In July, New York became the first state to enact a moratorium on new data centers, a path that other states may follow. But US policymakers, drawing lessons from past failures to make economy-wide investments in electrification and rare-earth processing, should weigh the strategic costs of not building essential infrastructure.
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We are grateful for comments to Larry Ball, Yuriy Gorodnichenko, Ina Hajdini, Lubos Pastor, seminar participants at the University of Chicago, Harvard, University of Iowa, and participants at the NBER Inflation: Frontiers or Research and Policy conference. The views expressed herein are those of the authors and do not necessarily reflect the views of the…
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“The strongest argument for claiming benefits earlier goes beyond the traditional break-even analyses.”
MILAN—The massive inflows of capital into data centers amid the frenzy of AI infrastructure investment have generated significant pushback in the United States by local opponents, leading to the cancellation of data-center projects worth at least $85 billion over the past three years. In July, New York became the first state to enact a moratorium on new data centers, as other states and the federal government consider similar proposals. But concerns about data centers’ economic and environmental costs, while reasonable, are only one part of the story. Everyone still must ask: Will the US miss out by not building more data centers?