A (data) economy that works for all?

Can tech firms be trusted with our personal data?

If you're one of the top US tech firms right now, such as Google or Facebook, life is lucrative, fast - and attritional. You've felt like you've been getting it in the neck from all sides for a few years now. And that's before unforeseeable horror shows like this Cambridge Analytica scandal.

It's something I've been writing about for the past year. The tech-lash: a backlash against big technology firms, most of whom are American. And it has many fronts.

The first is data security - or, if you like, privacy. Can these firms be trusted not to lose the vast amounts of personal data that they store on us? Or not to give them to individuals, companies or governments that we consider inappropriate?

This is the crux of the recent travails of Facebook, whose reputation for trustworthiness has taken a big hit. By the way, my strong sense is that these concerns vary hugely between the generations - that is, people over 50 care a lot about it; people under 25 less so. That's the impression I get but I need to read more, well, data, before I can say the evidence supports it.

The second is fiscal. As my distinguished colleague Kamal Ahmed blogged last week, there are moves afoot to get more from these companies in tax receipts.

"The European Commission has... announced what amounts to the most significant change in business taxation for decades," Kamal wrote. "It is proposing taxing the revenues of those firms, country by country, dependent on the numbers of users and advertising income received."

Another line of attack is from the news industry, who say Google and Facebook - who hate being lumped together of course - are killing News as we know it.

According to this argument, they have assisted the spread of fake news and disinformation, completely dominate the means of distribution, and above all are gobbling up an ever growing slice of digital ad revenues.

Then there is their alleged failure to tackle anti-social behaviour, from child pornography to extremist videos on (Google-owned) YouTube. The companies say they are doing all they can, and that better machinery rather than more manpower will lead to a fix. But still the critics harangue them incessantly.

Like I said, they're getting it in the neck, and from all sides.

Labour Pains

But I wonder if one of the stronger lines of attack against them is also one of the less often aired. According to this, the real case against these companies is how - relatively - few people they employ. They would argue that, through their economic activity, many jobs are created. But as The Economist put it: tech firms "employ relatively few people, and pay little tax".

This is a potential exposure for them. If it is felt that big tech firms are not contributing to the collective sacrifice that nourishes any democracy, they risk being seen as outsiders.

That is an impression you can get on a visit to their sprawling campuses just south of San Francisco. These places are staffed with many graduates from around the world, at a time when the President of America has lauded "America First" and said "I love the poorly educated".

In employing relatively few people, given their wealth, and a high proportion of non-Americans, companies like Google and Facebook are contributing to one of the most profound economic shifts in modern history. This is the drastic fall in the proportion of national wealth making its way to the labour force in advanced economies.

Look at Page 3 of this remarkable OECD report. It says: "The OECD has observed… that over the period from 1990 to 2009 the share of labour compensation in national income declined in 26 out of 30 advanced countries for which data was available."

It goes on: "the median (adjusted) labour share of national income across these countries fell from 66.1% to 61.7%". That is a fast, precipitous drop, with massive implications for these societies.

A seminal paper - The Fall of the Labour Share and the Rise of Superstar Firms - elaborates this thesis.

With concerns about automation and labour market competition across the globe widespread, this might have radical implications.

Here's one. Maybe the companies that have grown very rich very quickly through amassing hordes of personal data, but who employ relatively few people given their size, should pay us for that data.

That's right. Those baby pictures in your Facebook News Feed, or lawnmower searches into Google, could be recast as a kind of labour - that is, work - for which you should be paid.

Why work for free?

Before exploring this in greater depth, let me say I obviously don't endorse any policy on this blog. But it is incumbent on me to give you a flavour of the ideas circulating around my brief, based on conversations in and around the industry.

And the idea that data - which, by the way, is not the new oil - should be re-interpreted as work, for which we should be paid, is migrating from the fringes of academia to the centre of policy debate.

In a couple of articles (see here and here), the excellent John Thornhill of the Financial Times has explored this possibility.

"The genius of Facebook is that all its users are - unwittingly - working for the company for free, creating its most valuable product", Thornhill writes. "That enables Facebook to pay out the equivalent of just 1 per cent of the company's market value to its employees, compared with 40 per cent at Walmart."

Thornhill cites a hugely important paper on this subject - Should We Treat Data as Labour? - which, perhaps ironically, is free online. It's worth reading.

Over at the New York Times, Eduardo Porter explored this issue too. Like Thornhill, he referred to a book called Radical Markets, by Eric A. Posner and E. Glen Weyl (who is the main researcher at Microsoft).

"We may think we get a fair deal, offering our data as the price of sharing puppy pictures", writes Porter. "By other metrics, we are being victimized: in the largest technology companies, the share of income going to labour is only about 5 to 15 percent", Mr. Posner and Mr. Weyl write. Consumer data amounts to work they get free.

"If these A.I.-driven companies represent the future of broader parts of the economy," Posner and Weyl argue, "without something basic changing in their business model, we may be headed for a world where labour's share falls dramatically from its current roughly 70 percent to something closer to 20 to 30 per cent."

Porter entertains the idea that if people were paid for their data, its quality would improve. That is, as hypothetical workers, users of Facebook, for instance, might have an incentive to give the company better information about their preferences - which in turn would provide them with better information to give to the advertisers who drive their revenues.

All of this seems a long way of course. The practical objections are predictable and immense. These companies, who have got fantastically rich by harvesting personal data, are - to put it mildly - very invested in the status quo. They will lobby to retain it.

Apart from all that, being paid for our data may be a terrible idea. The transition from our current arrangement may be painful; other valuable economic activity could be harmed along the way; and how such a proposal would intersect with the rise of artificial intelligence is far from clear.

But economic history has sped up. Many think of privacy, tax, the alleged crisis in News, the disruption of multiple industries and broader anti-social behaviour as the harm from these companies, when perhaps it's actually that we're all working for them for free.

As superstar media-technology firms - who employ relatively few people, pass relatively little of their wealth to workers, and need our data in order to grow - have fortified their power in our society, radical ideas to redistribute that power may soon garner public support.