
Speaker 4: state level, and we will pause until everyone agrees to that.
Speaker 4: You could also see a world where that's better for
Speaker 4: data center developers because they no longer have to manage
Speaker 4: like all of these like individual negotiation processes quite as
Speaker 4: much if those standards have been set at the state level.
Speaker 4: So I think I'm pretty optimistic about that kind of streamlining.
Speaker 4: I know it was a relevant factor actually with the
Speaker 4: solar build out too. And the reason I keep referencing
Speaker 4: solar is because that also went through a period of
Speaker 4: controversy in Wisconsin and Michigan, and so people often talked
Speaker 4: about it and bringing state level regulation was kind of
Speaker 4: like part of the solve there. And then I guess
Speaker 4: like part of it is also just like I think
Speaker 4: that both the AI industry and governments have to do
Speaker 4: a better job making that pro Like I was disappointed frankly,
Speaker 4: and a lot of the local officials they met with
Speaker 4: how poorly they were able to articulate, like why it
Speaker 4: would be beneficial to their community to make this deal. Like,
Speaker 4: I think, if you are responsible for leading economic development,
Speaker 4: like it is kind of on you to talk to
Speaker 4: your constituents to understand their concerns and to do whatever
Speaker 4: community engagement process that is required in order to achieve that.
Speaker 4: But it's also just like very very hard, you know, great, I.
Speaker 2: Mean, if the constituents don't believe anything you or the
Speaker 2: company says, because there's just a lack of trust both
Speaker 2: in government and in corporate America at the moment, it
Speaker 2: feels very difficult to convince them otherwise.
Speaker 4: Yeah, I think these are all things that I think
Speaker 4: could make things better. But like, fundamentally, like I think
Speaker 4: that the domestic politics will be a constraint on the
Speaker 4: build out. There is a reason that the AI companies
Speaker 4: are now building out compute capacity in Australia, in Canada,
Speaker 4: in Europe even And so I think that people very
Speaker 4: much see that there is a risk to the AI
Speaker 4: build out if we expect to have to win over
Speaker 4: all these American communities and the global build out. Even
Speaker 4: the idea of data centers in space, for example, which
Speaker 4: is extremely speculative at this point, but it is something
Speaker 4: that folks are investing in.
Speaker 2: The ultimate nimbiism send them to know, because.
Speaker 4: People are literally thinking, you know, there's nobody in space
Speaker 4: to stop me, and I think that's very motivating to
Speaker 4: why Elon wants to do it.
Speaker 2: So when you get the aliens knocking on your.
Speaker 4: Door, oh gosh.
Speaker 2: I actually I wanted to ask you about China because
Speaker 2: I know you've traveled around there relatively recently. Do you
Speaker 2: get the same sense of data center pushback in a
Speaker 2: place like China.
Speaker 4: I didn't explore the data center's issue as much as
Speaker 4: I would have liked to when I was there because
Speaker 4: I was mostly sticking to the cities. And similarly, the
Speaker 4: data center build out was in sake Guajo Province or
Speaker 4: in some less populated areas of the north, so it
Speaker 4: was not happening around the cities. If I were to,
Speaker 4: you know, wager our hypothesis. My sense is that as
Speaker 4: with other big developments in China, there is just not
Speaker 4: a culture of resistance, like Nimbiism doesn't really exist in
Speaker 4: China because people do not own private property anyway, and
Speaker 4: so like when your land gets eminent, domained or taken
Speaker 4: for a government project, there's not as much of a
Speaker 4: channel in order to push back. Both culturally, there's not
Speaker 4: an expectation and politically, it's not a democracy, it's an
Speaker 4: authority and state, so you are going to lose. So
Speaker 4: whether there is or is not, like data center opposition,
Speaker 4: I'm sure some Chinese people are annoyed about the data
Speaker 4: centers being built if it's in their backyard, if it's
Speaker 4: on their farm, But my guess is like fundamentally, like
Speaker 4: you're just not going to see the political pushback. That
Speaker 4: is I think a specific quality of American democracy that
Speaker 4: a local town can actually stop a hyperscale developer from
Speaker 4: coming in.
Speaker 3: That makes sense, by the way, you know, like when
Speaker 3: a governor hokl came on odd Lag, I think a
Speaker 3: lot of people did find it quite compelling when she
Speaker 3: was like, look, actually we do want data centers, but
Speaker 3: we want to come up with a template that actually
Speaker 3: just we know is like positive sum And I think
Speaker 3: a lot of people actually found that to be fairly
Speaker 3: convincing in the sense, like what's happening so fast these
Speaker 3: towns do not really have this sort of I guess
Speaker 3: you'd call it state capacity or government capacity to really
Speaker 3: figure these things out on their own.
Speaker 1: They don't have the house expertise.
Speaker 3: Let's come up with a repeatable template that we have
Speaker 3: reason to believe works in town after town. I don't know,
Speaker 3: it seems plausible to work. Something I'm curious about, like
Speaker 3: putting back your.
Speaker 1: SF hat on. You know, clearly the AI.
Speaker 3: Industry they're very anxious about AI themselves, right, we know that,
Speaker 3: and they've anticipated in advance backlash, but they've mostly focused
Speaker 3: on this risk of job displacement. And so you see
Speaker 3: they'll write essays about we're going to need a new
Speaker 3: social contract, we're gonna need maybe to rethink the welfare state,
Speaker 3: We're going to need to think that you know, some
Speaker 3: VC rights, that thing about the meaning of work or whatever.
Speaker 1: How much of would you say.
Speaker 3: The last two years or three years within AI is
Speaker 3: a big thing of Like AI executives just not correctly
Speaker 3: anticipating the first source of actual attention.
Speaker 1: They thought it was going to be about jobs.
Speaker 3: Many of them have probably been like unrealistic in their
Speaker 3: timelines for job displacement. You know, we've been hearing six
Speaker 3: months until the big white collar wipeout for like almost
Speaker 3: probably two and a half years now. How much of
Speaker 3: it is like they thought the flashpoint was going to
Speaker 3: be one thing and it turned out to be another thing.
Speaker 4: I mean, I think that's a big issue. Jobs. Of
Speaker 4: course people are really concerned about, Like when you look
Speaker 4: at the national pulling there and like, people are certainly
Speaker 4: anxious about their jobs. But yeah, data centers. I don't
Speaker 4: think people expected the kid's safety stuff. I don't think
Speaker 4: people expected. The thing I always tell my friends here
Speaker 4: is I'm like, yeah, like there are no kids and
Speaker 4: no data centers in San Francisco, So no wonder you
Speaker 4: guys didn't worry about it. But the thing is, like
Speaker 4: these are the ways that AI materially shows up in
Speaker 4: like everyday people's lives, right, Like they are not their
Speaker 4: job has not been lost yet in most cases, they
Speaker 4: are not thinking about the speculative future superintelligence and whether
Speaker 4: that's going to like have a coup or something like that.
Speaker 4: But like their kid is already cheating on their homework,
Speaker 4: a data center is already showing up in their city.
Speaker 4: And so I think that because you know, SF is
Speaker 4: a bubble, the AI industry is the bubble. Most people
Speaker 4: in that world kind of only talk to other people
Speaker 4: in that world and never leave. And so I think
Speaker 4: that they are just frankly blind to the ways that
Speaker 4: AI is already showing up elsewhere, and they're sort of
Speaker 4: focused on their somewhat longer timelines and beliefs about dramatic
Speaker 4: AI capabilities in the future instead of Nope, this is
Speaker 4: like having effects on people's lives right now, and those
Speaker 4: effects are not all good. And so I do think
Speaker 4: the last six months has been a real reckoning that
Speaker 4: I'm hearing from the AI industry about like, oh, shoot,
Speaker 4: we really got to do something about the data center's thing,
Speaker 4: and even with the job saying like, I think that
Speaker 4: the AI executives have only started changing their tune on
Speaker 4: this in the last few months after realizing like, talking
Speaker 4: about white college loss all the time does not make
Speaker 4: people very happy, And so I don't know. I did
Speaker 4: this event in San Francisco on Monday, and it was
Speaker 4: quite a few like people from the industry there, and
Speaker 4: someone from Open Ai came up and mentioned he was like, yeah,
Speaker 4: we're like discussing your article in our slack because we're
Speaker 4: trying to think about the fact that we haven't been
Speaker 4: telling very positive or effective stories about AI and this
Speaker 4: is really coming to bite us. And I was like,
Speaker 4: I'm glad you guys are having those conversations.
Speaker 3: Well, so you know, this is just another sort of
Speaker 3: SF question. But like in the labs, like especially you
Speaker 3: know obviously the open AI hugging face attack, like all
Speaker 3: these things, you know, they talk about job loss, et cetera,
Speaker 3: Like how pervasive and how widespread is the sort of
Speaker 3: like the X risk fears, like the real fears, And
Speaker 3: would you say, like within the labs or within SF
Speaker 3: more than data centers, even more than job loss, which
Speaker 3: they might be comfortable talk about because it could just
Speaker 3: sort of be solved maybe by tax and redistribute, et cetera.
Speaker 1: That like this like sort of like.
Speaker 3: Real, like the big one is like growing in SF,
Speaker 3: like the big fear.
Speaker 4: Yeah. I mean it's interesting because at the same time
Speaker 4: folks are realizing, oh, yeah, the rest of the country
Speaker 4: is worried about these more near term risks or near
Speaker 4: term harms. The thing that people here are honestly worried
Speaker 4: about is cyber attacks. Like I think Mythos was a
Speaker 4: huge wake up call book through people in SF and
Speaker 4: frankly people in DC, It's like, what does it mean
Speaker 4: that this thing is now an extremely effective cyber weapon?
Speaker 4: What does that mean for opensforce? For who gets access
Speaker 4: to the cyber weapon, which countries, which companies? Is this
Speaker 4: defense or offense dominant? I think people are starting to
Speaker 4: think about bio more seriously of okay, maybe it's a
Speaker 4: cyber weapon today. Is it going to be a bioweapon
Speaker 4: in six months or twelve months? What does that mean
Speaker 4: for the national securitization of this technology? And then the
Speaker 4: hugging face incident? Was it to a lot of people?
Speaker 4: Look like these sci fi stories that rationalist forms were
Speaker 4: talking about five years ago, they are like, shoot, is
Speaker 4: it coming true? Like our internal model that we were
Speaker 4: testing decided to like cheat on its EVL, cheat on
Speaker 4: its homework basically by hacking into another system and leaving
Speaker 4: notes for its future self. I think this worry about
Speaker 4: AIS trying to take a bunch of steps autonomously to
Speaker 4: pursue a goal you've set, and then reward hacking basically
Speaker 4: taking some unexpected, harmful route to get to the end result.
Speaker 4: That story is actually starting to play out in a
Speaker 4: pretty serious way. And so while the AI industry sees
Speaker 4: say the data center backlash as something to manage on
Speaker 4: the public perception front. The thing that they are truly
Speaker 4: truly worried about right now is I think alignment, cyber
Speaker 4: and bio risk, all right.
Speaker 2: I think that's a good place to end it. Maybe
Speaker 2: not a good place, but place to end up. A
Speaker 2: great place to end it. Jasmine, thank you so much
Speaker 2: coming back on all blot. It's always good to chat.
Speaker 4: Yeah, this is so fun. Thanks for having me.
Speaker 2: Yeah, Joe, that was a fascinating conversation. I mean, it
Speaker 2: does feel like some of the struggle right now. I
Speaker 2: mean I wouldn't even necessarily say it's a marketing problem.
Speaker 2: It's just an identifying the upside problem for large hyperscalers
Speaker 2: who are building models that you know, like not only
Speaker 2: can take your job, but maybe they'll I don't know,
Speaker 2: take control of your bank account or kill us all
Speaker 2: with some new bio weapon that seems like a tough sales.
Speaker 1: Pitch, right, but we'll give you a fifty thousand dollars bon.
Speaker 2: No, and people still don't trust a fifty thousand dollars bonus.
Speaker 3: It is weird that I believe maybe I'm wrong but
Speaker 3: I believe there's still probably like cities, town, states, et cetera,
Speaker 3: that have tax incentives for data centers.
Speaker 1: And it always blows to my mind when I.
Speaker 3: Read that, because like, this is the this is the
Speaker 3: bottlenecks and all bottlenecks, this is the scarcity to end
Speaker 3: all scarcity for all of that. Yeah, and it's like
Speaker 3: you're still competing or you still nominally have something on
Speaker 3: your books to attract data center companies, Like it seems
Speaker 3: like the obvious first move is like get rid of
Speaker 3: that and just reverse all the signs, right, It's like, no,
Speaker 3: you're picking double sales tax or whatever.
Speaker 2: This was the other thing I was thinking, because Jasmine
Speaker 2: described the balance of power shifting to exactly that, right, Like,
Speaker 2: there aren't a lot of places that still have There
Speaker 2: are some, but not a lot that still have tax
Speaker 2: incentives to attract data science. Most of them are asking
Speaker 2: for payments from the companies themselves, And so I was thinking,
Speaker 2: as that becomes the standard maybe template for a lot
Speaker 2: of these projects, you know, hyper scalers and data center
Speaker 2: companies are really going to have to pay up for
Speaker 2: that space. It's another liability on their balance sheet. Right,
Speaker 2: Everything is just getting more expensive.
Speaker 3: Yeah, that's right, So everything is getting more every component,
Speaker 3: and like maybe look at the mergions metas like cuts
Speaker 3: to teachers in that one parish in Louisiana is not
Speaker 3: really going to.
Speaker 1: Move the dial, but like all on their own and every
Speaker 1: one of these yes, it's like the whole thing is
Speaker 1: going to get Well, think about.
Speaker 2: Every data center you have now has a tax guarantee
Speaker 2: like that could be a substantial liability even for a
Speaker 2: big tech company.
Speaker 1: No, of course, every single thing is going to add up.
Speaker 3: So obviously, prior to the last three years, there were
Speaker 3: a lot of data centers being built in America. It's
Speaker 3: interesting to me that, like the people Jasmine talked to
Speaker 3: felt they had different opinions on like a GPU AI
Speaker 3: data center versus the old data center. That may be
Speaker 3: like how's the cash of Netflix films for that area
Speaker 3: or whatever, and that people perceive to be their difference.
Speaker 3: I am not surprised that a given how easy it
Speaker 3: was to build data centers up until recently, and b
Speaker 3: how most people in the AI industry their own anxiety
Speaker 3: is about something much more existential that they just didn't
Speaker 3: really anticipate in a very good way. That like no,
Speaker 3: this would be where the rubber hits the road, because
Speaker 3: it's like, if you're worried about like AI causing human extinction,
Speaker 3: like you're probably not thinking, like are the people in Jamesville,
Speaker 3: Like how have we convinced them enough that like they're
Speaker 3: tax bill is going to go down? Hey?
Speaker 2: But if you want AI to cause human extinction, you
Speaker 2: got to get that data center up and running. That's
Speaker 2: the first step.
Speaker 1: All right, that's right.
Speaker 2: Shall we leave it there?
Speaker 1: Let's leave it there.
Speaker 2: This has been another episode of the Authoughs podcast. I'm
Speaker 2: Tracy Alloway. You can follow me at Tracy Alloway and
Speaker 2: I'm Joe Wisenthal.
Speaker 1: You can follow me at the Stalwart.
Speaker 3: Follow our guest Jasmine Son, She's at Jasmine new Son.
Speaker 3: Follow our producers Carmen Rodriguez at Carmen Arman, dash Ol
Speaker 3: Bennett at Dashbot, Calebrooks at Kelbrooks, and Kevin Lozano at
Speaker 3: Kevin Lloyd Lozano. And for more Odd Lads content, go
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