Prof G Markets
00:29:06 · Ed Elson, Alex Bores
[00:29:06] S3: What do you think voters are most concerned about when it comes to the data centers? I I feel like there's a whole swath of things that people have expressed, but, I mean, what what ranks highest, do you think? [00:29:17] S6: It's tough to separate out the different pieces of it, but there's a debate about whether it is AI itself or just the data center. There... There's lots of things that are just local concerns with the data center. People express a lot of concern about water usage. So in The US, that's pretty highly regulated and we've seen much better behavior than what we've seen in other countries. But the energy prices that might spike because of it, even when a data center is promising to bring its own energy, if it puts a lot more demand on the components that generate energy, that could raise prices for your local utility that's doing it as well. So whether people will truly get their bills frozen or or reduced because of a data center has become a big issue. But there was really interesting polling that showed if you ask people if... How they felt about a data center versus how they felt about an AI data center. Data centers by themselves were still underwater, but an AI data center was another 20 points underwater. Just that it was tied to AI made a big difference. And so you saw OpenAI saying that they are going to try to rebrand data centers as AI compute campuses. I mean, campus sounds fun, but they're still tying the AI into it in a way that I think won't alleviate the very real concerns and fears that Americans have.
00:30:38 · Ed Elson
[00:30:38] S3: You have have proposed, more stringent regulation on AI and data centers. You you had co sponsored a bill in New York that that would have paused data centers... Data center construction for a year. It ended up happening by by a different measure that that governor Hochul later implemented. But when I hear that, this idea that, like, AI data centers are so much worse than data centers, to me, that makes me think that maybe voters are misunderstanding data centers or that that there's... They're being sort of mischaracterized, caricatured in some way as AI equals bad, so we hate this thing. Am I wrong in thinking that? Is is is there a little bit of, I don't know, sort of an anti AI cult that is causing people to maybe irrationally dislike these things, or is it all rational and and warranted?
00:31:38 · Alex Bores
[00:31:38] S6: Well, I think it was Camus who said humans aren't rational. They're rationalizing. So the philosophy of the mind, we can... And and of the voters, can put off there. But there is a... You know, if a data center... I like to point out there are plenty of data centers that exist in my hometown of New York City. They're just in buildings. They're not these big campuses that that impose on land use in lots of ways. So there are legitimate concerns about land use, about power, about noise in some of these places, and all of that's reasonable to talk about. And then there's the separate fact that data centers are the first time that AI is meeting democracy. And so let's say you're fine with a data center, but you're really upset about the way AI is being forced into schools as we saw news with Google this week. Or you're worried about the impact of AI on chatbots or even AI automating your job. You haven't gotten a vote on any of those changes. Polling that Who Decides did that our organization did found that over 70% of Americans agreed that AI has been forced into their workplace, their kid's school, or some other part of their daily life without them being consulted. And so they just feel alienated from being able to make any choice with this technology. And if the first choice you get is whether you could build a local data center, well, I understand people then expressing a broader preference through that vote.
00:33:03 · Ed Elson
[00:33:03] S3: Yeah. It's a great point. Just looking at the market's reaction, so it seems as though investors basically believe that this blue wave, this blue tsunami essentially means that we're gonna have very, very stringent regulation on data centers, or at least data center construction is gonna be significantly slowing down. Neo clouds have sold off massively. All of the all of the names that... Whose only business is to build data centers, they are they are plummeting right now. Interestingly, big tech did not, and it seems as though investors believe that maybe they'll have a competitive advantage over the NeoClouds now, or maybe just that this means that they'll stop spending crazy amounts of money on these data centers, and maybe that's a good thing because it sort of derisks their businesses, unless you disagree with my characterization of what's going on in the markets right now.
00:33:56 · Alex Bores
[00:33:56] S6: I think your characterization is spot on, and I find it fascinating. Right? It expresses a bet that there will be stringent regulation on building new data centers, that that capacity will be curtailed, but that there won't be regulations that impact the profits of the tech companies and the AI companies. That's interesting, right? That is a bet that what voters were expressing and then what the electeds will follow on with is just on data centers. I don't think that matches what I'm hearing from voters. And I also don't think that that matches the what electeds have been talking about and what their incentives are when they're thinking two years down the road. Now, perhaps there's another nuance level of that, which is much of the regulation that's been proposed around AI that isn't data centers, doesn't actually restrict profits all that much. Right? What's being proposed has been tremendously light touch, Even having third party auditors, all the companies have said they wanna do, so maybe that is priced in. I mean, I remember this when it was fights about the RAISE Act in New York, where we had intense lobbying against it, but the trade organization that was fighting back said that it would cost... And right, the group that has every incentive to say this will be a crushing overreach, a crushing burden on business. That trade association said it would cost Meta, and Google, and OpenAI, these massive companies, would cost them one full time employee to comply with. So maybe this is the market recognizing that even if regulation is coming, it's not really gonna threaten profits, and there's room for government to take action here.
00:35:34 · Ed Elson
[00:35:34] S3: Based on the the investors' reaction here, it seems as though they believe... Investors believe, Wall Street believes, that data centers are essentially gonna be gutted. I mean, it's a pretty strong reaction that we're seeing. And I imagine they... I mean, you are kind of the face of this movement in a lot of ways, certainly in New York. And I would imagine that that people see you as someone who says data centers should should just disappear. They should go away. And I wonder if maybe Wall Street investors are overreacting to the extent to which data centers will be disrupted or the build out will be disrupted. To me, it seems like actually a lot of these these newly elected Democrats are pretty reasonable in suggesting maybe we pause this amount of of capacity here until we have a framework in place, which maybe could take, like, you know, less than twelve months. Would you agree with that characterization that maybe that that they're too concerned that we're gonna have this giant crackdown that's gonna kill the data center industry?