The Wall Street Journal Editorial Board decries the unwarranted hysteria over data centers. A slice:
It’s true the AI industry has hurt its own cause by fueling speculative anxiety about mass unemployment. AI developers have also failed to explain how data centers benefit local communities. But the larger failure has been the lack of political leadership in explaining the technological and economic transition now underway and how to address it.
On data centers, there’s a strong case to be made. The U.S. has more than 5,400 data centers, which are the backbone of the internet and power the apps on your smartphone. Data centers enable Zoom meetings, online food deliveries, video streaming, instant retail stock trading and more. If data centers went dark, so would the modern economy.
New large-scale data centers are needed to train and run AI models, and more than chatbots. Businesses large and small use AI to boost productivity, which lets them pay workers more. Steel maker Cleveland-Cliffs recently announced an upgrade to an Ohio plant that will incorporate AI to improve efficiency.
Utilities use AI to prepare for natural disasters and reduce power outages. AI models are helping diagnose cancer at earlier stages and develop cures. Data centers bring high-paying construction jobs, and skilled blue-collar workers are needed to run them.
Politicians need to take their obligations to bondholders seriously because they won’t be able to do anything else if they don’t. A hugely indebted government can spend only at the pleasure of its lenders. As interest costs crowd out spending on the essential stuff that government is supposed to do, voters will become increasingly upset as they sense that their taxes aren’t being spent for their benefit.
Debt can be sensible. When private borrowers take on debt, they are mostly doing it to fund an investment. They hope the investment will create a return that exceeds the costs of borrowing. And then when the debt is paid back, a beneficial, productive asset remains.
Some U.S. government borrowing is like that, when funding infrastructure projects or education. But the vast majority of federal borrowing funds short-term consumption, primarily for seniors, over long-term investment.
The government’s “return” on such short-term spending is negligible, and the money it must borrow to fund those expenditures is money that cannot be borrowed by private individuals or businesses to make productive investments.
That hurts economic growth, which hurts job growth, which hurts household incomes, which fuels political demand for more welfare programs to help people who are struggling, which will require even more debt, which borrowers won’t be willing to lend unless interest rates are higher.
Eric Boehm describes Trump’s trade war with Canada as “costly, absurd, and unfunny.” Two slices:
As the Trump administration escalated its trade war with Canada last week, the White House’s official Twitter account shared a photo of a bald eagle tackling a Canadian goose.
The intended message was not exactly a subtle one.
But the post did illustrate how the administration views America’s economic relationship with Canada, and how President Donald Trump thinks about international trade more broadly: as a win-or-lose struggle in which America must bully its trading partners and fight its allies, lest they keep “ripping us off.”
That logic completely unravels if you think about it for more than a minute. American consumers and businesses are being taken advantage of by Canadians who…are offering to sell us aluminum, oil, and wood while buying our farm goods, machinery, and ethanol? Americans and Canadians trade hundreds of billions of dollars’ worth of goods every year in voluntary, mutually beneficial transactions.
But Trump doesn’t want to think about it for more than a minute. He wants a fight for the sake of a fight, and the details don’t matter.
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The mistake there may be in assuming that Trump wants a deal at all. There is little indication that he does.
At one point during recent negotiations, The New York Times reported, American officials said the U.S. “would retain the power to change tariff policy against Canada at any time, irrespective of the agreement.”What good is a deal that’s subject to be changed at whim? It’s hard to blame Canadian Prime Minister Mark Carney for rejecting that ridiculous proposal.
Even before that, Carney had good reason to be distrustful. After all, the two countries had a deal—the United States–Mexico–Canada Agreement (USMCA), which Trump negotiated and hailed as “the best agreement we’ve ever made” during his first term.
Trump decided to tear up that deal because he wants a fight—even a nonsensical one that will harm American consumers and businesses—more than he wants trade with Canada. (By retaliating against Trump’s foolishness, Canada is compounding the error. As J.D. Tuccille wrote last week, Canada ought to pursue a policy of unilateral free trade, rather than hurting its own people in a showdown with Trump.)
Also critical of Trump’s trade war with Canada is Ramesh Ponnuru, calling it “multifaceted stupidity.” Two slices:
The trade war weakens the United States in relation to China. Optimists believe Trump is trying to force Canada to adopt its own stringent tariffs against China. Even if that were the right tool for an international coalition to use to weaken the Chinese government or improve its behavior, simultaneously attacking Canada over everything from its dairy policy to its existence as an independent nation is no way to build that coalition. Canadian Prime Minister Mark Carney’s musings about drawing closer to Beijing may not be wise, but they are predictable.
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The trade war is increasingly based on absurd complaints. Canada maintains some protectionist policies that harm American producers (and Canadian consumers), much as the U.S. engages in some protectionism against Canadian businesses. Yet the two nations largely practice free trade with one another. Scott Lincicome of the Cato Institute calculates that 99.85 percent of cross-border trade was duty-free before Trump started his trade war. The president called his first-term deal with Canada and Mexico “the largest, fairest, most balanced, and modern trade agreement ever achieved.”
