Egalitarian-minded economists are pushing for a ‘GDP 2.0’ — and getting some lawmaker help.
Step into the world of the awesomely affluent and you’ll find plenty of super rich with a simple explanation for their good fortune. I’m creating wealth, the claim typically goes, with the brilliantly “disruptive” new product or service I’ve invented.
Our high-tech rich have always seemed particularly partial to claiming this inventor status. But this tech elite, many of us are coming to understand, actually owes much more of its wealth to extraction than invention.
The wealthy, of course, have been extracting wealth from the rest of us since time immemorial. In ancient and not-so ancient times, that extraction came from slave labor. In more modern times, the fossil fuel industry has come to serve as extraction’s most shameless poster-child.
But today’s digital dynasties have maneuvered themselves into an extractive sweet spot that even the fossil-fuel crowd hasn’t been able to reach. Fossil-fuel kingpins have to buy or lease the land they dig into. They end up paying at least a little, in other words, for the wealth they extract. The kingpins of our Internet Age get the value they extract for free.
That value — the data from Internet interactions — comes from us. We give it up at no charge whenever we go online. High-tech companies track what we do there and mix in the information we key into this or that program or application, then package the resulting data for sale. And not just tech companies are playing this game.
“Banks, insurance providers and major retailers,” observes a recent Los Angeles Time analysis, “possess significant information about what people buy, watch, want or need that can be bundled and sold to third parties or used to target advertising and increase profits.”
How much value are all these businesses realizing from what we do and where we go online? Nobody knows exactly. Businesses don’t have to reveal how much they make or pay for our data. So tech superstars can get ever richer — five of the world’s ten richest people owe their fortunes to the tech sector — while most of the rest of us struggle to get by.
That all could start to change if efforts getting underway in California end up hitting paydirt for our world’s online masses. Earlier this year, in his State of the State address, California governor Gavin Newsom signaled that his administration wants to take concerns about data beyond questions of privacy.
“California’s consumers,” he pointed out, “should also be able to share in the wealth that is created from their data.”
Newsom is envisioning a new “Data Dividend for Californians” — “because we recognize that your data has value” — and his staffers are fleshing out the specifics. Other California lawmakers, meanwhile, are working on their own approaches to compensating online users for they value they’re creating.
How best to do that compensating? Opinions vary. Businesses, notes journalist Jazmine Ulloa, could pay into a state-managed fund that distributes dividends to California residents. Or the compensation could be a “reward that goes straight to consumers who give companies the right to sell the personal information collected from them.”
Or compensation for data, technologist Jaron Lanier and economist Glen Weyl believe, could be the subject for ongoing negotiations between netizens and the tech industry, “bringing the power of collective bargaining,” as Weyl writes, “to users who currently have no way of pushing back against the power of Big Tech.”
We should be encouraging people “to take advantage of labor law,” adds Lanier, “to bargain for the value of their data.” The bargaining agents in this process? They could be traditional unions or any number of other organizational players, from consumer advocacy groups to professional societies.
An bargaining approach, write Weyl and University of Chicago law prof Eric Posner, could turn “passive consumers of the entertainments dished out to us by digital platforms” into honored and rewarded “suppliers of the data that make the digital economy work.”
“Rather than all the value of the digital economy flowing to wealthy nerds in cosmopolitan cities,” they go on, “the fruits of digital technology would be shared broadly among citizens.”
These fruits would likely mount up into significant sums — tens of thousands of dollars for middle-income households, Weyl and Posner estimate — as artificial intelligence, or AI, becomes a more thriving presence in our lives. And AI would thrive, they argue, once users can get compensated for the data they create. Current arrangements, with people online “not properly rewarded for their digital contributions,” give users no incentive “to contribute the high-quality data that would most empower technology.” Proper compensation for the value users create would provide that incentive.
The ultimate benefit from sharing our online wealth may have less to do with bits and bytes and more with the core nature of our future, suggests Jaron Lanier, who’s currently serving as an adviser to California lawmakers.
“We are concentrating more and more power and wealth in a few companies, and it is not normal power,” Lanier sums up. “It is power over the nature of our democracy, over our families, over our personal identities.”
Time to share the wealth — and brake that power.
Sam Pizzigati co-edits Inequality.org. His latest book: The Case for a Maximum Wage. Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.