Samuel Johnson: Good evening, and welcome to the second of six contests on who pays for the data center. I am Samuel Johnson, and I shall once again preside with perfect impartiality.
Niccolo Machiavelli: I am Niccolo Machiavelli, and as I wrote in The Prince, it is far safer to be feared than loved. The Doctor has settled for neither.
Samuel Johnson: Sir, tonight’s question is who truly pays the bill. In the near corner stands William Graham Sumner, a professor at Yale and the champion of the Forgotten Man. He is an American, which I am obliged to overlook.
Niccolo Machiavelli: The Doctor once called the Americans a race of convicts, so this is him being warm.
Samuel Johnson: And in the far corner stands Andrew Carnegie, a steelmaker and a Scotchman. My Dictionary records that oats are a grain which in England is generally given to horses, but in Scotland supports the people.
Niccolo Machiavelli: My man Carnegie took the tariff, sold out for three hundred million dollars, and is remembered for libraries. Cesare Borgia never managed anything so elegant.
Samuel Johnson: The household in Ohio now pays some sixteen dollars more each month for its electricity, and somebody must answer for it.
Niccolo Machiavelli: Somebody will be blamed, Doctor, which is not the same thing at all.
Samuel Johnson: Professor Sumner, Mister Carnegie, the floor is yours, gentlemen, and I beg you to keep it honest.
Niccolo Machiavelli: Mister Carnegie, kindly ignore the Doctor and do whatever works.
William Graham Sumner: Thank you, Doctor Johnson. I say the man who pays this bill was never invited to the meeting.
Andrew Carnegie: And thank you, Mister Machiavelli, I fully intend to. I say a great works repays its town many times over.
William Graham Sumner: Mister Carnegie called his industry an infant while he was the largest steelmaker on earth.
Andrew Carnegie: The Professor has a remedy for nothing and a lecture for everything.
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William Graham Sumner: I am William Graham Sumner, professor of political and social science at Yale, and before that a clergyman, which taught me to distrust a collection plate. In 1883 I described a pattern. A sees something he wishes done and talks it over with B. Then A and B pass a law deciding what C shall do for X. I call C the Forgotten Man. He works, he votes, generally he prays, but he always pays.
Andrew Carnegie: And I am Andrew Carnegie, born poor in Scotland, and a bobbin boy in a cotton mill at one dollar and twenty cents a week. I made steel cheaper than any man alive, sold the business for more than three hundred million dollars, and set about giving it away. I built more than sixteen hundred libraries in America. I mention it only because the Professor will not.
William Graham Sumner: Then let us find the Forgotten Man in the present case. A is a governor who wants a ribbon to cut. B is a company that wants a great deal of electricity. The independent monitor of the largest American power market says data centers account for six point three billion dollars of its last capacity auction, out of sixteen point four billion. Households in Ohio pay about sixteen dollars more each month. In seven states, four point three billion dollars of connection costs were assigned to ordinary ratepayers in a single year. That household is C, and nobody asked him.
Andrew Carnegie: Professor, you have read one column of the ledger. A national laboratory study found that the states with the fastest growth in demand saw real prices fall between 2019 and 2024. Another found rates six percent lower where data centers grew. I learned the reason at the mill. Run the works full and the cost of every ton comes down. A great customer shares the fixed cost of the wires with the widow down the lane.
William Graham Sumner: That second study was supported by Google, which I mention for the widow’s benefit. And both findings can be true. When a system has idle capacity, a large customer lowers the average cost. When it is full, the same customer forces new plant at a higher price, and the bill goes to everyone. Your evidence comes from the slack years, sir. The sixteen dollars comes from the tight ones.
Andrew Carnegie: Then hear what the town receives. Loudoun County in Virginia spends about four cents serving a data center for every dollar of tax it collects. An ordinary business costs the county twenty five cents. These buildings send no children to the schools and few wagons down the road. I never knew a town that was sorry to see my chimneys, Professor.
William Graham Sumner: Homestead was sorry, sir, though I grant you were in Scotland at the time. And observe who gains in your example. The county that taxes the machine does well. The household two states away on the same grid gets the bill and none of the tax.
Andrew Carnegie: The Professor has plainly been saving that one for some time.
William Graham Sumner: I shall now state Mister Carnegie’s case properly, which I do only because a weak opponent teaches nothing. He says size is the source of cheapness. He says a steady customer running day and night is the best customer a utility can have. He says the works pays more in tax than it takes in service. All of that is sound arithmetic, and none of it explains why he needs a favor.
Andrew Carnegie: That was nearly generous, Professor, and I shall treasure it always.
William Graham Sumner: Here is my answer to it. In 1890 you wrote that the steel industry was not yet fully grown and must be protected until it was. You were then the largest steelmaker on earth. I wrote a book calling protectionism the doctrine that waste makes wealth, and you were my best illustration. An industry spending seven hundred billion dollars a year is no infant either, sir. It is merely holding the bottle.
Andrew Carnegie: Now I shall do the Professor the same service, chiefly so the audience may see how little he asks for. He says that when two parties strike a bargain and send the bill to a third, it is no bargain at all. He says the cost is spread so thin that no household will fight it, while the gain is gathered so thick that somebody will always lobby for it. It is neatly put, and it is the most cheerful thing he has ever said.
William Graham Sumner: You have stated it accurately, which surprises me a good deal.
Andrew Carnegie: But the Professor has indicted the wrong man. That sixteen dollars does not come to the data center. It is a capacity payment, and it goes to the owners of power plants, many of them built long ago. The fellow he calls B never touches the money. And notice his cure. He would forbid the gift, and then forbid every rule that might replace it. He offers the Forgotten Man his deepest sympathy and nothing else.
William Graham Sumner: The first point is correct, and I concede it. The money lands in a third pocket. That makes it worse, because two parties arranged a transfer and neither can be made to return it. As for my cure, I want no warehouse rule and no commission. I want a contract. One utility in Ohio required these companies to pay for eighty five percent of the power they reserved, for up to twelve years, used or not. Its forecast of new demand fell from thirty thousand megawatts to under six thousand. Four fifths of your great future left the room when it was handed a pen.
Andrew Carnegie: Oh, that is good, Professor, and I may borrow it. But the fifth that stayed is the fifth that matters. I did not build every mill I sketched either. The men who signed in Ohio will pay their way, which proves my case. The serious builder never feared the bill.
William Graham Sumner: Then you will not object to your own rule. When you gave a town a library, you required it to own the site and to tax itself ten percent of the gift every year. You said a community not willing to maintain a library had better not possess it. I agree entirely. An industry not willing to maintain its own power line had better not possess that either.
Andrew Carnegie: I did say it, and I meant it, and I am rather pleased to be quoted. But mark the difference. I gave the building, and the town had only to keep the lamps lit. I have always held that the man who dies rich dies disgraced. Show me the ratepayer I left poorer, Professor.
William Graham Sumner: You left the buyer of every steel rail poorer by the amount of the duty. He never knew your name, which is the whole of my point. And here is what neither of us knows. Much of that capacity bill is for data centers that have not been built. If the demand arrives, your arithmetic holds. If it does not, the household has paid for a power plant to serve a rumor.
Andrew Carnegie: I will grant the uncertainty, for I have seen a boom or two. The contracts are private and the forecasts are guesses. But every great thing in this country was built ahead of its customers. Wait for certainty and you will have a very safe village and no steel.
William Graham Sumner: Then build ahead with your own money, sir, as you advise the poor to do.
Andrew Carnegie: I always did, Professor, once the tariff was paid!
William Graham Sumner: THERE IS THE CONFESSION AT LAST!
Andrew Carnegie: IT WAS THE LAW OF THE LAND!
William Graham Sumner: YOU ARGUED FOR IT IN PRINT, SIR!
Andrew Carnegie: I BUILT SIXTEEN HUNDRED LIBRARIES!
William Graham Sumner: AND SENT THE TOWNS THE BILL!
Andrew Carnegie: PEDANT!
William Graham Sumner: INFANT!
Andrew Carnegie: PREACHER!
William Graham Sumner: PROTECTIONIST!
Andrew Carnegie: SCHOOLMASTER!
William Graham Sumner: SIXTEEN DOLLARS A MONTH!
Andrew Carnegie: CHEAP AT THE PRICE!
William Graham Sumner: If this was of use to you, like and subscribe. It is free, so for once the Forgotten Man is not being charged. Mister Carnegie is a cheerful man who never met a cost he could not hand to a stranger and call a gift. He will tell you he was a bobbin boy. Subscribe before he tells you again.
Andrew Carnegie: Yes, like and subscribe, my friends. And spare a thought for the Professor, who gave up preaching to a congregation in order to preach to undergraduates. He has opposed the tariff, the subsidy, the reformer, and the philanthropist, and he has never once built a shed. He is the only man I know who can lose an audience by agreeing with it.
William Graham Sumner: Doctor Johnson, I return the floor to you, and I trust that you can count.
Andrew Carnegie: Mister Machiavelli, back to you in the booth, and do be kind to a poor Scotch boy.
Samuel Johnson: Thank you, Professor. I can count, sir, and I count it for William Graham Sumner. He found the man who pays, he found the sum, and he found the infant.
Niccolo Machiavelli: Thank you, Mister Carnegie, and I shall be more than kind. A prince must be a fox to know the traps and a lion to frighten the wolves. Carnegie was both, and he smiled throughout.
Samuel Johnson: He smiled, sir, while confessing that he built with his own money only once the tariff was paid! My Dictionary calls excise a hateful tax levied upon commodities, and his tariff was its first cousin.
Niccolo Machiavelli: Your Dictionary also calls a pension the pay given to a state hireling for treason to his country. Then the King offered you three hundred pounds a year, and you took it.
Samuel Johnson: Sir, that was an entirely different matter, and I decline to discuss it.
Niccolo Machiavelli: Now mark the blow of the night. The sixteen dollars never reaches the data center. Sumner prosecuted a man who was not holding the purse.
Samuel Johnson: He conceded it like a gentleman, which is more than a Scotchman or a Florentine would do.
Niccolo Machiavelli: He conceded it like a professor, Doctor, which is to say at length.
Samuel Johnson: I confess that one thing troubles me. Neither man could say whether this great demand will ever arrive.
Niccolo Machiavelli: Fortune governs half of what we do, Doctor, and tonight the ratepayer is covering her half.
Samuel Johnson: Next time, John Locke and Jeremy Bentham dispute who owns the water beneath the ground. One of them is a Whig, sir, and the first Whig was the Devil.
Niccolo Machiavelli: Locke is the Whig, and the Doctor has already filled in his scorecard.
Samuel Johnson: Until then, I remain your impartial servant.
Niccolo Machiavelli: He remains a pensioner, but do come back.
