Connecticut was at the heart of the American industrial revolution. Connecticut was the birthplace of some of America’s greatest companies, like Singer Sewing Machine, Hartford Steam Boiler, and Pratt & Whitney. Connecticut’s entrepreneurs and innovators generated more patents per capita than any state. Connecticut was the can-do state.
Now, after more than three decades of stagnation, Connecticut is recovering its vitality. In the last three years, after no net new business creation since 2000, there is a surge in new businesses, more than 10,000; job creation has been strong, with payrolls up more 40,000 in 2022 and 2023; January saw 7,400 additions. Connecticut has also enjoyed one of the nation’s best growth rates in real gross state product. Add in a newly fiscally responsible state government and the future looks promising. But this recent success only brings us back to our previous peaks.
But will we sustain this new vitality? In this IT dependent economy, the quality and scale of the IT infrastructure will be central to sustaining that path. With the AI revolution, the single most important element in that infrastructure is hyperscale cloud data centers.
If we now seize the opportunity to become a national leader in AI — which would flow from being a leader in building those hyperscale data centers — Connecticut will surely sustain and expand that new vitality. We open a new and exciting chapter in our economic story.
Now some in Connecticut seem to fear the future. They don’t think Connecticut is able to transition into being that modern, data-driven, digitally dependent economy and manage the demand for electrical power that AI demands. Driven by the fear that Connecticut is not up to the task at hand, the legislature is considering SB299, requiring a study of whether Connecticut’s grid can cope with the surge in demand for electricity that construction of hyperscale, cloud data centers will drive.
[RELATED: Legislature seeks data center study; Concerns raised over delays]
Such data centers are the heart of the new AI economy, which is rapidly becoming the dominant element in the IT world and the foundation of future growth. Without that IT infrastructure and the competitive advantage it creates, Connecticut, indeed, the northeast, faces very difficult times.
The presumption behind SB299 is Connecticut isn’t up to the challenge. That Connecticut’s effort to join the modern IT economy and capture a leading role is beyond our abilities, beyond the capacity of our regulatory agencies, beyond the resources and leadership of our utility companies.
The language of SB299 is not forward-looking; it is not asking how the state can facilitate, even push development of those data centers that would transform Connecticut’s economy and restore the vitality the state once had. Connecticut has suffered nearly 35 years with no net job creation. Rather than sizing the opportunity to become again the national leader Connecticut once was, SB299 says “slow down, we probably aren’t up to this, and should be content to be a second/third-tier state and marginally connected to the modern IT, data dependent economy.”
[RELATED: Proposed data center would get power from Millstone nuclear plant]
Connecticut was once a national leader along multiple vectors and arguably created the nation’s most successful state economy. We lost that position after the 1980s. SB299, given its language and apparent fear of embracing the future, looks to guarantee Connecticut will stay on the sidelines and refuse to frame a new future for itself.
Rewrite SB299 so a study looks to frame how Connecticut will grab the decisive competitive advantage of being a leader in hosting hyperscale cloud data centers that will be the center of future growth; a study that points to the policies and the initiatives that will build and sustain Connecticut’s leadership in the AI economy.
Fred V. Carstensen is a Professor of Finance and Economics and Director, Connecticut Center for Economic Analysis at the University of Connecticut.