Memo to the Governors

The Signal: We’ve Done This Before

In 1956 Dwight Eisenhower signed the Federal-Aid Highway Act and kicked off the Interstate Highway System, the largest public-works project in American history. Forty-one thousand miles of road, poured one state at a time, one county at a time, over decades. And here’s the part the nostalgia leaves out: it played favorites. Ruthlessly. If the Interstate ran an interchange through your town, you got motels, gas stations, distribution centers, jobs, a tax base. You became Atlanta, a city the highways basically built. If it bypassed you, the traffic that was your whole economy simply stopped coming, and you became the town in Cars, Radiator Springs, the place the map forgot. Same country, same decade, same project. One family got the on-ramp. The other got the silence.

The AI buildout is that project for this generation. It is the same distributed scramble of concrete and copper, the same pouring of physical infrastructure at national scale, and it will make some places and hollow out others exactly the way the Interstate did. The new interchange is a data center. And the whole question of who wins comes down to two inputs.

⚡ Power Is the Gate

Two things gate this buildout: power and skilled labor. They are not equally scarce, and the difference is the entire memo.

Labor moves. Mike Rowe went on Bill Maher this weekend and laid out the trades math that should scare every statehouse in the country: for every five skilled tradespeople who retire, two show up to replace them, and it’s held that way for twelve years. “The arithmetic,” he said, “is horrifying.” Ford (NYSE: F) CEO Jim Farley told him he has 5,000 empty bays he can’t fill at $120,000 a year, no degree, AI-proof. And Rowe toured a data center in Plano and met three electricians, all under 30, all debt-free, all clearing north of $240,000, all poached three times in the last eighteen months. That electrician is a scarce resource, but he is a mobile one. He’ll follow the work to Tennessee or Arizona or Texas without a second thought, U-Haul in the driveway by Friday.

Power doesn’t move. You cannot truck a substation across the country, you cannot wish a gigawatt into a county that doesn’t generate one, and firm, dispatchable power carries the single longest lead time in the entire chain. You can stand up a frontier model in a quarter. A new baseload plant is measured in years, sometimes a decade. So of the two gates, power is the one that’s bolted to the ground, and that makes it the binding one. Whoever controls energized power today sets the terms, which is exactly what Chamath said this week (“power is the binding constraint… get your hands on power, it’s the spice”) and exactly what a hundred years of industrial history says too.

Now the twist the governors keep missing. The electricity the data center wants is the same electricity the voter wants. It comes off the same grid, gets priced in the same market, and when a hyperscaler’s load shows up in a county that was already tight, the resident’s bill goes up and the resident’s lights get less reliable. Which is why this stopped being a technology story and became a political one. The voter is the one who says yes.

📋 The Actual Memo

So here it is, addressed to every governor who’s currently deciding whether to be Atlanta or Radiator Springs.

Seven in ten of your constituents would fight a data center in their town. A year ago it was four in ten (AP), and the number is climbing because the industry has been pouring these things down like it’s doing the neighbors a favor. The backlash has united Bernie Sanders and Ron DeSantis, which nothing else on Earth has managed, along with a hundred-plus local and state moratorium proposals and, in New York, a one-year construction freeze from Kathy Hochul. You can read that as a wall. It’s actually leverage, and it’s yours.

Three parties want the same scarce megawatt: the AI company that needs it, the utility that sells it, and the citizen who votes on it. A dumb governor picks a side. A smart one aligns all three. Make the hyperscaler overbuild the grid as the price of admission, so the new generation it pays for also serves the town and the residential bill goes down, not up. Tax the racks and route the money into the things your voters actually touch: the substation that keeps failing, the pipes, the schools. Land the six-figure trade jobs and the apprenticeships that keep your own kids off the U-Haul. Do that, and seven-in-ten opposition converts into a re-election, because now the data center isn’t extracting from the town, it’s underwriting it.

That’s the whole trick, and it has a name: make the citizen a beneficiary, not a host. The Interstate that razed a neighborhood bred fifty years of resentment. The Interstate that brought a town its livelihood got a parade. Same asphalt. Different deal.

🌰 The Water Fight Was Never About Water

Here’s the tell that the revolt is about the deal and not the physics. Almost all of it marches under the banner of water. Tell my wife the data centers are draining the planet and she nods along. Then mention that a single California almond drinks about a gallon of water to grow, and that the state’s almond orchards swallow something like a tenth of all its agricultural water, and California agriculture is roughly 80% of the state’s developed water. Nobody is marching on the almond. Nobody’s demanding a moratorium on granola. The almond gets a pass because almonds are healthy and the farmer is sympathetic, and the data center gets a pitchfork because it’s cooling a chip for a company in San Francisco.

I’m not knocking the concern. I’m locating it. The water number is a proxy for a fairness question, and the fairness question is legitimate: what do I get out of this? Answer it well and the water complaint evaporates. Answer it with “jobs are coming, trust us,” and you get Hochul’s moratorium. The governors losing this fight are the ones treating a distributional problem like a hydrology problem.

☢️ The Reactor Is Fine. The Paperwork Is the Meltdown.

Now the hard part, and the place a governor’s actual courage gets tested. The firm power this all needs, the kind that runs a data center at 3 a.m. in a heat dome when the sun’s down and the wind’s dead, is nuclear. And you basically can’t build one, not because the reactor is dangerous or unsolved, but because the federal permitting runway is a decade of paperwork and litigation.

Sit with how absurd that is. The United States Navy has run reactors on carriers and submarines for forty years. A Nimitz-class carrier floats on two reactors throwing off something like a gigawatt of heat, and the Navy has operated these things through combat, through storms, sitting in corrosive salt water, across more than six thousand reactor-years, with zero reactor accidents. We put nuclear plants inside steel tubes, hand them to 22-year-olds, and send them under the polar ice, and they run clean for decades. The machine is a solved problem. The permit is the meltdown.

This is where the manifesto’s oldest lesson applies: we’ve seen this movie. Encryption export controls in the ’90s, spectrum allocation in the ’40s, the telegraph during the Civil War, the reflexive government instinct to gate a new source of power behind a licensing regime that protects incumbents and calls it safety. The governor who spends real political capital clearing that runway, small modular reactors, restarts, gas as the bridge, geothermal where the geology allows, is the one who actually gets the interchange. The one who holds a press conference about tech bros gets the silence.

👑 What They’re Really Afraid Of

Step back, because the water and the aesthetics and the traffic are proxies for something bigger, and it’s worth naming plainly. Everyone who holds power defends it. Media professionals defend it, politicians defend it, incumbents defend it. And the reason AI has united the DSA left and the populist right in the same revolt is that both, in their gut, sense the same thing: AI is going to shape human thought more than any force in history, more than the printing press, more than television, more than the social feed that currently holds the title, and if the buildout finishes the way it’s trending, that power lands in the hands of four or five unelected men with their own quirks.

Read Tressie McMillan Cottom in the New York Times calling it “data politics,” a few unelected people with too much untraceable money and too much power over everyone else. That’s a democratic-socialist columnist. Now read a libertarian allocator worried about the exact same concentration. They agree completely on the diagnosis and split only on the cure. She wants the state to seize or freeze it. The market answer is the opposite: the cure for concentrated power was never more concentrated power. A national moratorium or a secret federal rulebook (the White House is reportedly declining to publish the framework it’s using to grade frontier models) doesn’t break the kings, it crowns them, because scarcity and compliance moats are exactly what mint an oligopoly. The thing that prevents five kings is fifty states competing, many providers, open weights, and the citizen’s right to exit. Distribution is the antidote to capture. Which is to say the “state is the unit of competition” thesis isn’t just an investing frame, it’s the actual mechanism that keeps the thought-machine from ending up in five hands.

And note where the real chokepoint sits, because it’s not the model. Models are commoditizing toward free (Baker’s whole point: they go to zero). The concentration risk is one layer up, in distribution, in whoever owns the daily console you think through. We wrote that in The Man Behind the Curtain (July 13): own the surface, own the account. The megawatt and the console are the two things worth watching. Everything in between is racing to zero.

💰 Baker, Chamath, and the Productive Asset

Which brings us to the fight the smartest money is having in public right now, because it clarifies where an allocator should actually look. Chamath says own the energized megawatt, full stop, “it’s the spice.” Gavin Baker says the opposite: the megawatt and the data center are commodities, models go to zero, and the only durable value is in utilization, data moats, and reinforcement learning. Take a GPU from 30% utilized to 60% and you’ve doubled the output of the factory without buying another watt.

They’re both half right, and the synthesis is the useful part. Owning an asset doesn’t make you rich. Owning a productive asset does. The reason SpaceX could go public the way it did is that it turned Colossus from a dormant pile of iron into a fully-utilized, revenue-generating machine through the deals it cut to run Anthropic and Google (NASDAQ: GOOGL) workloads, reportedly $30 to $50 million of annualized revenue per active megawatt. That’s not “own power” versus “own utilization.” That’s own power and run it hot, which only full vertical integration lets you do. Musk is building a hundred-million-square-foot plant outside Houston to make his own chips for Optimus and the Cybercab, which is the same move again: control the whole stack so nothing sits idle. Meanwhile Amazon (NASDAQ: AMZN), Alphabet, Microsoft (NASDAQ: MSFT), and Meta (NASDAQ: META) have quietly piled up $1.46 trillion in property and equipment, up 140% in three years (Nikkei). The asset-light software business is over. They’re oil majors now, and the market will start judging them on return-on-assets like oil majors, not on multiples like software.

The lesson for a reader who isn’t building a gigawatt campus: the money is in utilization, and utilization is a management problem, not a hardware one. The dormant asset is a liability with a tax bill. The productive one is the whole game.

🧭 We’ve Been Marking This to Market

None of this is a reversal for us. In April we wrote that the AI race had become a resource war (The AI Race Just Became a Resource War, April 13), that the scarce input had flipped from models to electricity and silicon. In June we argued nobody ever got rich selling electricity, that the fortunes accrue to whoever plugs in, not to the plant itself (Nobody Ever Got Rich Selling Electricity, June 25). And last week we flagged that the physical floor everyone’s fleeing to is already cracking, turbines failing and uptime running below spec while the depreciation runs ahead of the marks (Know Thyself, August 7). This issue braids those threads into the next turn: the resource is power, the value is in running it hot, and the entity that controls whether it gets built at all is the state.

What This Means For You

You are almost certainly not a governor. But you allocate something (capital, a company, a career, your own address), and the map this memo describes is being drawn under your feet right now.

Read your governor like a leading indicator. Whether your state is cutting the beneficiary deal or just rationing tells you where power, payroll, and customers migrate over the next decade. If you sell into a local market, this is existential: a town that loses its data-center bid loses the trades, then the families, then your buyers. Audit your customers before you audit anything else, because a market can hollow out from an energy decision made three states away.

If you’re the one building, bring a gift, not a request. Don’t ask a town to host you. Offer to leave its grid better than you found it: overbuild the substation, underwrite the reliability, fund the trade school. Extraction gets you a moratorium. A gift gets you a groundbreaking.

Follow the firm power, and the permit that gates it. Intermittent won’t run a 24/7 load, so the scarce asset is dispatchable power and the bottleneck is federal permitting, not physics. The dollars in this buildout bottleneck exactly where the electrons do.

And audit your own state like a balance sheet while you’re at it. Is your power getting cheaper and more reliable, or is your bill climbing? Is your state importing high-wage workers or exporting them? If it’s “bill up, workers out,” you’re paying a tax that compounds, and you should price it into where you build, hire, and live.

Three Questions We Think You Should Be Asking Yourself

Is my state building power or rationing it? Not promising it, not studying it. Building it. Look at what’s actually breaking ground versus what’s stuck in a moratorium or an interconnection queue, and be honest about which side of the Interstate you’re standing on.

Are my customers about to move? If your revenue depends on a local community, is that community about to gain a high-wage employer or lose one to the state next door? The hollowing-out happens slowly, then all at once, and the businesses that get caught are the ones that assumed their customer base was a fixed thing.

Am I paying for a dormant asset or a productive one? Whatever you own (a facility, a team, a model, a stock), is it running hot or sitting idle with a tax bill? Baker’s right that ownership isn’t the edge. Utilization is. The company that runs its assets at a hundred percent beats the one that just owns more of them.

You can’t download a gigawatt, and you can’t download an electrician. Build both, and the map redraws itself around you.

Sources

• Mike Rowe on Real Time with Bill Maher (Aug 7–8, 2026), via clips from @RedWavePress, @VigilantFox, and @wakeupnj on X; and The Shawn Ryan Show (July 2026) for the Plano, TX data-center electricians
• Ezra Klein, “The A.I. Revolt Is Here” (with Jasmine Sun), The New York Times, Aug 4, 2026 (the 7-in-10 AP polling, Sanders/DeSantis/Hochul, 100+ moratoria)
• Tressie McMillan Cottom, “Want to Fight Back Against Big Tech? Start Here.” (data politics), The New York Times, Aug 3, 2026
• Bret Stephens, “I’m Begging You: Never Write With A.I.,” The New York Times, Aug 4, 2026
• Chamath Palihapitiya (Aug 6), Gavin Baker (Jul 29), Shaun Maguire (Aug 6) on X — power vs. utilization, and the ~$30–50M/MW figure
• “4 US tech giants amass $1.46tn in physical assets, rivaling oil majors,” Nikkei Asia, Aug 7, 2026
• US firm-power shortfall (~90 GW by 2030) and ERCOT 474 GW / 91 GW figures via @zerohedge citing Morgan Stanley (Aug 8) — pending primary confirmation from Morgan Stanley and ERCOT
• US Navy Naval Reactors safety record (86+ nuclear-powered vessels, 6,000+ reactor-years, zero reactor accidents) — confirm exact figure at final
• SpaceX/Tesla ~100M sq ft Houston chip plant, via There’s An AI For That (Aug 8) — pending primary confirmation
• Prior CO/AI issues referenced: The AI Race Just Became a Resource War (Apr 13), Nobody Ever Got Rich Selling Electricity (Jun 25), The Man Behind the Curtain (Jul 13), Know Thyself (Aug 7)