The Economically Libertarian Case Against Data Centers in Georgia

Local governments across the state are experiencing excessive applications for rezoning requests to allow data center companies to build massive complexes in Georgia. This week, the Georgia Public Service Commission approved an OpenAI data center in Effingham County that is estimated to become “one of Georgia Power’s largest customers once it is completed.” OpenAI is paying for any necessary infrastructure expansions to the Georgia Power grid to power this facility. Defenders of this project say it “will help lower power bills for typical residential customers by $180 annually beginning in 2029.”¹ Still, this presumed reduction in bills relies on the stability of OpenAI’s data center needs.

Data centers have existed since internet technology has been commercially available, and even before then. Proponents of these centers will note that the modern internet requires them, which is true. This website hosting the article you are reading is stored on a data center, as is the research used for this blog post. Everything from the beginning and completion of this article relied upon a data center. However, undeniably, there has been an increased need for more centers because of the recent boom of AI technology. The data center industry is not growing because of some spike of users, but mainly because of new technologies that require it.

The aggressive growth coming from the data center industry is reliant upon the stability of those AI products and the financial state of their companies. Unfortunately, that is where the key issue lies. OpenAI is not profitable and estimates that it will not turn a profit until 2030, which is far beyond the time where Georgia Power admits residential customers will see any reductions in their bill.² Artificial Intelligence is a financial blackhole that, at any point, can collapse unless it can eventually turn a profit comparable to the amount of money currently keeping the industry on life support. When (not if) that fails, stock prices of companies associated with the data center boom will drop significantly leading to a market contraction.

Generative AI is, for the most part, free to use currently because it is being heavily subsidized by companies looking to include it alongside their services. This blog article is being drafted on Google Docs which has AI-powered Google Gemini features that can review and revise the language on the document. This limited free-to-use feature is definitely helpful for those that frequently use Google Docs to write. That said, I wouldn’t pay for it, nor do I imagine other customers doing so. In the past and before I became educated on the AI issue, I used ChatGPT and Microsoft Copilot before for image generation and to ask questions. Still, if the service was paywalled, I would not have used it. The benefits I received compared to the price are simply not enough for me to justify the expense, unless it was free to me. I simply cannot imagine a world today where people would willingly pay for ChatGPT for basic search queries when simple Google Search was reliable just a few years ago.

This is the heart of what pessimistic financial spectators refer to as the “AI Bubble” that will paralyze the market when it bursts. Companies are pouring millions of dollars to build infrastructure to hold up an industry that, once it shifts its economic model, will likely collapse. In this prescribed nightmare scenario where data center companies like OpenAI withdraw from states like Georgia only to leave abandoned warehouses, Georgia Power customers will be stuck with an electricity grid locked in overproduction. The choice will either be to scale back production by closing plants and employee layoffs or putting residential customers with the cost of maintaining overproduction — possibly both.

Public utilities in Georgia are managed by the government through the Public Service Commission and directly controlled by semi-public entities like Georgia Power, which is Georgia’s largest electricity provider. Libertarians “oppose all government control of energy pricing, allocation, and production”³ because it removes the aspect of competition amongst firms and places important decisions on distant bureaucrats motivated by short-term elections rather than long-term consequences. Customers do not have a choice of provider and are stuck with a company accepting a financially-unstable large-load data center on their system.

While it is admittedly unusual to see Libertarians show up to local rezoning hearings to speak out against requests, it is still important given the current system that Georgians find themselves under. In the Libertarian Party of Georgia’s platform, we recognize the right of private property owners to purchase land and act without “government restrictions on their rights to control and enjoy their property,” but that phrase comes with the important caveat that decisions are allowed “as long as their choices do not harm or infringe on the rights of others.”⁴ Here, Georgians are being forced to subsidize and subscribe to a financially volatile system without choice. Our rights are being infringed and it becomes our duty to speak up.

1. https://www.wsbtv.com/news/local/new-data-center-may-use-more-electricity-than-anything-else-georgia/YT6RVDQWNNFMPDRGPTVJRZZ4SU/ ↩︎
2. https://finance.yahoo.com/sectors/technology/articles/openai-doesn-t-expect-profitable-161556430.html ↩︎
3. Section 2.3 of the Libertarian Party of Georgia Platform, https://lpgeorgia.com/about/platform/. ↩︎
4. Section 2.1 of the Libertarian Party of Georgia Platform, https://lpgeorgia.com/about/platform/. ↩︎