The Cost of Not Building Data Centers

MILAN—The massive inflows of capital into data centers amid the frenzy of AI infrastructure investment have generated significant pushback in the United States by local opponents, leading to the cancellation of data-center projects worth at least $85 billion over the past three years. In July, New York became the first state to enact a moratorium on new data centers, as other states and the federal government consider similar proposals. But concerns about data centers’ economic and environmental costs, while reasonable, are only one part of the story. Everyone still must ask: Will the US miss out by not building more data centers?

As Josh Zoffer, a former official at the National Economic Council under President Joe Biden and now an investor in the AI sector, recently put it , data centers are a “crucial test of US industrial resolve.” They highlight the uncomfortable truth that building strategic capacity in the future usually requires sacrifice in the present. Failure to recognize this reality has led US policymakers to bungle similar buildouts in the past. Two cases stand out.