Do We Need a World Data Organization?

Democratic presidential hopeful Andrew Yang thinks so.

"I want to propose a new World Data Organization, like a WTO for data, because right now, unfortunately, we're living in a world where data is the new oil and we don't have our arms around it," declared presidential hopeful Andrew Yang at Wednesday's Democratic debate. My initial reaction was negative, but on reflection I think there may some merit to the idea after all. But first let's push back against Yang's use of the catchphrase "data is the new oil."

International Center for Law & Economics research fellow Alec Stapp has neatly taken apart the data-is-oil meme at the Truth on the Market blog. Among other things, Stapp points that data, unlike a barrel of oil, can be consumed again and again; that oil is a fungible commodity that is basically the same everywhere, whereas data is non-fungibly heterogeneous; that oil has positive marginal costs, whereas data has zero marginal costs; and that oil has constant returns to scale, while data has rapidly diminishing returns. Stapp boldly concludes that oil is valuable while data is worthless.

That cuts strongly against Yang's proposal to make our individual data a property right. Yang is correct that companies profit from collecting and reselling our data. But Stapp points to research that finds "general information about a person, such as their age, gender and location is worth a mere $0.0005 per person." Data about potential auto buyers is valued at about $0.0021 per person, and data about a specific individual's health conditions is worth a whopping $0.26 per person. The upshot: For most of us, the value of our data is less than a dollar. Companies realize value only through amassing, sorting, and analyzing millions if not billions of bits of data. If these calculations are approximately right, none of us will be retiring to a beach villa to live off of our data earnings anytime soon.

As Adam Schlosser of the World Economic Forum once put it, "The next time you hear someone say 'data is the new oil,' ask them when the earth will have no more data to extract and see if you get an answer."

Putting the misconceived oil analogy aside, is Yang right about the desirability of a World Data Organization? Maybe. Schlosser notes that "the movement of data across borders generates yearly global economic gains equivalent to the GDP of France"—about $2.5 trillion. But countries are increasingly requiring that data be localized within their jurisdictions. The increases costs while enabling governments to monitor and restrict their citizens' access to data.

Alarmingly, countries such as Russia, China, Iran, and North Korea are pushing for global norms that would allow governments to further control data flows across their borders in the name of "internet sovereignty." On Monday, a rogues' gallery of authoritarian countries got the United Nations to approve a resolution to launch negotiations on a treaty that would supposedly "counter…the use of information and communications technologies for criminal purposes." Earlier this month, an open letter from human rights organizations warned that the actual purpose of this cybercrime treaty would be to criminalize ordinary online activities, such as exercising free speech and engaging in political protest.

A World Data Organization (WDO) comprised of governments that support online openness could counter the balkanization of the world's information ecosystem via the pernicious poison of internet sovereignty.

"America, Europe, Japan, and like-minded willing-and-able partners must work together to set future standards for artificial intelligence, data, privacy, citizens' rights, and intellectual property," argued Eurasia Group president Ian Bremmer this week. A World Data Organization would "develop a permanent secretariat to determine these digital norms together, and a judiciary mechanism to enforce them." The World Trade Organization is far from perfect, but it has lowered trade barriers considerably. Global merchandise trade has grown from about $5 trillion in 1995, when the organization was established, to nearly $20 trillion now.

A global organization aiming to keep data barriers low could similarly boost economic growth and technological progress while also defending human rights and liberty. The actual details would matter, of course. But at the very least, Yang's proposal is worthy of urgent consideration.