Politics

/

ArcaMax

Allison Schrager: Expect more data center moratoriums -- and slower growth

Allison Schrager, Bloomberg Opinion on

Published in Op Eds

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 U.S. 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.

Most of the time, the goal should be to get rid of friction. When it comes in the form of land or labor regulations, friction helps explain why the U.S. can’t build more, faster and cheaper housing. Technology usually aims to reduce friction, not only in the economy but also in people’s lives. It allows us to book a flight, rent a car, or order groceries without having to deal with another human, or even to find that old family recipe instead of calling grandma.

Nevertheless, there is some value to friction. Many jobs exist to create friction: university administrators, most HR departments, much of the legal profession, a lot of the DMV, to name a few. These frictions can be both annoying and useful. When HR makes employees watch those cringe-worthy videos about sexual harassment, for example, it is enforcing professionalism — forcing workers to abide by behavioral norms is form of friction. Even time spent at the DMV can help prevent identity theft and ensure some minimum standard of driving competence.

Soon, so people say, the blockchain will offer seamless and instantaneous financial transactions that currently take hours or days and carry high fees. But transferring assets costs time and money because the banks have processes to confirm identity and reduce criminal activity.

Social interactions benefit from a little friction, too. Dating apps have made it easy to meet people. But — precisely because they make it so easy — they may also devalue existing relationships. AI offers the promise of even more frictionless social interactions.

Of course, we humans are not helpless when it comes to which frictions we want to keep or eliminate. The problem is that one person’s economic friction can be another’s livelihood. America could, in theory, greatly reduce the number of college administrators or building regulations. That it doesn’t could be a reflection of the power of various vested interests, or of the simple fact that people want more process and a slower economy.

AI is both unusual and threatening because it has the potential to eliminate frictions previously thought permanent. It will force people to come to terms with the fact that friction is a choice. AI may well be approaching a point where it becomes self-improving, which could transform the economy at an exponential rate.

 

I myself would not bet on this happening — not because the technology won’t be capable, but because America’s economy and culture love friction and want more of it. By one survey, 80% of Americans want more friction to slow down AI. Some people are even willing to forgo a cure for cancer to slow down AI.

In the best-case scenario, AI will force all of us to take stock of the frictions in our lives, removing the unnecessary and harmful ones and keeping the ones that provide some value. Many prominent economists think if we study this question carefully, we’ll gain the wisdom to know the difference on a larger scale as well. Then the economy will grow more smoothly with fewer disruptions.

Unfortunately, that’s not how innovation works. It is a messy process, provoking both hope and fear, while vested interests at odds with the wider economy vie for influence. If the U.S. can’t even get local zoning right, how can it possibly manage a technology that affects every part of the economy?

The backlash against data centers suggests that Americans prefer greater friction over higher growth. Maybe the illusion of control is more appealing than no control at all.

____

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”


©2026 Bloomberg L.P. Visit bloomberg.com/opinion. Distributed by Tribune Content Agency, LLC.

 

Comments

blog comments powered by Disqus

 

Related Channels

The ACLU

ACLU

By The ACLU
Amy Goodman

Amy Goodman

By Amy Goodman
Armstrong Williams

Armstrong Williams

By Armstrong Williams
Austin Bay

Austin Bay

By Austin Bay
Ben Shapiro

Ben Shapiro

By Ben Shapiro
Betsy McCaughey

Betsy McCaughey

By Betsy McCaughey
Bill Press

Bill Press

By Bill Press
Bonnie Jean Feldkamp

Bonnie Jean Feldkamp

By Bonnie Jean Feldkamp
Cal Thomas

Cal Thomas

By Cal Thomas
Clarence Page

Clarence Page

By Clarence Page
Danny Tyree

Danny Tyree

By Danny Tyree
David Harsanyi

David Harsanyi

By David Harsanyi
Debra Saunders

Debra Saunders

By Debra Saunders
Dennis Prager

Dennis Prager

By Dennis Prager
Dick Polman

Dick Polman

By Dick Polman
Erick Erickson

Erick Erickson

By Erick Erickson
Froma Harrop

Froma Harrop

By Froma Harrop
Jacob Sullum

Jacob Sullum

By Jacob Sullum
Jamie Stiehm

Jamie Stiehm

By Jamie Stiehm
Jeff Robbins

Jeff Robbins

By Jeff Robbins
Jessica Johnson

Jessica Johnson

By Jessica Johnson
Jim Hightower

Jim Hightower

By Jim Hightower
Joe Conason

Joe Conason

By Joe Conason
John Stossel

John Stossel

By John Stossel
Josh Hammer

Josh Hammer

By Josh Hammer
Judge Andrew P. Napolitano

Judge Andrew Napolitano

By Judge Andrew P. Napolitano
Laura Hollis

Laura Hollis

By Laura Hollis
Marc Munroe Dion

Marc Munroe Dion

By Marc Munroe Dion
Michael Barone

Michael Barone

By Michael Barone
Mona Charen

Mona Charen

By Mona Charen
Rachel Marsden

Rachel Marsden

By Rachel Marsden
Rich Lowry

Rich Lowry

By Rich Lowry
Robert B. Reich

Robert B. Reich

By Robert B. Reich
Ruben Navarrett Jr.

Ruben Navarrett Jr

By Ruben Navarrett Jr.
Ruth Marcus

Ruth Marcus

By Ruth Marcus
S.E. Cupp

S.E. Cupp

By S.E. Cupp
Salena Zito

Salena Zito

By Salena Zito
Star Parker

Star Parker

By Star Parker
Stephen Moore

Stephen Moore

By Stephen Moore
Susan Estrich

Susan Estrich

By Susan Estrich
Ted Rall

Ted Rall

By Ted Rall
Terence P. Jeffrey

Terence P. Jeffrey

By Terence P. Jeffrey
Tim Graham

Tim Graham

By Tim Graham
Tom Purcell

Tom Purcell

By Tom Purcell
Veronique de Rugy

Veronique de Rugy

By Veronique de Rugy
Victor Joecks

Victor Joecks

By Victor Joecks
Wayne Allyn Root

Wayne Allyn Root

By Wayne Allyn Root

Comics

Steve Kelley Rick McKee Bob Englehart John Branch Gary McCoy Mike Beckom