In her January 8 State of the State address, New York governor Kathy Hochul rolled out an ambitious plan to build a cutting-edge artificial-intelligence computing center. This public-private partnership, dubbed “Empire AI,” will make New York “a global leader” in AI innovation, she promised. If New York State’s previous attempts to capitalize on tech booms are any guide, however, the governor’s proposal is more likely to lead to cronyism, self-dealing, and wasted tax dollars.
Hochul’s plan would create a consortium of universities—including Columbia, Cornell, NYU, Rensselaer Polytechnic Institute, SUNY, and CUNY—and nonprofits, entrepreneurs, and other investors. The consortium would be empowered to build the AI facility, possibly in Buffalo, to serve students and “give rise to a wave of responsible innovation.” Hochul wants to devote $275 million in state funds to the project and says that private partners have committed an additional $125 million.
Giving New York’s educational institutions a leg up in researching AI isn’t a bad idea. The problem lies in finding partners who can build and manage a high-tech data facility and cloud-computing network. After all, Alphabet, Microsoft, and Amazon are each pouring tens of billions of dollars into AI cloud-computing capacity. Can a state-run consortium hope to keep up? Some experts are skeptical. “Is this going to reinvent the wheel in order to put a Big Apple stamp on it, or a New York State stamp on it?” AI pioneer Oren Etzioni asked the New York Times. “That could be very worrisome.” Not even computer science professors—much less state bureaucrats—have the expertise to supervise such a complex venture.
Taxpayers should also be concerned about the governor’s claim that a state-funded computing center will “incubate the AI-focused startups of the future, driving job growth.” Albany has a woeful record when it comes to hitching rides on tech bandwagons. Former New York governor Andrew Cuomo committed billions in state funding to high-tech initiatives involving nanotechnology, microchips, and green technology. These “innovation hubs” were supposed to attract startups, create jobs, and lift upstate economies. Instead, most collapsed in bid-rigging scandals, squandered investments, and unfulfilled hopes.
In 2015, Cuomo described his program to build a massive solar-panel plant on a Buffalo brownfield as “too good to be true.” It was. New York spent nearly $1 billion on the public-private partnership with one of Elon Musk’s companies. But, as the Wall Street Journal reported, the factory that the state built—now misleadingly dubbed a Tesla “Gigafactory”—never produced many solar panels. Instead, much of the manufacturing equipment the state paid for was “sold at a discount or scrapped.” Today the quarter-mile-long facility mostly houses lower-paid data crunchers, and Tesla leases the property for $1 a year.
Public-private partnerships aren’t always a bad deal. It’s smart for government to turn to private industry to perform functions that it can’t do as efficiently. NASA saves billions by hiring SpaceX to launch its astronauts, for example, and Operation Warp Speed, the federal effort to fast-track the development of Covid vaccines, was a worthwhile gamble. But government rarely succeeds when it takes on functions that it isn’t equipped to handle. And taxpayers should be especially nervous when politicians claim to know better than the market how to leverage high-tech investments to boost the economy. New Yorkers, of all people, should know this by now.
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