Microsoft and Google overstate job creation at Chile data centers
restofworld.org
restofworld.org
Somewhere gives Google etc a tax break for a data center. In exchange Google destroys a huge swath of land, Hoovers up electricity and water, and provides some temporary construction jobs.
In exchange the local residents get nothing… at least if it was a power plant or something they could get some cheaper electricity. Maybe they get slightly better internet connectivity? But from what I’ve read this doesn’t really seem to be the case.
Isn't that the case for a lot of these corporate welfare programs?
> A firm announces a plan to build a new facility, but where? Local and state development officials compete to attract the firm with ever-more-generous tax breaks and subsidies. This scene plays out again and again – even though research shows that incentives do not substantially influence firm behavior, even in the face of media exposes about wasteful giveaways. Why? Governments hope to encourage jobs and business profits, and hubris leads officials to believe “this time will be different,” even if incentives have not worked before.
> But something more pervasive is also at work. My research with Stephen Ellis demonstrates the role of “business climate” in driving economic development professionals and government officials to engage in an incentives arms race. Officials feel they must offer incentives, because failing to compete to attract businesses will be interpreted as evidence that their locality is not business-friendly. States and localities will therefore continue to compete, to the point of giving away more than the value of the new firm or facility. Can American citizens find ways to prevent the negative effects of this no-win arms race?
I guess this is the crux but who really wants a data center? It’s a big flashy number but what does it really do for the community at the end of the day?
https://www.google.com/search?q=nova+tax+revenue+data+center...
> A data center costs the county $0.04 per $1 of tax revenue received, whereas normal businesses cost about $0.25 per $1 of revenue
Cities like NYC, SF, Boston, Seattle usually offer zero incentives and even charge developers fees for new development.
That's not a good thing. Those cites also have the lowest rates of new residential construction (in %) and housing shortages.
Out at Interstate 495, there is a bunch of open space, but a lot of it is zoned conservation land. To take something out of conservation zoning, you need to pay all the taxes they would have incurred from the time it was zoned as conservation land to the current day.
Sometimes I think the only reasonable solution is to start razing in-city industrial property and building it over with dense, high-occupancy, 10+ story buildings. The old mill city I live in has done that with some success. Their solution to the parking problem was to build multiple city-owned parking garages and make parking costs explicit, rather than bundling them into the rent.
The main downside is that if you don't drive, you have to spend half an hour plus on a bus to get to a supermarket or other necessities. I guess the cost of a supermarket lease makes setting up a business there significantly riskier.
I think there was some kind of corruption as to how they get to just repair bikes without giving me anything. I've been a local for way longer than these people.
EDIT: And yes, they do get government money. SF has a city program to encourage local businesses or something so they get grants. Besides all businesses are eligible for SBA loans and no one asked me if they should be.
You could fit every bike in your city in there lol.
But don't worry about it, this is something an $850/hr consultant is paid to not understand.
So the industrial factory tax break model often did pay off. Data centers are selling the same story: give us tax breaks for big expensive capital investment and regional prosperity is yours. They often lie about even the direct number of jobs. But the implied regional advantage is definitely dead when it is all cloud and zoom, rather than widgets and happy hours.
even housing produces far more economic activity than a shed full of servers
Objectively not, given they're able to outbid all everyone else for the same land. You might not like a massive datacenter being built to serve ads or generate AI slop, but the fact that investors are willing to put money into it, and no one else can outbid them means the market expects datacenter will generate more future "economic activity" than any other possible use for the land. Whether a $1 generated by adtech is worth more than $0.5 (or whatever) generated by a car factory is a separate discussion, but arguing over how much "economic activity" is the wrong way to approach this.
they're often subsidised by hopeful governments, and every tax they would pay is offset by "licensing"
it's not a level playing field
Compare that to most other industries where you have pollution, noise, truck traffic, low paying and neck-breaking jobs, need import/export ports, etc. The footprint of datacenters is rather low.
Most countries have a sh%t ton of space and some have lots of water (ie: Chile). There is little reason not to have them.
So? it's not like if hyperscalers weren't building datacenters, the billions that would otherwise be spent on GPUs would be spent on 10 car factories or whatever. The only reason the billions was being invested in the first place was because there's a craze for AI datacenters
Edit: It looks like all the major cloud providers have Chile AZs except Amazon, which has one planned: https://aws.amazon.com/blogs/aws/coming-soon-aws-south-ameri...
Of course no jobs are created. The data centers are there for cheaper energy, laxer environmental regulations and for the ability to process U.S. citizens' data and build files on them where it would be illegal to do that on U.S. soil.
So these companies receive subsidies like in the U.S. How does the government shutdown affect these subsidies in the U.S.? Are SNAP benefits for corporations being halted as well or does it only affect poor people?
I'm not in favour of giving the smelter owners a sweet deal but I believe there is some nuance which is lost in your comment.
When you say subsidize I assume you're talking about the price the smelter pays for electricty (I'm not aware of any direct subsidy).
Until about 2022 the transmission lines out of Manapouri heading north could only handle a part of what Manapouri could produce, other lines headed towards Tiwai Point to feed the smelter with the balance of Manapouri's output. This meant that negotiating electricity prices with the smelter owners was tricky because it was perfectly clear that there was nowhere else to take the electricity. In the past five years more capacity has been added to allow electricity from Manapouri to reach the National Grid and so, I presume, this significantly dilutes downward price pressure from the smelter.