There is a pertinent question that has not been answered in the aftermath of this past week’s much ballyhooed Pennsylvania Energy and Information Summit at Carnegie Mellon University.
Nearly two dozen companies announced plans for more than $90 billion in data centers, energy and power infrastructure — natural gas, nuclear and a revamped power transmission network — and workforce and AI training projects across the commonwealth.
In fact, the list of projects is so lengthy and intricate that it’s too large to list in this forum. But to label it as “massive” is no hyperbole.
Supporters are calling it the start of the state’s “economic renaissance,” placing the Keystone State at the forefront of the artificial intelligence parade. And, indeed, the scope of the announced projects is breathtaking, projected to create tens of thousands of construction jobs and thousands more permanent jobs.
Those are the projections. There is, however, a very large and looming “but” (and at considerable risk of being labeled a “naysayer”) that we’ve not seen addressed:
But what, if any, is the taxpayer exposure in all of this promised new investment and this latest supposed road to “renaissance”?
Indeed, $90 billion in touted private investment is nothing to sneeze at. But taxpayers long have had, and should have, a serious allergic reaction to some of the world’s largest and quite profitable concerns – Blackstone, Google, Microsoft and Amazon, among them – possibly being given an as yet stated and/or yet devised package of taxpayer subsidies, whether they be in outright grants, abatements or other targeted tax forgiveness.
But if, as company after company has claimed, these projects will drive such massive economic development with equally massive economic returns, why should taxpayers be turned into venture capitalists?
While these promised new power-generation facilities and transmission upgrades supposedly will go a very long way toward shoring up a very fragile power grid, it appears much (most?) of the new generation capacity, whether fueled by natural gas or nuclear, will go toward the proposed new and power-hungry data centers.
Which raises another “but”: While we understand the growing appetite to advance research into and development of the artificial intelligence technologies that these data centers are designed to support, the fact of the matter is that, in the grand scheme of things, such centers employ quite few.
As Frank Gamrat, executive director of the Allegheny Institute for Public Policy, reminded (in Policy Brief Vol. 25, No. 19), “But most importantly, Pennsylvania’s leaders must refrain from awarding taxpayer subsidies to boost companies in this growing industry.”
He reminds that a Homer City power-plant conversion project, prior to this past week’s summit, already has a $5 million Redevelopment Assistance Capital Program grant for a natural gas pipeline improvement project.
“Outside of a role to ensure the safety of its citizens as the electrical capacity and transition takes place, it is important that these leaders avoid political overreach and instead provide a proper free-market environment to encourage this industry to grow and prosper,” the Ph.D. economist concludes.
That would include cutting the government red tape that can stall such projects for years, he notes.
And as Jake Haulk, president-emeritus of the think tank, reminds, “The absence of Right to Work laws and one-party control of city and county and most municipalities are roadblocks to private-sector gains.
“This will not be overcome by AI employment,” the Ph.D. economist notes, reiterating that AI [data centers do] not create many jobs once [they] are up and running.”
And he offers this dark, Huxley-esque caution: “[AI] is a brave new world that might prove disastrous for humanity.”
Given the manipulative perversion for which AI is capable, Haulk’s admonition should not be taken lightly.
But whatever AI is, or is to become, and given the tony players involved, taxpayers have no business being tapped to advance and promote it.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
