Misplaced Priorities, Crony Capitalism, & The A.I. Bubble

The U.S. ranks high in GDP per person but lower in social well-being and equality. The U.S. scores low on metrics like maternal health, political rights, discrimination, and income mobility compared to other developed nations. In fact, the U.S. often falls outside the top 20 in overall social progress despite strong economic indicators. Wealth doesn't always translate to broad social benefits. 

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. 

Wisconsin, under Governor Scott Walker, rejected Obama administration funding (around $823 million) for a proposed high-speed rail line between Madison and Milwaukee in 2010. Walker, a Republican, made stopping the rail project a cornerstone of his campaign, and after winning, he canceled the plan, leading to the federal funds being reallocated to other states.

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.  

Wisconsin is also throwing a lot of money onto the AI bandwagon. Wisconsin is experiencing a boom in data center development, driven by AI, with projects from Microsoft (Mount Pleasant) and Vantage Data Centers (Port Washington). Since significant public monies and resources are involved, many are raising concerns about energy use and environmental impact, along with negotiating for benefits like infrastructure and green energy. 

Clean Wisconsin reported, "Two approved data centers in Wisconsin will use more power than all the homes in our state combined. More than the generation capacity of the Point Beach nuclear plant, the single-largest source of power in Wisconsin."

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 Prosperity

America’s Forgotten Generation (of Prosperity)

Why Did the Rich Pull Away from the Rest?

Restoring Shared Prosperity

The AI Industry Is About to Collapse

The AI Bubble and the U.S. Economy: How Long Do “Hallucinations” Last?

Talking With Paul Kedrosky

Michael Burry’s AI Warning Can’t Be Ignored

There Is No Labor Shortage!!!

Accomplices Reporters keep labeling shitty-paying jobs, that are supposedly going unfilled, as a labor shortage. Labor Shortage Transforming State Workforce

There is no labor shortage. This is about a living wage, health care, and a pension (retirement). Respectable pay for an honest day's work - the mantra America has been shoveling and selling for generations. 

Unions were the answer to the disparity between the Haves and the Have-Nots. Yet, for decades, Republicans have attacked government and the public sector, in general, along with unions. It's no coincidence that as unionization has declined so have the wages and benefits of workers. 

Business news bloviators talk about how CEOs have earned and must be paid millions - that's just the market working. At the same time, Republicans, along with the business news crowd, tell us how these same millionaires shouldn't pay taxes - that would be a disincentive to their genius.

But when everyday workers decide certain jobs (and the lack of pay and benefits associated with such) aren't worth it - you know, the market - Republicans and the business crowd declare these workers to be lazy and ungrateful. Workers don't deserve good pay and incentives will only make them lazier.

I guess when CEOs get to make policy and write the rules, there is a set of rules for them and a set of rules for workers. The market rules for millionaires are very different from the market rules for workers. 

So is it really a surprise that as workers have had to work harder for lower pay and less benefits, the workers have turned away from these lowest-paid and worst jobs? It's not a labor shortage, it's a pay shortage. The labor is here and willing to do the work, they just need to be paid a fair market wage.

The 5 Biggest Corporate Lies About Unions

As Union Membership Declines, Inequality Rises

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