Co-authored by Joe Kelly
A Digital Bretton Woods
A Global Information Regime to Give Individuals Control Over the Value of their Own Data
In 1944 at the Mount Washington Inn in Bretton Woods, New Hampshire, delegates from 44 nations gathered to create the rules and institutions the would govern global monetary policy and macroeconomics for the post-World War 2 world. They created a system of fixed exchange rates between currencies, all pegged to the U.S. Dollar as the reserve currency, with the dollar in turn pegged to gold at $35 per ounce.
The delegates were influenced by perceived failures in the international economy that led to the Great Depression and contributed to war. In the wake of World War 1, the debt owed among the victorious powers and by defeated Germany were more than the economy could afford. In a nutshell, each nation began to pursue a "beggar thy neighbor" approach of devaluing their currency in order to reduce the value of the outstanding debt and to drive economic activity through exports. Nations would devalue their currency (against either a gold or silver standard) and impose import tariffs to drive their own economy. With every nation pursuing its own devaluation while at the same time ignoring a large debt overhang, the effect was to blunt economic growth worldwide.
The Bretton Woods solution was to effectively create a fixed world money supply that would allow central banks to exert greater control over the economy and generally create a more stable economic environment for reconstruction to occur. With a fixed money supply, central banks could exert greater control over private lending and the system facilitated international trade and reconstruction by making capital easily convertible. It was a vital tool for post-war reconstruction and the system continues to affect the shape of the global economy.
Today, as we see some of the same "beggar thy neighbor" trends re-emerge, we offer a Digital Bretton Woods -- an idea for a set of international rules for the management and valuation of individual information in order to ensure that our global economy can continue to grow. The global economy lives on the production, extraction, correlation, analysis, and sale of information. The iPad used to write this article is an impressive physical product that drives a lot of economic activity in its production. But it has a far greater economic value in the information it gathers on the primary user's preferences, tastes, choices, and lifestyle. When such data is aggregated, cross-referenced, and processed via algorithms, it creates a wealth of knowledge that others will pay to access and use. The iPad owner is as much product as consumer.
National rules for the management and control of information are widely divergent, preventing us from promoting economic activity down to the lowest levels of society. A Digital Bretton Woods would institutionalize the greatest benefit of the Internet: the ability of one individual to reach out and do business with the world with information as a key item of value.
In our view, the problem is not that companies collect information or that it is at such an absurdly detailed level. Rather, the problem is that while we may give our consent to this data collection, we are not given the opportunity to directly profit from that information extraction or make any detailed choices about how that extraction will occur.
Today, we trade our information for convenience and free services, allowing others to profit from its aggregation, analysis, and resale. One could imagine a regime where that individual information is given a minimal baseline price (much like the old peg of the dollar to gold) and that companies and governments would be required to pay individuals for the use (not collection) of that information. Government and industry information could also be priced at some derivative level. Such an approach is radical and would upend entire categories of activity, but it would force people to think about the value of information in more explicit terms and assess what uses are worthwhile. The benefit to business of such a regime is that it would make compliance with a wave of proposed privacy regulations easier and it potentially make it easier to monetize the information. More importantly, giving individuals control over their ability to profit from their information has the potential to open up entirely new realms of economic activity, creating growth where none was possible before.
Joe Kelly is a cybersecurity consultant and strategist, who previously served as Senior Technical Advisor and Acting CIO for the Privacy and Civil Liberties and Oversight Board and as Deputy Director for Cyber Capabilities in the Office of the Secretary of Defense.
The Honorable Bijan R. Kian is a twice Senate Confirmed Former member of the Board of Directors of the Export-Import Bank of the United States, a former member of the White House Business Council, reporting directly to two presidents of the United States from both major political parties.