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If you are an AI doomer, as a majority of Americans are, then you might find New York’s one-year moratorium on new data centers reassuring: No matter how fast technology progresses, humans will do all they can to slow it down.
Restrictions on data centers, which are almost certainly coming in other states as well, illustrate what we economists call friction. As usual, it comes from a place of fear — in this case, that data centers harm the environment or increase electricity prices. Friction is also enabled by a belief that government can exert some control over technology. At least when it comes to data centers, the control is largely an illusion; if one state doesn’t build data centers, another will. Still, expect more moratoriums and other regulations that aim to manage the path of technological progress. Some will matter more than others, and some may even be prudent.
But make no mistake: Friction reduces economic growth. Friction is anything that may slow, divert or stop economic activity. The US has a capitalist economy, and market activity is routinely diverted by frictions we choose to adopt — some good, some bad. As a pro-growth economist with poor social skills, I am generally anti-friction.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.