In the news, you will have read or heard the AI revolution is jumping starting the economy with the building of data centers and more important the chips that are in it. The building means taxes for the town or region and the state that it is in. Data centers are huge, multiple footballs in size and look like huge distribution centers except after the building is built, few people actually work in the building. For states they could be cash cows, so new laws have to be passed.

In an article by Tony Romm of the New York Times News Service, in the state of Virgina which is south of Washington, DC there is area near Stone Ridge, there are hundreds of warehouses that the area is known as Data Center Alley. For states like Virgina, they are expecting $600 million in addition revenues.

At the heart of the AI policy debate are two possibilities.

The first is that AI will create an unfathomable economic boom, perhaps adding $15 trillion to the world’s economic output by 2030. That forecast alone has supercharged the valuations of major tech companies.

The second possibility is a doomsday brought about by the same pursuit of growth. If AI falters, it could cause a catastrophe for markets, while if AI succeeds, it could leave millions of Americans unemployed. And it could concentrate more wealth into the hands of the few.

At the heart of the policy response is a fundamental shift in the relationship between local government and the powerful interests of Silicon Valley.

Once, communities nationwide eagerly courted companies such as Amazon, Meta, Alphabet, Amazon and Microsoft lavishing them with tax incentives and other perks. Chasing an economic boom, local officials were willing to make short-term fiscal sacrifices in exchange for covered jobs and potential tax revenue.

But the industry’s demands – and profits – grew exponentially. Sometimes, their promises did not pan out. And the new data centers that they erected to serve AI are different than earlier facilities. The new warehouses are larger, employ fewer worker and can consume far more water and electricity, stroking local fears about their economic and environmental impact.

The tech industry’s lobby group is called the Data Center Coalition.

Over the past 2 years, roughly 30 states have considered legislation related to data center energy use, including special tariffs on the largest electricity users, according to the University of Virgina tracker.

Linking to dividend paying stocks, if you have an index portfolio there will be tech stocks in them, the larger companies also pay some dividends and you can own them directly. If you own the companies, you are expecting the possibility that tech companies continue to dominate the economy, and the second possibility of what happens to people will be left to governments. Governments are the same as John Dillinger, who once said I rob the banks because that is where the money is. Governments will increasingly look to tech companies and their owners, because that is where the money is. In the meantime, enjoy the ride but increasingly the relationship will change a bit.

There are more questions than answers, till the next time – to raising questions.