The Politician’s favorite new game: Data Farmville5/1/2013
Since I originally wrote about the subject in 2008, Iowa has become a Mecca for data farms. The biggest names in digital communications have decided to build huge, new data farms in what used to be Iowa’s bountiful cornfields.
Yes, the Iowa Economic Development Authority can add Google, Microsoft and Facebook to its list of high-tech companies found in Iowa.
So what is it that Bill Gates, Sergie Brin, Larry Page and Mark Zuckerberg love about Iowa? Well contrary to local myth, it isn’t our down-home personalities, fabulous ACT scores, corn-fed beef, idyllic Grant Wood vistas or temperate climate. What these well-heeled billionaires have affection for is our round-heeled politicians.
The reality is Iowa hands out huge tax breaks to these billionaires in the form of tax credits, property tax abatements and lifetime sales tax holidays. It’s a fabulous combination of incentives reserved for corporations owned by the über-rich. But it isn’t just pimply-faced Silicon Valley entrepreneurs who benefit. Much of the credit can be attributed to Warren Buffett.
Buried somewhere in the $75 billion worth of Buffett holdings is Mid-American Energy. Thanks to Buffett’s lobbying efforts, the State of Iowa allows him to sell his billionaire band of brothers all the electricity they want without a nickel’s worth of sales tax. To put things in perspective, it was estimated that Microsoft’s data farm alone consumes about 800 million kilowatt hours of electricity per year. That is equivalent to more than 85,000 average households in Iowa. Data farms are the black hole of energy use, which is why tree-huggers posting rants on Facebook about energy conservation is as amusing as online rants about the “One-Percenters” who own virtually everything virtual. The three companies building energy-sucking data farms love to play up the fact that Mid American Energy derives 20 percent of its power through wind generation in the state — this as two companies in Iowa that supply wind generation equipment have laid off nearly 500 people.
The good news is all the new, high-tech positions that come with building massive data farms, right? Well here is another dose of reality: The combined total of full-time employees in the three data farms in Iowa is about 235 people. That roughly equals the staff of the average Cheesecake Factory. And the majority of the positions are security, maintenance and facilities positions.
Certainly high-tech companies that spend between $300 million and $1.5 billion on facilities will want to make a bold statement with iconic architecture, right? Well, if you think “prison chic” is bold, maybe. The facilities are nothing more than bomb-proof bunkers holding thousands of data servers. They are the high-tech equivalent of hog confinement operations. And data servers are certainly energy hogs.
But technology is constantly changing, so how long before massive data centers are obsolete? In 1995 Dell was selling a top-of-the-line 486 with eight megabytes of RAM and a 320-megabyte hard drive for $4,400. Today, an iPhone has more than 20,000 times the capacity of that laptop for 7.5 percent of the cost. Altoona just gave Facebook 20 years of tax abatement, while the need for a 1.4-million-square-foot facility for data storage two decades from now seems remote. Not unlike a $32-million, 110,000-square-foot Central Library in downtown Des Moines, or a 500,000-square-foot printing facility on Park Avenue.
Besides billionaires, the real winners will be local construction workers hired to build Facebook’s facility and the $400 million expansion of Google’s Council Bluffs site.
Small-town Iowa needs all the help it can get, yet politicians have gone hog-wild subsidizing out-of-state billionaires with a combined net worth of $165 billion.
Meanwhile, jobs just keep eroding away. A Ding Dong factory in Waterloo loses 89 employees. A wind generator plant in Fort Madison lays off 407 workers. A packing plant in Sioux City lets 1,450 people go. Iowa has lost 5,000 jobs from just 18 companies since 2010.
When it comes to economic development, politicians don’t pick winners; they pick pockets. Perhaps it’s time voters unfriend our politicians. CV
Kent Carlson is a native Iowa artist interested in preserving Iowa’s architectural heritage and the common sense of its leaders. And he writes a few columns for Cityview, too.