Why Voters Are Turning Against Data Centers

[00:00:00] Speaker 1: This year's midterm elections will be the first where AI will figure prominently. Everyone more or less agrees that the new technology could have great potential, but there is a wide range of concerns about its possible effects. Everything from what it could mean for employment. [00:00:15] Paul Ryan: The fear surrounding AI, you know, is my son or daughter going to have a job? I just paid all this tuition. Am I going to have a job? [00:00:22] Speaker 3: To whether it could lead to mass extinction. AI is just as dangerous as drugs, so we should have an FDA for AI. So public policy needs to support the public good of AI alignment. [00:00:35] Speaker 1: But for this particular election, it seems the most pressing concern is over the building of all those data centers needed to support AI. We do not want any more data centers in our county. This is not a Republican issue. It's not a Democrat issue. It's a people issue. [00:00:52] Speaker 4: You're seeing red states and blue states both look at the data center opportunity and quandary in the same way, which is it can't hurt consumers. [00:01:00] Speaker 5: Nobody knows yet what it's going to mean for that community. They don't know what it's going to mean for their water. They don't know what it's going to mean in regard to noise pollution or other types of pollutants. [00:01:12] Speaker 1: Resistance to building more data centers has led some states to slow down AI's development. [00:01:17] Paul Ryan: We need an immediate pause on advanced AI development and a permanent ban on super intelligence. [00:01:26] Speaker 6: New York issuing the first statewide moratorium on new hyperscale data centers. [00:01:31] Speaker 1: So although only 44% of voters say AI overall is very important to their vote, well below other issues like the economy, the future of democracy and health care, 61% say they are against the building of more data centers. With so much at stake, it's not surprising that political groups aligned with AI companies, philanthropic and open AI have poured some $56 million into elections across the country. And for once, it may not matter whether you're a Republican or a Democrat. I think you have equal opportunity on both sides of the aisle where AI is a is a worry. To understand better the issues surrounding data centers and AI in this election, we turn to someone who regularly advises the C-suite and to two long-time members of Congress, starting with Paul Ryan, who served as the 54th Speaker of the House and is now a partner at Solomir Capital. [00:02:26] Paul Ryan: I'm from Wisconsin. I've lived in my hometown of Janesville. We have a ballot initiative on the data center to go in our old GM plant location. It's like a 50-50 proposition. All the ads you see on TV are blaming the other candidate of being more in favor of data centers than the other person. I see it as a proxy on just AI itself. [00:02:47] Speaker 1: According to Ryan, much of the current problems surrounding data centers come from the way some hyperscalers have sold them to the public at large. [00:02:55] Paul Ryan: They basically go out there and say, this is going to either take everyone's job or kill everybody, but please, we need more data centers to do this. I mean, so I think they were really horrible at presenting themselves. And then the way they entered communities was wrong. [00:03:11] Speaker 1: Paul Ryan served in Congress with Kevin Brady of Texas and had the seat next to his on the House Ways and Means Committee. Brady sees some of the same resistance in his home state. [00:03:22] Kevin Brady: You know, I think it's because there's two things intersecting. One, for communities are the question, is this data center next door good for us and good for our community, our electric rates, our water capacity, all that. But the second and equally important is, you know, do those dangerous data centers fuel an AI that's good for my future, you know, and for our livelihood. And I think that has driven a lot of the resistance to data centers beyond just the physical footprint of them, which I'm absolutely confident can be addressed. Standards by states and local communities on these data centers can solve a lot, create a lot of assurance for local communities. What they still don't know is, you know, are we hosting a center that works against me in AI? And there, I think that's driving a lot of the angst in Texas. You know, we're at the center of this. We've got 230, I think, applications for data centers. They're starting to move from the suburban areas out to the rural areas. It's a major issue in our election right now. And so I think at the end of the day, if you're looking for a solution, it really is, this is a state-federal partnership. States create the standards for the data centers. And the feds, Congress, designate the safeguards for consumer protections, for safety, and all that going forward. But in the middle of the election, no one talks policy or solutions. This is an issue that I think generates fear, you know, among voters. [00:05:00] Speaker 1: Will we have state competition for data centers? If it's a state standards issues, they can have different standards and compete for them. [00:05:08] Kevin Brady: They can. And I think every state, I think you'll see some that flat out ban them outright. Others who set very strict standards here, but welcome them and that investment to it. I think you're going to see at the end of the day, local communities are going to have a bigger say, you know, in how those data centers operate and how they exit perhaps in the future as well. So I think there's a path forward. But right now in the heat of the battle, this is just a pure political, you know, issue. And big tech is clearly in the crosshairs right now. [00:05:44] Speaker 1: We saw the first television election back in 1960, perhaps. We have the first AI election. What does that mean for this election? Oh, I think it's going to mean a lot. Blair Efron of Centerview Partners sees the AI issues from the perspective of the C-suite he works with regularly. [00:05:58] Speaker 6: I think the industry has not done a very good job explaining to most people what it's about, how they benefit. And what you really see is most voters, most citizens taking out on the data centers because it's local. It comes into their community. They understand what it means to take up a lot of land, what it means to take up a lot of resource, energy. And I really think when you see that, it's actually a manifestation of what they consider to be the dangers of AI. Now remember, AI has three components to it that people talk about. The economic component, the security component, and the Armageddon component. And what I can't figure out, David, and no one can is where on that spectrum of three voters are actually most concerned. I would actually venture to say it's the first element, which is the economy. We still don't know whether it's going to be a steep curve with job loss, a more gradual curve, or frankly, no curve. I would argue it depends on the sector. Information services is the one that really has been impacted the most. 350,000 jobs have been lost since the advent of ChatGBT. That said, for most companies, they have not been laying off people because of AI. They're not hiring as much, but we're still on an employment level, a bit 4.2%. And I think the thing we need to figure out is, because no one knows which of those paths is going to happen, is what are we going to do that solves and helps any of those scenarios? We need a program, and I think for 28, it's going to be a big issue for all the candidates. What is the program that says among any of these scenarios, we can figure out how to help someone who is either displaced or needs to understand better the tools of what AI can do? I think most people think AI has something of a PR problem, [00:07:49] Speaker 1: particularly with the data centers. Does it also have a political problem in this sense? That, as you say, we don't know how it will play out in the labor market, but I don't see a strong case for saying it's going to create a lot more jobs. So, I mean, when you have something as vast, as important as AI, normally we want the political process to help sort it out. I'm not sure the political process is going to be that open to it. [00:08:10] Speaker 6: I don't think the political process is going to put itself on the line to say that it'll be job enhancing. Only time will tell. We do know, historically, great technological innovations, and I use the word great as in large, not as in great, have led over time to new areas of jobs. [00:08:34] Speaker 1: President Trump has embraced deregulation, in part saying to corporate America, this is good for you. And maybe overly simplistically, there's a tendency to think that in general, corporations would like to have less regulation rather than more. From your experience in the C-suite, in the boardrooms, is much of corporate America open to the possibility of an FAA, [00:08:53] Speaker 6: to use your word? One hundred percent. This is an area where CEOs are not embracing it as a total positive. They see the worry spots. They see the risk from security. They're spending a lot more on security, and these security infrastructure companies for cyber are one of the biggest areas of investment right now. I think that most CEOs I know want a set of rules, want regulation that lets us operate fairly, but within bounds, and also a regulatory regime that is global. Everybody appreciates we can't do something without China doing something, and to a lesser extent, because they don't have a lot, Europe has an example. And if you look at that summit two weeks ago, there's nothing that really came out of it that had anything to do with AI. And I'm hoping that the next two summits they have between now and the end of the year, China and the U.S., that AI really is one of the top topics on the agenda. [00:09:58] Speaker 1: But whatever the local concerns, and however they play out in this particular election, no one really thinks we will decide to put a stop to the march of AI in the United States. [00:10:09] Paul Ryan: Data centers are going to be built because they have to be built. We cannot afford to lose this race on technology to tyrannies like China. So we have to build data centers. The question is, can we do it in a way that it benefits everybody in the community?