Data Centers and the Open Access Order
The US discussion over datacenters is depressing. Datacenters do not use a lot of water, they produce very useful outputs, they are not a blight on the landscape. All of this is obvious. But I don’t want to restate the obvious. What bothers me most about the discussion is that people seem to think this is or should be a collective decision. No.
We have a simple set of rules that everyone must follow. You buy land from someone willing to sell it. You contract for electricity. You hire workers who want the job. Your obligations to your local neighbors come from the same laws that govern everyone else. We do not ask what the land, electricity and labor is for. If you follow the rules, that is nobody’s business.
This is the distinction North, Wallis and Weingast make in Violence and Social Orders (paper here) between limited access orders or the natural state and open-access orders. For most of recorded history large-scale economic activity depended on access to political power. In the natural state, “people outside the coalition have only limited access to organizations, privileges, and valuable resources and activities.” The dominant coalition controlled entry into valuable activities and created rents by granting privileges.
An open access order works through general criteria. Organizational formation is “open to everyone who meets a set of minimal and impersonal criteria.” In economic life, the transition entails “the ability to create economic organizations at will, open entry and competition in many markets.”
The key word is impersonal. The same conditions apply regardless of who wants to build or whether public officials admire the proposed use. The state is not necessarily laissez-faire but its role ends once you have complied with the impersonal rules.
