When a data-centre plan that would never have materialised is cut down, it often makes a very large sound. Politicians are eager to polish their anti-data-centre credentials ahead of the midterm elections in November. The resulting policies may not affect the boom much. In July New York’s governor announced a one-year moratorium on big projects (including those not connected to its electricity grid). But the moratorium does not apply to data centres that have already been approved, and New York is hardly important to the build-out. Virginia imposed a $600m electricity tax on data centres to great fanfare, but left in place a sales-tax exemption three times as big. Mr Shapiro’s new rules will require local authorities to approve projects before the state does, clearing up his desk until after the election. If the data-centre build-out has a natural home it is Texas. The state is vast, energy-rich and home to plenty of the lawyers and engineers needed to handle big infrastructure developments. Its electricity-grid operator has been flooded with an astonishing 474GW of requests to connect to the grid (which currently faces peak demand of around 90GW). On August 3rd Greg Abbott, governor of Texas, announced an “audit” of data-centre projects, which is expected to last, conveniently, until just after the midterms. Tellingly, some of the biggest data-centre operators have publicly supported his plans. More political controversy probably means more delays for projects that are not yet in motion. But the share of the data-centre pipeline that has been delayed or cancelled has remained consistent at roughly 10% during the past year, despite the explosion in the number of plans and political opposition to them. Thus far constraints imposed by the market, such as the availability of chips and workers, have worried developers far more than those imposed by government. Could the slightly fake war against data centres in fact be a “phoney” one, poised to turn real? It is hard to imagine. Politicians are rarely willing to halt projects that have already broken ground. As for the new ones, developers can to some extent vote with their feet. So far that has meant moving west. It could also involve building more on federal land. Eventually, it might
involve more construction abroad—or, if Elon Musk is to be believed, in space. It is often said that China has an advantage in the AI race because it can build big things by force. Yet America has the power of willing things into existence by exaggeration. The grand plans of developers will be watered down. Politicians will also overstate their opposition. Often they will cancel each other out. Meanwhile, the searing pace of construction will continue. ■ This article was downloaded by zlibrary from https://www.economist.com/business/2026/08/19/the-war-on-data-centres-is-a-bit-fake
The world’s most influential economist is oddly unconvincing Why bond markets are unnerving rich-world politicians However you measure it, China’s job market is weak The White House’s absurd claim of a Chinese transshipment “scam” Stock indices no longer reflect equity reality The high cost of phantom tollbooths
Finance & economics | Reassessing the research The world’s most influential economist is oddly unconvincing Daron Acemoglu is revered. Why? Aug 20th 2026 BY THE TIME the call came from Stockholm, it felt overdue. In 2024 Daron Acemoglu of the Massachusetts Institute of Technology shared the Nobel prize in economics with Simon Johnson and James Robinson for work on how institutions shape prosperity. Mr Acemoglu is only 58 years old, but for some time he has been the discipline’s colossus. He has written seven books, including a new one about democracy and the economic impact of artificial intelligence, not counting a couple of popular textbooks. His hundreds of papers, more than ten of them published this year, are often stuffed with complex mathematics. He competes with Andrei Shleifer of Harvard University for top spot on a citation ranking of economists
produced by IDEAS/RePEc, a research database. His views carry weight with other wonks and the media. Give economists a few drinks, however, and some will venture their true opinions about this giant. “Much of his theoretical work is useful, but he uses his models to inform populist policies that have been tried before and failed,” blasts one well-known economist. Some commentators do not require Dutch courage. “I’ve been yelling about Acemoglu for literally a decade,” Noah Smith, an economics blogger, has said, in response to a flurry of online criticism of Mr Acemoglu’s work. No one accuses Mr Acemoglu of truly poor research, let alone academic malpractice. “He is obviously a genius,” says another economist, who adds that he is generous to PhD students and junior colleagues. The question is whether his reputation at the very apex of the economics profession—and the intellectual influence that goes with it—is justified by his scholarship. Start with his empirical methods. His Nobel rests heavily on a paper released in 2001 with Messrs Johnson and Robinson, which researchers have cited more than 23,000 times. It seeks to explain why some countries are rich and others poor. In places where European settlers died in droves, perhaps because of disease, colonisers built “extractive” institutions, with power and resources concentrated in the hands of an elite few, to take out as many resources as possible. But in more agreeable climates, settlers survived. Colonists built more inclusive institutions, with proper roads, schools and medical services. Those institutions persisted, with the effect that places with lower settler mortality in colonial times are richer today. Economists now take these results seriously but not literally. The paper encouraged them to think more deeply about institutions, but they have also picked it apart. The Nobel committee’s report in 2024 conceded that the mortality data are “sometimes sketchy”. In 2012 David Albouy of the University of Illinois Urbana-Champaign showed that some countries were assigned mortality rates borrowed from other countries, among other adjustments. Correct for these, he found, and the paper’s estimates become unreliable. Last year Martin Buchner of RWI-Essen, a research institute, and colleagues reported that experts they surveyed were somewhat more likely to side with Mr Albouy.
Mr Acemoglu says that “these discussions and some critiques are hugely valuable.” But he counters that Mr Albouy reaches his conclusion by omitting half the data from the original sample, including on important countries like America, Canada and Australia. It is this combination, along with some statistical choices, that introduces the unreliability, he says. He adds that if he were redoing the paper today, he would make “a number of changes, including in some of the estimation details”—though not to the mortality data. Most recently, researchers have examined a paper that Mr Acemoglu released in June, with co-authors, which argues that lower birth rates are associated with faster growth in GDP per working-age adult. A striking finding, it seems to suggest that places with falling populations, like Japan, do not have much to worry about. Yet other economists, including Jesús Fernández-Villaverde of the University of Pennsylvania, question whether historical relationships are really useful guides to the present, when many countries’ birth rates are collapsing. It is a fair point—and Mr Acemoglu and his co-authors raise it in their conclusion. But it can get lost and can seem unsophisticated when set against Mr Acemoglu’s reams of maths. A determined critic can find holes in almost anyone’s work—and Mr Acemoglu is the biggest target in economics. Yet fame-induced scrutiny cannot explain a second problem: that his ideas can seem underwhelming. His public commentary, especially on American politics, is unadventurous. His “unified theory of Trump”, for instance, asserts that the president operates “by elevating executive power and destroying constraining institutions and norms”. Well, indeed. More worryingly, his grand thesis may not reveal much. Nations prosper when institutions are good, and stagnate when they are bad. True. But what, exactly, is an institution? Rules, norms, enforcement, culture—everything, really. Where do institutions come from? “Critical junctures” and “institutional drift”. Reviewing one of Mr Acemoglu’s books in 2011, Tyler Cowen of George Mason University noted that the institutional changes it describes seem only to come from other institutional changes, making the core argument regress for ever—turtles all the way down. Duncan Green of the London School of
Economics has said that the framework works mainly in hindsight. Francis Fukuyama of Stanford has argued that the book waves away the example of China, which has had blistering economic growth alongside institutions that can plausibly be described as extractive. Mr Acemoglu retorts that the book devotes two chapters partly or mostly to China. As for the turtles: “To understand institutional change from an institutional perspective you must consider the specific institutions in the past and the historical events…that influence them,” he says. “I don’t think this is tautological at all.” To the extent that Mr Acemoglu breaks from received wisdom, it is mainly to espouse remarkably glum views about technology. “Power and Progress”, written with Mr Johnson and published in 2023, treats a thousand years of innovation largely as a story of elite capture and unintended consequences. The cotton gin was the handmaid of slavery; the Haber-Bosch process created weapons. Ordinary people apparently gained only when they could steer capitalists to consider their interests. The book plays down a more compelling claim: that technological progress in itself has made the average person many times richer than in pre-industrial times. Mr Acemoglu’s arguments about AI are also pessimistic to the point of losing credibility. In a paper published in 2024 he calculates that AI will boost American productivity by only a touch over ten years. The paper reaches this conclusion by ignoring the potentially transformative effect of new AI products. “He leaves out entirely in that analysis the possibility that we will have more rapid scientific progress, more rapid social-scientific progress, or better decision-making because of artificial intelligence,” according to Lawrence Summers, president emeritus of Harvard (and a former treasury secretary). “This is a valid criticism,” says Mr Acemoglu. “I did not foresee agentic AI and it was not incorporated in my predictions.” He also notes that AI models may be more useful in scientific research than he imagined. But he stands by his methods of estimating the productivity effects of AI, as well as injecting “some realism into the claims about huge coming productivity improvements”.