When the investment arrives, the jobs follow

Fox News reports that the data centre industry — exemplified by the Compass Datacenters campus in Red Oak, Texas — is generating substantial demand for electricians, welders, and carpenters, tradespeople whose skills require no university degree. The CEO, Chris Crosby, is quoted as saying the campus proves that this sector needs hands as much as it needs minds. I find that observation entirely consistent with what I have always argued: the composition of investment matters as much as its volume, and investment in physical infrastructure tends to draw labour across a broad range of skills and wages.

There is a reflex among some commentators to treat any job creation as self-evidently the fruit of the free market operating without interference, and to conclude that policy is therefore irrelevant. I would counsel a more careful look. Data centres of this scale do not arise in a vacuum. They require power grids, reliable broadband corridors, zoning decisions, and in many cases direct or indirect public subsidy in the form of tax incentives. The distinction between 'private' and 'public' investment is, in practice, considerably blurrier than the ideological shorthand suggests.

The deeper macroeconomic point is one I pressed throughout my working life: in a modern economy, the level of employment is not determined by the willingness of workers to accept lower wages, but by the level of effective demand — and effective demand is driven substantially by investment. When animal spirits are high and capital expenditure flows into new physical plant, the multiplier does its work. The electrician employed to wire a server hall spends his wages; the welder's income becomes someone else's revenue. This is not a complicated mechanism, but it is one that households-as-units-of-analysis economists consistently undercount.

What I would press policymakers to consider — and here I am reasoning by inference from principle, not from any recollection of events after my own time — is whether the public sector is doing enough to sustain and guide this kind of capital formation. Private animal spirits are volatile. The data centre boom is real, but booms are by their nature episodic. A government serious about full employment does not merely applaud the current wave; it designs the grid, the training pipeline, and the industrial policy that ensures the next wave arrives before the present one recedes.

The story as reported by Fox News focuses, rightly, on the human dimension — the worker who acquires a trade, the community that gains an employer. I do not diminish that. But the policy conclusion I draw is the opposite of complacency. A labour market that depends entirely on the spontaneous enthusiasm of private investors is a labour market one confidence shock away from unemployment. The lesson of every slump I studied was the same: private investment is a magnificent engine and an unreliable one. The state exists, in part, to be the reliable counterpart when private confidence flags. That is not socialism; it is engineering.