Of Data Centers & Democracy

Dave Davis Commentary, Policy, Uncategorized , , , ,

The current hysteria over AI data centers highlights how smart the Founding Fathers were to put hurdles in the way of popular Democracy. Rash actions were discouraged, while individual and minority rights were protected against the tyranny of the majority. Historically, momentary popularity of leaders or positions has too often been a fad. However, it has still led to the rule of tyrants. Whipping up the populace to demand moratoria on centers already in the works, as well as future ones, could do the Nation irreparable harm if implemented.

Not long ago, politicians such as Texas Governor Greg Abbott and Pennsylvania Governor Robert Shapiro were touting their states as data center friendly. Many local governments competed for them, often offering incentives. Thousands were built without much notice. All of a sudden, we were hearing horror stories about skyrocketing energy bills, water shortages, and a mind-numbing hum. So much agricultural land is taken out of production; we may starve:

Now Abbott and Shapiro have joined the moratorium chorus. Politicians across the Nation are running over each other to get out in front of the “no AI data centers in my backyard” army. Polls show a wide majority are against the centers.

This revolt against the “monster centers” came home to me over dinner with some Utahns. Somehow our conversation turned to a Mega AI data center development north of the Great Salt Lake. Situated in Box Elder County, the Kevin O’Leary-organized project is truly a mega project on 40,000 acres, consuming 9 gigawatts of power at completion.

The Shark Tank “Mr. Wonderful” investor group secured support from the County, landowners, and the Military Installation Development Authority (MIDA), which fast-tracks Utah developments. How did the celebrity businessman put this energy- and water-consuming Monster over on the good people of Utah? Get ready for skyrocketing energy bills, and say goodbye to the Great Salt Lake. Get ready for the hum. The Oligarchs strike again.

The Stratos Proposal isn’t hard to find. It shows O’Leary and Company are well aware of the problems of putting data centers in the water-deficient West, in a state not known for abundant energy. They make a case that this is a great location for the Mega Centers.

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Crisis, What Crisis?

Dave Davis Commentary, Policy, The Middle East, Uncategorized , , , ,

We’re entering the mid-term election home stretch, and it looks as if it will come down to which we hate more: Trump or Socialism. Polls show a majority of Americans dislike both. Younger voters abhor Trump. At the same time, older Americans feel the same way about socialism. Each party is expending resources to convince the populace which is more terrifying.

This state of affairs makes it easy to follow the campaigns. Thank goodness there are no other concerns we need to discuss before they become a crisis. After all, our exploding national debt is a long-term worry. Our losing the Iran war only confirms that foreign adventures always turn bad. Just stay at home. Like, that’s a possibility in an ever-shrinking world.

I don’t want to be a wet blanket, but there are signs that the debt crisis may be closer than we think. Are you aware that the U.S. government is about to sell 30-year bonds at the highest interest rate in a quarter of a century? Don’t feel bad; most people aren’t:

The current rate on the long Treasury bond yields more now than at the height of Quantitative Easing (QE) coming out of the Great Recession. It’s higher than when we had 9% inflation under Biden.

This is true even though the Treasury issues far fewer of these long bonds than short-term obligations. Generally, there is a ready market for long bonds from insurance and pension funds that need to match long time frames and commitments, and the Treasury accommodates them, but refrains from issuing more for fear it will raise rates the Federal Reserve has little or no control over.

The Federal Reserve can no longer affect longer-term interest rates because of the masses of longer-term bonds bought under QE to keep rates down in the past. Those bonds are now held at a loss. That’s right, our central bank is losing money. The new Fed chairman, Kevin Warsh, was no fan of the QE program that resulted in the first loss since the Fed’s first year in 1915, so it’s unlikely to repeat it.

The climbing long rate seems to signal future inflation problems. We are already paying more interest on our debt than we do for national defense. With the impending insolvency of Social Security and Medicare just a few years out, spending looks like it has nowhere to go but up. With most of the debt short-term, any further interest rate rise is reflected almost immediately in much higher payments.

Japan, with debt two and a half times its GDP, is further along a crisis path. Its currency came under attack, meaning a possible inflationary devaluation. In the past, nations under similar attacks either raised interest rates or sold reserves to buy and bolster their currency.

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Why Fauci Matters

Dave Davis Commentary, COVID-19, Policy, Uncategorized , , , ,

With the publishing of the diary Dr. Anthony Fauci kept on a government computer, many people who are still struggling with economic setbacks, their kids’ learning loss, mental problems, and the failure to see loved ones before they passed away, among other things, are calling for the Doctor’s head. While I share their dismay at the unnecessary detrimental actions Fauci favored that cost so many so much, I think we need to look at how these failures came about so we never repeat them.

Pandemics have occurred throughout history and likely will continue in the future. It stands to reason that institutions such as the World Health Organization (WHO) and our Centers for Disease Control and Prevention (CDC) should create guidance on how to proceed when one raises its ugly head. By developing their responses before a crisis and coolly analyzing the data during calm times, we could avoid hasty, even panic-driven actions likely to make matters worse. Maybe much worse.

So why didn’t these esteemed organizations have a plan when COVID hit? It may come as a surprise to many, but both WHO and the CDC did have well-developed, thoughtful guidance. It was the Trump administration that decided to appoint a new board to guide our response, rather than follow the CDC plan already in place. It’s as if a school had a well-developed fire plan, but at the first sign of smoke the principal appointed a committee to work out a new plan rather than just following the existing one. Makes no sense and is likely dangerous, but that’s what we did.

Vice President Mike Pence, Alex Azar, the Health and Human Services Secretary, Dr. Deborah Birx, coordinator, Dr. Antony Fauci, infectious diseases; Dr. Robert Redfield, CDC director; and Jerome Adams, Surgeon General, made up the board. Maybe impressive on paper, but why would any plan this bunch came up with be as well thought out as the existing CDC plan? If Redfield had the CDC plan, and he did, why did he go along with this ad hoc committee?

The answer is Donald Trump didn’t trust or care for the CDC. He chose to bring the COVID response into the White House, making it impossible not to be political. In a sharply divided nation, this made certain the partisan backbiting that followed.

Like all committees or boards, someone becomes the spokesperson. The Committee face. After reading Fauci’s diary, is it any wonder this publicity-seeking narcissist grabbed the limelight? If Birx was supposed to be the coordinator, does anybody remember her other than her scarves?

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A Year Later

Dave Davis Uncategorized

A year ago, I posted “Topping Out?,” where, even though Trump seemed triumphant to many, I opined that he was at the apogee of his second term and that the path forward was downhill. He might never again be as popular, or appear as powerful. A year later, the problems and policies I pointed out contributed significantly to his present low standing:

Strutting up to any cameras available, Trump told us at the time that his tariffs had made us richer, and nations all over the world would invest trillions in our country. He blasted then Fed Chairman Powell for not lowering interest rates. Trump claimed inflation would go away under his policies; Powell was blocking the Trump boom. He had to go. While rates didn’t go down, the Fed may have been discouraged from raising them. The “Great Big Beautiful Bill had recently passed. Trump was making his mark on the world like nothing ever seen before.

It’s hard to remember how strong and dominant the President appeared just a year ago. Yet the seeds of downturn were present at the time. Most of his cornerstone tariff policy had already been declared unconstitutional by the Court of International Trade (CIT). Though few did, any reading of the court’s decision could only alert one to the trouble the policy was in.

Rather than receding, prices were still stubbornly high last August. At just under 3%, the rate of inflation was well above the Fed’s 2% goal. Trump’s tariffs were adding to price pressures. The President’s demand for lower interest rates seemed at cross purposes with low prices.

A year later, any supply-side gains from “the Big beautiful Bill,” were offset by tariffs and spending, leaving inflation high throughout the year:

The Appeals and Supreme Court upheld the CIT decision, forcing refunds under the original law relied on. The administration imposed more widespread tariffs under another, but short-term, law, which just expired. Now we have a third legal rationale underlying broader tariffs. The later tariffs are in court; the CIT already declared the recently expired ones unconstitutional, but they are under appeal.

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AI BIAS?

Dave Davis Commentary, Policy, Uncategorized , , , ,

I was checking factual information on some points about the similarities between the progressive reaction to today’s technological age and the progressive reaction to the Gilded Age for a recent post. A simple AI inquiry: “Did the Gilded Age see the greatest leap in living standards in history?” Google qualified the statement with “it’s debated because it also featured severe poverty and extreme wealth inequality.” The summary goes on to spell out social costs of deep inequality, crowded cities, and harsh labor:

The Gilded Age is generally thought to have begun with the completion of the Transcontinental Railroad in 1869 and extended to WWI.

These qualifiers seemed strange first because I didn’t mention social conditions, just the economic advancement, and they’re at odds with the rest of the summary. In the next sentence, after it mentions the inequality and poverty, it states that real wages for nonfarm workers grew by about 53%. It goes on to confirm the Gilded Age’s Leap: with falling prices, things became more affordable to the average person, life expectancy went up, and the new technologies transformed daily life.

Adding in downbeat notes seems at odds with the rest of the findings. If things were so awful, why did millions leave farms, or come from other nations? People don’t migrate to have less. With all those people coming to our cities to take higher-paying jobs, of course there’s a housing shortage.  

Curious, I put the same statement to Microsoft’s Copilot. Its conclusion: The Gilded Age produced the fastest sustained improvement in material living conditions ever recorded for a large population,” confirmed my understanding. Yet it had to echo Google about inequality and bad labor conditions, while adding corruption and racial divisions. “Jim Crow hardened, immigration tensions rose, Native Americans suffered catastrophic losses.” But all of these problems existed before the Gilded Age. What did the Gilded Age have to do with Jim Crow? Again, these nuances are at odds with the rest of the summary.

My curiosity about AI adding extraneous and contradictory information was further piqued when I wondered about the widespread Genocide accusation leveled against Israel. In the modern world, the concept of Genocide goes back to approximately 60% to 65% (or roughly 1.5 million out of an estimated 2 to 2.5 million) of the Armenian population in the Ottoman Empire who died during the Armenian Genocide between 1915 and 1923.

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