A road trip through the data center debate

22:06And again, these deals mean that sometimes the property taxes don't show up for like 10 or 20 years. And people think, what if the data center gets abandoned by them? What if the AI bubble pops? Like, it's not necessarily true that just the property taxes mean that you are going to get a tax break next year. Sometimes it means the property taxes are going to be used to pay off the infrastructure improvements to build the data center. And then maybe in 10 or 20 years after they finish paying for their streets for the data center, they will pay for the schools.

22:36Jasmine Sun:So it's like obvious costs, theoretical benefits. I think so, yeah. One thing that was really shocking to me was how often anti-data center folks told me, I don't believe that that's going to happen. So I would say something like, if you could guarantee that your electricity prices would stay the same for the next five years while this data center is being built, would you be more open to it? Because they all say, no, we're not going to let your rates rise. We're going to cover it, right? That's what they all say. Is it just like, we don't believe it based on their history? No, it's completely false.

23:06Everyone that is involved in these fights understands how it works. So we know that's bullshit. And they know that we know that that's bullshit. Does it matter? Not really. So far. So they're either dumbasses or liars. It's one of the two. Or both. Or both. Yeah, because that's not how that works. And people would say, I don't believe that they're not going to raise the rates. DTE, the utility provider in Michigan, has raised rates almost every year for the last five years. Why would they stop doing it? I don't believe them because we know their grid can't support it without adding more generation.

23:40And I think what I think of now when I say that, oh, they're not going to overtax the grid or anything like that, to me, when I read in between those lines, it's because, oh, instead of a big, noisy data center next to your community, we're also going to stick a private gas generation power plant on the same property or nearby. or a small modular nuclear reactor. And I can't think of anything worse than having a data center except to have a data center and a nuclear reactor next to your kid's school. Or if I said something like, this data center is expected to pay$10,$20 million in property taxes year after year.

24:22That could go towards the streets. That could go towards the schools. Does that interest you? Folks would say, I don't think they're going to do it. I think that they're probably going to write themselves a carve out. What if the AI bubble pops before they even do that? It's infuriating that if at some point the AI bubble bursts in such a way that they just collapse, which is extremely possible, you know, then there's nothing. There's no protections for what happens to this land, what happens to communities that have already been burned. They can't recoup money. They can't recoup. And that's our tax dollars, you know.

24:54So it's just like supporting what feels like right before the 2008 crash, except for much worse. And so it's not even necessarily that getting the deals slightly tweaked, learning the exact facts on water use or energy would have changed their minds. The fundamental thing going on was this repeated, I don't believe them when they say they're going to pay their property taxes. And I can point to an example in the past where we got screwed over by a big company. So why should we believe them this time? And I think it's an incredibly hard problem to make a deal in an environment of trust that low.

25:28And in that sense, I do sympathize with local officials who are trying to raise revenues, trying to bring economic development to their communities, and who are running into a roadblock because there is an element of trust that's required to sign a contract. And you can't guarantee everything will go perfectly.

25:50we're going to take a short break we've visited Janesville and Saline

25:54Jasmine Sun:two midwestern towns with high levels of data center antipathy when we come back our road trip continues to meet a union leader who wants these data centers and a politician Abdul El-Sayed who's fighting against them

26:30Jasmine Sun:The following conversation is brought to you by LabCorp On Demand. I find that sometimes I really, really hyper-focus on work and my social life, and I pay a little bit less attention to my health than I probably should. I was talking recently to a friend and we had a pretty surprising conversation about this, really about medical tests. So have you ever, have you ever done a blood test? I mean, so many, haven't you? I've done so many. Have you ever done one where you learned anything about your health? Uh, yeah. This is Jenna Weiss-Berman. She works in podcasting. She's actually the person who greenlit search engine.

27:06Jasmine Sun:She's the reason you're listening to this show at all. But today we were talking because she was telling me a story from her life from a few years ago. There was this time when she hadn't been feeling well, and so she'd gone to the doctor. And this doctor decided to test me for something called my ceruloplasmin. It's a copper binding protein. And it was found that I have this thing called Wilson's disease, which is a very rare and very deadly and dangerous liver disease. I mean, I really thought I was going to die. and I had just had a baby. So it would have been a real bummer to die right after that.

27:42Jasmine Sun:And the worst case scenario would have been, had you not been diagnosed, you would have died? Yeah, I would have died for sure. It's like a real killer. One strange symptom of Wilson's disease, tiny copper rings around your cornea, usually only visible in an eye exam. It's a rare disease, not always detected, which meant Jenna was very fortunate to have caught it and to know what to do to treat it. which is mainly just avoid all the foods that surprisingly have small amounts of copper in them. Avocados, who knew? But to her, the takeaway lesson. Everybody get blood tests. They're great. LabCorp saved your life.

28:21Jasmine Sun:You were the person who signed search engine. And so because of LabCorp, search engine exists. Oh my God, that's true. That's amazing. It's important as a person to be proactive about your health, find out what's going on in your body, and not just wait for things to go wrong. And if you want more insight into what's happening, there's an easy way to find it. If you have questions about your health, LabCorp On Demand is a convenient and accurate way to get closer to answers, and you can do it from home. Here's how it works. Visit the website and choose from a suite of more than 100 lab tests, ranging from micronutrient and cortisol to testosterone and sexual wellness.

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30:46Welcome back to the show.

30:50Jasmine Sun:A lot of what Jasmine had captured in her microphone on her mini American tour was semi-organized rage towards these data centers. I'd wanted to hear more about people like the real estate agent we'd heard from, though. People who actually wanted these buildings. Who were you, like, in your road trip? Who were you running into who wanted this? Besides people, obviously, who work for AI companies, like, who was pro data center? I would say that the few categories are there are definitely some local officials who are really excited about data centers, again, for tax revenue reasons. I mean, in Mount Pleasant, Microsoft is paying$20 million a year in taxes to this city of, I think, like 28 ,000 people.

31:30And so it is a huge boon for the tax base. And it means that these towns don't have to raise taxes on their actual residents and they can invest in infrastructure as costs go up. And that was something I heard a lot of from local officials. In addition, you have labor. Maybe the first question, very basic, is just how you got involved in this union and Local 139 and just the basic mini history. Oh, that goes back. I started when I was 14 years old at a local excavating shop. I would shovel the garage floor at night, change tires on the trucks. I talked to a union leader named Terry McGowan, who gave me his whole backstory.

32:10He's with the International Union of Operating Engineers. And he told me that with all the data center projects springing up around Wisconsin, the skill trades have been kind of booming. People are getting these super well-paying jobs. The apprenticeship program that the union runs is doubling in size and enrollment. Companies are literally dangling these cash per diems at workers because there are so many shortages and there's such high demand. And so he said from his perspective, the data center boom was such a windfall for the skilled trades. It's just been a windfall. I mean, when I started in this business, it was a roller coaster.

32:46OK, work was good. Work was bad. Work was good. Work was bad. This has just been a steady stream. I grew up just outside of Milwaukee. Milwaukee was an industrial city. And back in Milwaukee's heyday, when I was a young man, noise was money. And you know what the thing was? The citizens of that area revered these huge, massive industrial factories because this is the engine is paying our bills, sending our kids to school, feeding us, you know, housing us. And they were hailed. And so construction workers, the trades workers, are pretty excited about data centers. But other than local officials who really grok the tax revenue and maybe the few thousand people who are in the trades, there's not really a super strong pro-data center constituency in the way that at least with housing or with solar farms, there's usually some group of people like environmentalists or people who want to move there who are kind of excited about it.

33:48One really interesting thing that shows up in the polling is data center opposition is pretty equal no matter whether you actually live near a data center or not. So if it was just nimbyism, you would think people who live near the housing might not want the new housing, but people who don't live near there would be excited about housing, right? That's sort of normal standard issue nimbyism. What you see in data center polling is that whether or not you live near a proposed data center, everyone kind of hates them equally, which suggests that it is more anger at data centers or a dislike of data centers than it is specifically, I want data centers just not near me.

34:20It's funny, the very same people that are afraid of AI, and I think that's what it is more than anything, they're just afraid of the advanced technology. that they're so afraid of AI taking over everything or their media or their brain that the negative people, the people against AI, have actually gotten in their brains. That's what I feel.

34:42Jasmine Sun:But so it's like what you're seeing, it sounds like, is the support basically comes from local politicians who say this is going to be great for the tax base and skilled tradespeople, like those unions like them. Otherwise, it sounds like the picture of the opposition that was starting to be drawn for you is if one of the big questions around AI is like, if this is really going to be socially important technology, how are those spoils going to be shared? The deals around these data centers, it's like one of the early battles. It's like, are the companies going to negotiate deals for themselves where they keep most of the spoils?

35:15Jasmine Sun:Or are there some local city council going to be able to learn from a local city council or somewhere else to carve out a deal that makes sense? And like, the intuition that activists have, that people have, is that these are bad deals. The intuition is that there is such a power asymmetry that they don't really get to choose. Please welcome the next United States senator from the state of Michigan, Abdul El-Sayed.

35:43So one of the most interesting things was going to Lansing, Michigan, a rally that Abdul El-Sayed hosted with Bernie, with AOC. There are things happening in this country that people everywhere are shocked by. A government of, by, and for the oligarchs. This was kind of bundled into the Bernie AOC anti-oligarchy tour. A lot of it was also about dark money and politics. That was sort of the narrative that was hit again and again. Dark money could mean APAC. Dark money could mean Big Pharma. Dark money could mean the utility company everyone hates. But dark money also meant these data center deals.

36:19We've got each other. Folks who may never understand the lives that one another lead, locking arms together to say that we will not have our future dominated by the likes of your big tech company to put a data center in our backyard. We will not. And it was very interesting to see in speech after speech, even though no rally speech was completely about AI, AI fit perfectly into the story of the oligarchy. The idea that corporations are colluding with the government, are paying off your elected officials in order to make decisions that are good for the billionaires and bad for you. And so to go from that experience of like being at this rally where Abdul is saying when big tech buys a Senate seat, they're buying a data center in your backyard.

37:04When DTE buys a Senate seat, they're buying your local officials staying quiet while they raise the rates on you. When they tell us that they're going to raise our electricity rates, we won't back down. When they tell us they want to put that data center in our backyard, we won't back down. When they tell us that they want to take our tax dollars and give them there. When we've got kids who need them here, we won't back down. Going from that experience about hearing AI slotted into the money and politics story to Celine, where the developers have literally sued the democratically elected city council in order to build a data center that nobody wanted there.

37:47it really became clear how the oligarchy story played together with the data center story.

38:02Hey, so nice to meet you. Jasmine. Jasmine, nice to meet you. Thanks so much for taking the time.

38:06Jasmine Sun:And so what was Abdul El-Sayed like? I mean, so I sat down with Abdul for 30 minutes the day after the rally in Ann Arbor because the team decided it would be a better venue to go deeper on AI policy. And he has a long, long list of demands in terms of regulating AI that go from we should force a divestment of Anthropic from Amazon or Microsoft and OpenAI to make sure that you don't end up with AI monopolies. We should have an international treaty with China so that we can pause and slow down AI. To we should have an FDA merged with the SEC, merged with some other regulatory agency solely dedicated to regulating AI.

38:44These corporations have too much incentive to do things that are terrible for humanity but very good for making money in the short run. If we take seriously the risk to the social contract, then public ownership has to be part of it, right? Similar with utilities. He had a big laundry list of demands for AI regulation. And what did you think? It was a very big list. I'm not sure that I agree that these policy proposals all made a ton of sense. I mean, I think that what I felt was that populist politicians like Abdul in Michigan or Francesca Hong, the Democratic frontrunner for governor in Wisconsin who's advocating a moratorium on data centers too, they are tapping into real anger.

39:24And I left with a lot more sympathy for the anger and the suspicion that people felt. I didn't leave thinking that all of these very ambitious regulatory ideas were necessarily the right ones, but it became clear that we are going to need some AI plan, maybe at the national level, maybe at the state level, that tackles a bunch of these issues, labor stuff, the data centers, kids safety, and makes people feel that someone has this under control. Because the other thing that people kept telling me, like activists, for example, was like, our local government, our mayor, they're not doing their homework.

40:00They're in over their heads. They don't have this under control. And so I think having state or national governments tell people, this is how we're thinking about AI. This is how we're thinking about the AI industry. We understand your concerns about labor issues, about the environment, about whether this could be a bubble. and this is what we're going to do to ensure that you're not left holding the bag as normal Americans if the AI companies do this or that. That's the kind of leadership that the public wants right now and that they're not getting, which is leaving a vacuum for a lot of more blunt populist mechanisms.

40:37Jasmine Sun:It's tough, though. I mean, like, the idea that no one's in control, I'm very sympathetic to. Who should be in control? I find very confusing. Yes. I mean, I don't think the answer to me is that the government is in control of what we use AI for. I think that the thing that people want is protection against downside risk. And I do think it is the government's job to protect people against downside risk, whether that is a data center becoming a stranded asset if the company decides to up and leave, or whether that downside risk is people losing their jobs or whatever else people are worried about.

41:08Jasmine Sun:I mean, can you imagine a world where you basically have a bunch of states that do data center moratoriums? You end up with some localities negotiating better deals because anti-A backlash means that there's only a few places you can do data centers. And so you get to a good outcome because of all of this ball ticking? I mean, in a way, absolutely, right? Like, I think it is a great thing that Microsoft has said publicly. They're not doing NDAs anymore on these. I think that I would expect other AI companies and developers to follow suit. That seems good to have more transparency. I've heard both from people who are in these communities as well as from folks from the AI and tech side that the deals are getting better for communities.

41:49They are extending more in community benefits. It's a question that I'm getting from people I know in AI world is, what do we have to give these communities? What do we want? What can we promise them? We really want to build this data center. Just tell us how we can use money to solve the problem. And so I think that there's not a world anymore where some small town has to give a subsidy to Meta. Like no one should have to be subsidizing Meta's build out, you know? And so I think that the deals are getting better because of the level of backlash. I think the main thing that I'm thinking is, I suspect there is a way to do the deals right.

42:21There is a way for places like Janesville, which does in fact have this giant concrete slab in the middle of the city and could use some commercial revenue to find a way to get a good deal out of the AI companies. Whether or not they are set up to do so at the moment is unclear. I mean, the best case that I heard, for example, Kathy Hochul's data center moratorium, is that it can bring the standards for these deals up to the state level because the state is significantly more equipped to figure out what should go on. So that's actually the justification her team has been giving both in public, and I've talked to them also about this briefly as well, where they're saying in the same way that like Gretchen Whitmer set standards on solar farms in Michigan, which were very controversial, you shouldn't leave these tiny towns to figure out how to negotiate with Meta.

43:07you should pause, set a bunch of standards at the state level, have Kathy Hochul's team negotiate with the data center developers and the AI labs to figure out what's possible and what's not, release statewide standards saying, you want to build a data center in New York state, you're going to do closed loop cooling. You're going to use X percentage renewable energy. You are going to not sign an NDA. And then once those standards are set at the state level, it hopefully becomes much easier to make the local deals.

43:30Jasmine Sun:It solves the part-time city counselor asking, like, ChatGPT, what's a good data center deal problem? them. I think so. And I actually think that like, if that's actually what's going on, that might be a smart way to do it. Huh. So are you more positive towards stuff like the New York state data center moratorium than you were before you went on the road? I think I am. I mean, again, to be clear, like I am more positive on it. If it means the thing that I just said and not just like, it's a permanent moratorium, we're never going to deal with this ever again. Cause sometimes people say moratorium, what they mean is ban.

44:00Right. And like that, I am not sure if I believe in. Um, but like if the actual thing that's happening is that your state government is figuring out what are the standards that we can set? What are the terms of engagement for New York towns, for data centers? I think that's pretty interesting.

44:16Jasmine Sun:So you actually came across, like, I feel like the upside of your trip is like, it doesn't just feel like polarized nations screaming at each other based off things they saw on TikTok. It feels like a country trying to figure out a deal that makes sense. And how to make those deals in an environment that's already so low trust. Yeah.

44:39Jasmine Sun:So that is what I learned from Jasmine's road trip. That, as often is the case, this country looks a bit more reasonable when you talk to people offline. That what voters are saying they want is not exactly brakes they can smash to stop this technology. They want a better, fairer process around these data center deals. They've learned the hard way that industry can burn them. And they want their politicians to make deals they can trust. as for Jasmine you can find her ongoing very excellent coverage of AI San Francisco and the technological and political currents shooting through our culture at her sub stack Jasmine Sun we'll have a link in our show notes I do not miss a post and neither should you

45:33Thank you.

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49:20our associate producer. Our production intern is Piper Dumont, who also fact-checked this week's episode. Theme, original composition, and mixing by Armin Bazarian. Our executive producer is Leah Reese-Dennis. Thanks to the rest of the team at Odyssey, Rob Mirandy, Craig Cox, Eric Donnelly, Colin Gaynor-Moore, Curran, Joseph Unit-Francis, Kirk Courtney, Vanessa Tenkati, and Hilary Sheff. If you have a business and would like to advertise on our show, please send us an email, pjvote85 at gmail.com, subject line advertising. You can also send your questions there. if you have a question you'd like the show to answer.

49:51If you're a listener and would like to not hear ads on the show, you can sign up for Incognito Mode. It's our paid feed. You also get bonus episodes. You can find that at searchengine.show. Your contributions there are what help us keep this project running. Thank you, as always, for listening. We'll see you in a couple weeks.

50:19Thank you.

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