Government policy and spending choices provide insight into how the U.S. has gone astray from the post-WWII shared prosperity model of common sense, broadly shared benefits, and best bang-for-the-buck decisions.
Instead, Wisconsin has focused on road building. See this post regarding induced demand and why widening and building more highways is generally a bad idea. It's bad for the environment and it doesn't alleviate traffic congestion. Nonetheless, Wisconsin is doing more of it at a significant cost. This $1.7 billion (currently) project is expected to last through 2033.
Further, these companies are drawn to Wisconsin for the water. Data centers need a lot of water. As PBS detailed, "Wisconsin has become a destination for new data centers because of the extreme heat they generate, benefitting from cooler climates and lots of water to regulate their temperatures. That’s why companies are eyeing the state — for its climate and water."
Good Jobs First has substantiated that while Wisconsin's data center boom creates construction jobs and investment, the massive sales tax breaks (like those for Microsoft) cost taxpayers tens of millions in lost revenue, with few jobs created relative to the subsidies, prompting calls for better state oversight, transparency, and "guardrails" for fair pay and worker protection, as current deals often lack accountability and permanent job guarantees.
On top all of the money being given away to data centers, Tom Kertscher and Paul Kiefer note, "Obsolete power plants continue to cost ratepayers. Now, the push to generate unprecedented amounts of electricity for data centers risks creating another $1 billion in ‘stranded assets.' ... Wisconsin ratepayers will owe over $1 billion on retired coal power plants by the end of 2026 — a total that may climb in the coming years."
On top of all these issues related to AI data centers, they are also short-lived assets. Meaning they depreciate at an exponentially fast pace - the technology and equipment are obsolete within years. Further, the AI market is a bubble. Don't take my word, environmentalists, or other naysayers, big investors who've called other bubbles are saying so. Not only are they saying so, they are putting their money where their mouth is; they are betting against AI. Based on the initial investment to build these centers, and how quickly they need to be replaced or upgraded, the profits needed to achieve such are nearly impossible.
The choice to continue building highways rather than more efficient ways of moving people and goods degrades our environment and our economy. Shoveling money into unproven and inefficient ephemeral and illusory catalysts (power plants, data centers ... not to mention stadiums and convention centers) is a drag on future growth. There is a massive opportunity cost imbedded in these choices. By wasting money on these boondoggles, the money can't go toward more meaningful and productive uses.
In the end, this all continues to hurt the country, the states, and the citizens. As usual, the only benefactors are those being given these handouts and corporate welfare.
For Futher Reading:
The Hidden History of ProsperityWhy Did the Rich Pull Away from the Rest?The AI Industry Is About to CollapseTalking With Paul Kedrosky
