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This article was originally published by RealClearPennsylvania on August 13, 2025: How Pennsylvania Can Lead the Physical AI Revolution | RealClearPennsylvania

As with every great industrial leap, the race among states to lead the AI revolution is reaching a fever pitch. We are living through a transformation that could shape the 21st century even more profoundly than railroads and steel defined the late 19th century, or the personal computer and the internet transformed the close of the 20th. We are now entering the steep part of the hockey stick curve for AI innovation—when breakthroughs move from research labs and pilot projects into the physical world, driving exponential changes in how we produce energy, manufacture goods, move people and freight, and secure national defense. In this age of “future shock” innovation, progress is inseparable from energy and infrastructure—and infrastructure, in turn, is inseparable from political will. The states that will win are those able to cut through permitting bottlenecks, align policy with industry needs, and move capital to the ground quickly. Speed, strategy, and scale—mirroring the first movers in tech’s Magnificent Seven—will decide who builds the competitive platforms that fuel generations of growth.

The housing market in the United States has reached a crisis point. Americans, rural, suburban and urban alike, are facing the most extreme housing pressures seen in generations, precipitated by the failure of housing supply to keep pace with housing demand.

Periods of market and technological upheaval tend to catalyze financial innovation. Given the confluence of geopolitical tensions, the acceleration of next generation technologies, the implications of AI and reshoring for energy demand, the severe imbalances in the housing sector, and, most recently, the radical scaling back of federal government programs and policies heretofore seen as sacred and invincible, an era of financial experimentation should now be upon us.

There’s been much talk of federal spending this year. Two of us have written on the flow of federal resources, and how locals prepare for major shifts. As we have noted, a critical part of federal funding flows through public procurement, in addition to federal entitlements and programs.

Frankly, procurement writ large forms a substantial part of the economy, touching every geography via federal, state, and local purchasing, in addition to procurement by corporations and nonprofit institutions. While it is difficult to say with certainty how spending patterns will shift in public procurement, the magnitude will continue to be immense and unmatched.

Early last month, the Vatican named Pope Leo XIV to lead the Catholic faithful. The elevation of Cardinal Robert Francis Prevost was a surprise pick.  Chicago-born, Prevost had spent most of his career as a missionary in Peru and became a cardinal only in 2023.

Since the launch of the Department of Government Efficiency, I’ve been meaning to write a piece about, well, “government efficiency.”

For those people who have had the privilege to work in the public sector, we know the breadth and depth of the challenges that our country faces and the commitment to service that enables public servants in our communities to be rightfully called “essential workers.”

The two of us recently attended a remarkable retreat on Fogo Island, off the coast of Newfoundland. The retreat, hosted by Shorefast and the Canadian Urban Institute, focused on ways to bridge the gap between global capital and local economies — moving money into “place”. Participants included community practitioners as well as representatives from financial institutions and capital providers.

In his January 1959 State of the Union, in the waning years of his presidency, President Dwight Eisenhower called for a Commission on National Goals.  In a speech dominated by Cold War concerns and gargantuan military spending, Eisenhower took the privilege of the presidency to “express something that is very much on my mind.”

Local and state actors have been taking stock of what the current moment in Washington means, assessing regional exposure to the effects of federal agency restructuring, spending cuts, workforce reductions and radical shifts in trade, immigration, health and science policies. For the most part, a broad array of federal grantees, borrowers and recipients are responding to the immediate impacts. Yet the interconnectedness of city and metropolitan regional economies — and the public, private and civic institutions that drive them — means that there will be longstanding, reverberating effects, with multiple, domino-like second and third order effects.

And so, it begins.

Amidst the daily noise and chaos, the US has begun a grand experiment, the radical defederalization of roles and responsibilities in the nation. We have seen versions of this movie before of course, particularly during the 1980s when the Reagan Presidency drove state innovations around health care and welfare reform. But this 21^st century version of defederalization is happening at an unprecedented speed and scale, with much less ideological consistency and coherence and no coordination — NONE — between layers of governments.