Why This Topic
Georgia expects to give up 2.5 billion dollars this fiscal year through its sales tax exemption for data centers. Ohio forecast that its version would cost 136 million dollars in 2025 and the actual figure came in near 1.6 billion. Fourteen states with data center incentives publish no number at all. Meanwhile the four largest operators plan to spend roughly 725 billion dollars on capital projects in 2026.
That contrast is what started this series. We wanted to know whether data centers would still turn a profit if the law treated them like plain warehouses: warehouse-level grid power, warehouse-level water, and no tax break written for their industry. The answer turned out to be too large for one debate, so we cut it into six. This first one, between Henry George and Leland Stanford, takes the opening question. Should a state pay an industry to come?
Underneath the current event is an old argument. When a big enterprise arrives, does it create the value around it, or does the community create that value and then get charged for it?
Why Henry George
Henry George is best known for Progress and Poverty and the single tax on land. Before any of that, he was a working newspaperman in California, and the railroad was his beat. In October 1868 he published an essay in the Overland Monthly called “What the Railroad Will Bring Us.” It predicted that the transcontinental line would make some people very rich, raise the price of ground for everyone else, and concentrate political power in the company that owned the track.
One line from that essay carries most of his case in the debate. He wrote that the Central Pacific would be a company whose managers “manage legislatures as they manage their workshops, and name governors, senators and judges almost as they name their own engineers and clerks.” Swap the locomotive for a server hall and he would not need to change much.
George also wrote a pamphlet in 1871 called The Subsidy Question and the Democratic Party, aimed squarely at railroad subsidies. He had been making this exact argument for years before he was famous.
Why Leland Stanford
Leland Stanford was president of the Central Pacific Railroad, Governor of California, a United States Senator, and the founder of the university that bears his son’s name. He is the person George was writing about. That is the documented antagonism here: George attacked Central Pacific subsidies in a Sacramento newspaper, the railroad’s allies bought the paper, and George resigned in 1870.
Stanford is also the cleanest historical match for the modern data center developer. His railroad was built with government bonds and a land grant of about 9.4 million acres. Towns and counties were asked to contribute and understood what a refusal might cost them. When a federal commission examined the books in 1887, he stopped answering.
He is not a cartoon, though. Stanford gave away his fortune to found a university, and in December 1886 he introduced a Senate bill to help workers form their own cooperatives. We gave him those lines because they are true and because they make him harder to dismiss.
Who Else We Considered
Henry George vs Andrew Carnegie. This was the runner-up. Carnegie wrote a great deal, so his positions are easy to source, and his steel business benefited from tariffs while he preached self-reliance. We held him back because the railroad parallel is stronger than the steel one, and because Carnegie is a better fit for Episode 2, where the question is who actually pays.
Adam Smith vs Friedrich List. Smith argued in Book V of The Wealth of Nations that public works should be paid for by the people who use them. List wrote a whole book attacking Smith and was a railway promoter himself. It is a strong pairing, but it overlaps with our earlier Hamilton vs Smith debate on tariffs.
Andrew Jackson vs Henry Clay. The Maysville Road veto against the American System is the original American fight over public money for private benefit. It would have meant two new voices and a debate that leans more on politics than on political economy.
Frederic Bastiat vs Friedrich List. Bastiat’s essay on the seen and the unseen is practically a manual on hidden subsidy costs, and he was a satirist. We may come back to him.
Why Each Man Takes the Position He Does
George’s position comes straight from his own record. He thought land values are created by the whole community, so the community should collect them. He also argued that natural monopolies belong in public hands: railroads and telegraphs with the nation, gas and water with cities. Applied to a data center, that means full rent for the land, the aquifer, and the right to run wires across a county.
The historical record also constrains him, and we let it. George did not want to tax buildings, machinery or anything else a person made. Under a strict single tax, the servers inside a data center would go untaxed. Stanford lands that punch in the debate, and George concedes it because he would have to. His answer is that he would exempt the machine and charge for everything the machine sits on and draws from.
Stanford’s position is the builder’s case. Some projects are too large and too slow for private money alone. The public ends up with more than it gave. Someone has to take the risk, so a prize has to be offered. That is a serious argument, and George states it fairly before taking it apart.
For the modern numbers, we gave Stanford the best evidence available to his side. Loudoun County, Virginia collected 1.2 billion dollars from data centers in fiscal 2026, 39 percent of the county budget, and has lowered its homeowner tax rate every year for a decade. George’s reply is that Loudoun gets rich by taxing the equipment, while the states are the ones exempting it. A Georgia audit found that 70 percent of data center projects would have come without the subsidy.
The part of the fight that neither man can settle is the bidding. Stanford points out that a state which refuses to offer anything loses to the state next door, and the Ohio Chamber of Commerce has claimed that ending the exemption would cut investment by 35 percent. George answers with the price of what is being bought. A typical 250,000 square foot facility employs about 50 people once it is running, and one estimate puts Ohio’s exemption at nearly a million dollars per permanent job. Both things can be true, which is why this is the first of six debates and not the only one.
Stanford’s running line, “I do not recall,” is drawn from his conduct before the 1887 Pacific Railway Commission. One caution: the account we used says the railroad’s friends bought the Sacramento paper. It does not name Stanford personally. His denial in the script is dramatic license, and we flagged it in our notes.
Both men admit one thing on air. The real prices these companies pay for power and water sit inside sealed contracts. Neither debater has seen them, and neither have we.
A Note on the Sources
George is easy to source because he wrote constantly. The 1868 railroad essay, the 1871 subsidy pamphlet and Progress and Poverty cover nearly everything he says. His voice in the debate is gentle on purpose. We set him up that way in our earlier George vs Marx debate, and it works even better against a man who never raises his own.
Stanford is harder. He was not a writer, so his positions come from the Pacific Railway Commission testimony, his Senate record, and the university’s founding grant. Several of the sharper claims about him, including the commission’s estimate that his circle kept a construction surplus of more than 60 million dollars, come to us through a secondary account. We have marked those for checking against the commission’s own report.
This series also adds a commentary booth. Samuel Johnson, who wrote the Dictionary, calls each debate. As a young journalist he wrote up Parliament’s debates for a magazine and later admitted he “took care that the Whig dogs should not have the best of it.” Niccolo Machiavelli sits beside him and backs whoever is getting away with something. Johnson’s definition of a patron, “commonly a wretch who supports with insolence, and is paid with flattery,” gets used on Stanford at the close.
The modern figures come from Good Jobs First, Stateline, Loudoun County’s own published numbers, and reporting on hyperscaler capital spending. Links are below.
What Comes Next
Episode 2 asks who is actually paying. William Graham Sumner, the Yale professor who wrote about the Forgotten Man, meets Andrew Carnegie. After that come John Locke and Jeremy Bentham on who owns the aquifer, William Blackstone and Otto von Bismarck on eminent domain, Sumner against George on the remedy, and Walter Bagehot against Alexander Hamilton on whether the whole thing can pay its own way.
If you want the rest of the series as it drops, subscribe here and on YouTube.
Sources
Good Jobs First: Georgia estimates $2.5 billion in losses to data center tax breaks
Good Jobs First: Ohio data center tax break costs nearly $1.6 billion
Stateline: Many states don’t report losses from data center tax breaks
AI Weekly: Amazon, Microsoft, Alphabet, Meta plan $725B capex in 2026
Henry George: What the Railroad Will Bring Us (1868, reprint)
The Tariff Question, the Labor Question, and Henry George’s Triangulation
Zocalo Public Square: Was Leland Stanford a magnanimous philanthropist?
Lee Altenberg: Beyond Capitalism, Leland Stanford’s Forgotten Vision
Arthur Murphy: An Essay on the Life and Genius of Samuel Johnson
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