AI regulation needs a light hand, not overreach

Federal regulators have ordered grid operators to expedite connections for major power consumers, a move aimed at fueling the energy needs of artificial intelligence data centers. This directive, a response to Energy Secretary Chris Wright's request, is driven by the United States' intense race with China for AI supremacy, a competition that hinges on computing power.

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Blocking or delaying a technology carries a real cost, but it never lands on a ledger, so no one is ever charged for it: the renter who never found a unit, the patient who lost access to care, the shopper who paid more and the consumers who must rely on foreign technologies.

However, this push faces significant hurdles from state and local officials who are resistant to data center construction in their communities. Nationwide, lawmakers are considering restrictions on AI, often based on hypothetical risks, which critics argue ultimately burden the public. The costs of blocking or delaying technology are not always apparent on a balance sheet, affecting renters, patients, and consumers who face higher prices or rely on foreign technologies.

The conflict over data centers exemplifies a broader pattern where legislators target technology itself rather than addressing specific harms. Neighbors often voice objections based on unsubstantiated concerns about noise, water usage, and power demands. Critics contend that blocking such developments means Americans will access AI more slowly and at a higher cost, while crucial computing power and associated jobs shift to countries with more accommodating policies.

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The cost of blocking the buildout is quieter and lands on everyone else: Americans don’t stop needing AI, they just get it slower and pay more for it, while the computing power and the jobs that come with it move to countries that let it get built.

Similar regulatory battles are emerging around AI applications like algorithmic rental pricing, which some states have banned or are considering banning. The argument is that these tools merely reflect market conditions rather than create them. In Austin, Texas, for example, rents decreased even with AI use due to increased housing supply. Furthermore, states are barring AI from mental healthcare, such as Nevada and Illinois prohibiting AI therapy systems. Critics argue these laws ban the tool instead of addressing the harm, leaving individuals seeking late-night support without accessible resources.

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The legislative response addresses a potential problem by taking the tool rather than the harm.