Subsidies Warp Technology Markets and Rob Society of Better Solutions

Commentary

AI data centers. The very phrase makes some folks shudder and others leap for joy. As these mega-developments proceed, more and more people are growing concerned about their energy and water requirements.

Right now, data centers account for 25 percent of Virginia’s electricity use; the next nearest state is 15 percent. A proposed project in Kentucky is slated to use as much energy as powering a third of New York City. Maine is the first state to put a moratorium on data centers. Elon Musk wants to populate space with them in order to get solar power unimpeded by atmospheric blockage and cooling outside earth’s ambient temperature.

I had dinner recently with an engineer in Wisconsin who told me designers were trying to figure out how to build submersible data centers in the Great Lakes. It takes about three quarts of water to cool the computers that generate one AI email. As if all this isn’t enough to create concern, Wall Street pundits seem giddy to invest one day and fearful of a bubble the next. Where is all this going?

While policy wonks and various factions argue about economic and environmental guardrails to this latest technological juggernaut, are we missing the biggest issue? All technologies come with social, environmental, and economic price tags. All technologies disrupt cultural norms.

When kerosene replaced whale oil to power street lamps, one major industry replaced another. A new distribution, refining, and maintenance system developed. When electricity replaced kerosene, that was yet another technological disruption. Surely the automobile replacing draft power fundamentally changed society.

When we let our minds drift back to technological advancements prior to World War II, we see gradual market and societal adoption. The federal government was in general a nonplayer and let things develop within investors’ and buyers’ willingness to invest in a non-manipulated market. In 1915, some 1,500 automobile brands vied for consumer interest.

Since World War II, however, with expansive federal involvement in nearly every aspect of American life and business, the government intervenes in the free market metabolism of technological development by offering grants, subsidies, tax concessions, research, and even messaging to advance a favored player. Instead of letting new ideas permeate society at a metabolic rate conducive to gentle adjustment, this prejudicial intervention to artificially advance favorites not only denies society the choice among honest competitors, but also catapults the new idea faster than an honest market would develop.

When the government picked hydrogenated vegetable oil over lard and butter, it was catastrophic within the food and farming sector. And now we know it was catastrophic in the health sector as well. We would be a much healthier society had the government never told the citizenry what to eat. The 1979 Dietary Guidelines that put Cheerios and Ritz Crackers as foundational compared to meat and eggs as peripheral created untold diabetics and an obesity epidemic.

Prime farmland is being converted to solar farms, which don’t make any economic sense except for tax advantages. Ditto electric vehicles. Ditto windmills, both on land and in the ocean. If all these technologies had to carry their own investment weight, their speed would be far slower, enabling society to metabolize their consequences.

All technologies have consequences. For the record, I am not inherently opposed to data centers. But taking private property by eminent domain and giving public money, either through outright subsidies or backdoor tax write-offs, to stimulate their development brings them on faster than society’s ability to deal with the many concerning issues now coming to light.

When we have an idea, whether individually or corporately, we never know all its ramifications until we begin implementing it. We can make our best guesses, but we can never foresee all the nuances that might domino after we implement the new idea.

As a lunatic fringer lurking around alternatives all my life, I’m aware of numerous technologies with promise that never got traction because the government-selected favorite received the money and press releases. I’m thinking about the fellow who developed a ceramic tower superheated to 3,000 degrees F with magnifying glasses during the day. The thermal mass enabled it to continue producing steam throughout the night. Simple. But his idea was smothered by solar panels and windmills. Many breakthrough energy ideas have met similar financial prejudice.

Not long ago I had a second visit from a fellow trying to sign up our property for a solar farm. He said solar doesn’t make any sense unless you have 500 acres of panels in one spot. He was adamant on that point. The next day a friend gave me a book with the thesis that solar doesn’t make any sense except on rooftops. Solar advocates are extremely divided over this issue. Wouldn’t it make sense for our tax dollars to stay out of the winner-picking circuit long enough for these competing notions to develop their own winner, fair and square? I’ve been betting on hydrogen for a long time, but the poor fellows developing it are ugly ducklings in a solar panel swan narrative.

Right now, we have thousands of acres of prime farmland destroyed due to government meddling in the energy sector. The same could be said for pharmaceutical options. I’m waiting for President Donald Trump to issue an apology for Operation Warp Speed, which, at least in the alternative medical community, is universally thought to be a medical disaster. Health care, energy, food, agriculture, data—none of it is any of the government’s business.

When through corrupt backdoor deals and wine and cheese dinners businesses achieve the Holy Grail of government endorsement, with all its social and economic benefits, the culture doesn’t get honest technology development. We don’t have fair competitors vying for the best ideas and forced to go through the gauntlet of public trust and acceptance in real time.

Instead, we get technology cheating, where well-connected favorites enjoy largesse at the expense of those jockeying in the open market. I suggest that the question right now is not whether data centers should be put one place or another, but whether any governmental agency should tip the economics to favor them in the marketplace. Let them acquire their land on their own. Let them invest with no tax breaks or concessions. In other words, let them carry their own weight, from start to finish.

If government policy returned to that pre-World War II mentality, we would see a much more gentle ascent to technology. That would give time to socially, environmentally, and economically metabolize the idea. Any society that uses the government to pick winners and losers in the marketplace is headed toward corruption on the one hand, and retarded competitive ideas on the other. Neither offers society the best outcome. Let the players sell their game in a fair marketplace, and let the best team win.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.