The mad rush to build datacenters at this unprecedented scale is already wreaking havoc on the consumer economy. The needs of everyday people are far more important than the whims of a few trillion dollar tech companies run by billioinaires.
The data centers will ultimately end up being built elsewhere, until those places start pushing back. Without federal protections for the environment or the people all we can do is hope that state, county and city governments step up to make sure that data centers aren't harming them directly.
I would think that consumers would vastly benefit from cheaper software, nearly unlimited cloud storage, lower property taxes. Heck, the next generation of data centers are looking like they will actually be net energy producers.
Consumers might not know that they benefit from data centers, but that doesn’t mean that they don’t
Consumers like breathing (https://spectrum.ieee.org/data-centers-pollution) and drinking clean water (https://www.yahoo.com/news/us/articles/data-center-accused-m...). The noise is loud enough to cause hearing damage, and the smell and light pollution isn't helping consumers either.
https://www.brookings.edu/articles/confronting-and-addressin...
What data centers are bringing cheaper software, unlimited cloud storage (for free?), or lower local property taxes?
Nearly unlimited cloud storage - AWS / Google / etc. Data centers are the Cloud
Lower property taxes - data centers increase the property tax base, creating tax compression, which shift property tax from consumer –> company. I'm in Texas, so can only be sure that is true here. I have not looked at all other states.
Unlimited cloud storage: Where are consumers getting unlimited cloud storage from? I'm not aware of AWS/Google/others reducing prices/providing unlimited plans.
Software prices are down 73% since 2000: https://x.com/Mark_J_Perry/status/2015463505298878746
> Nearly unlimited cloud storage
$9 / month for 2tb of cloud storage is a pretty sweet deal for anyone. And unfathomable if you travelled back in time before data centers were scaled.
Data centers are a net good for all consumers. Pretty significantly!
Sourcing a tweet that doesn't have a real source (saying source: BLS without an actual reference to BLS isn't a source) is worthless.
Consumers don't buy software, they buy services. Whether or not that is captured by your source in the "Computer Software" is unknown, since I don't have the source. FRED via BLS has PPI for software publishers going up in the last ~6 years, but that's not exactly analogous to consumer spend.
When you say 2tb for $9 is unfathomable if you travel back in time, yes obviously if you go back to floppy days it's comical. Cloud storage prices have been the same for a decade now (pre LLM boom).
So software may or may not be cheaper for consumers (hard to say, nobody buys software). And in real dollars cloud storage is cheaper because of inflation. Not sure what the significant gain is.
The tweet is from Mark Henry who updates that chart often. It’s cited pretty often. There is a bit about the methodology here: https://www.aei.org/carpe-diem/chart-of-the-day-or-century-8...
My original list was just some brief examples, all of which I think hold up, but not nearly the entire list of data center benefits to all consumers. (One of those other benefits being the means to have this very conversation). There isn’t much of a way I can see to remove data centers from the technological progress we’ve benefited from over the last couple of decades.
That's not really the argument.
The problem with the tweet is that the chart kind of sucks, and it isn't immediately obvious. The category cited is "Computer Software and Accessories" which is under "Information Technology, Commodities"
A more interesting category is "Video and Audio services," specifically the live streaming subcategory. People don't buy software anymore, they pay for subscriptions to services.
Here are links to FRED for both top levels: https://fred.stlouisfed.org/series/CUSR0000SEEE https://fred.stlouisfed.org/series/CUSR0000SERA . Unfortunately the granularity for the Information Technology index isn't available on FRED from what I could find.
So IT price index is down, frankly to a huge degree. But that includes hardware, so it's hard to draw conclusions about software pricing from that specific chart. But Video/Audio services have seen a fairly sizable increase in index in the last decade.
But that's not really very important. We are talking about price indexes, which do tell us roughly how expensive something is over time, but who cares about the price of basketballs unless that's something I plan on buying as a consumer? The BLS charts give a relative importance which we can use a proxy for "how much a price change would affect the consumer." The relative important of the IT category (linked) is 0.745, but the software subcategory is 0.029. Video/audio and live streaming are 0.595 and 0.185, respectively.
Consumers do not purchase software. Companies don't even bother trying to sell software to consumers. The chart linked is tracking a metric that doesn't matter, because it's not important to consumers.
Going back to the relative importance values from 1999 (https://fraser.stlouisfed.org/title/cpi-detailed-report-58/a...) personal computers are at 0.106. No other categories. 2009 (https://www.bls.gov/news.release/archives/cpi_05192010.pdf) is 0.248. 2012 (https://www.bls.gov/news.release/archives/cpi_05152012.pdf) software is included with an importance of 0.048. At that point cable/television is at 1.387 (see Video/audio above).
So software prices don't matter. Consumers aren't spending on software. Service prices do matter, and they are getting more expensive.
This feels like a schizo post. Sorry for the complete lack of formatting.
Very interesting, thanks!
But a new iPhone Pro is $154 cheaper than it was in 2020 when adjusted for inflation, and that is probably all the average consumer really cares about
The smartphone market appears to be affected as well: https://www.reuters.com/world/china/global-smartphone-market...
And Apple has longer-term contracts for delivery of their chips. Apple is more insulated from short term supply shocks because of this, and their giant pile of cash. But even they have discontinued some high-RAM configurations because of the situation.
As you mention, products elsewhere that use RAM have already gone up in price.
If half of these datacenters go out of business next year, it will get even worse when mom and pop will be left with the bill for these projects.
Considering utility rates, I would happily pay more for utilities in the short term to have 30+ years of lower property taxes. The data centers property taxes would go to paying for that buildout, and over time it's a great deal for consumers. That said, I'm in Texas so the property tax issue is more prevalent than it would be in New York.
The prevailing idea is that we're currently in a bubble, especially when it comes to AI hyperscalers, and that the tax revenue will decline when the bubble pops.
Also, not all localities have updated their public utility regs to appropriately assign the costs of infrastructure projects to these new projects. Many, like NoVA have just recently added new utility rate classes specifically for data centers to attempt to do that. In other places, these costs are often are being split among the existing utility customers.