The G20 can save the world once again
Marx and Engels famously started the Communist Manifesto with the words “a specter is haunting Europe—the specter of communism.” Crypto Anarchist Timothy May was less Eurocentric, beginning his 1992 Crypto Anarchist Manifesto with the words “a specter is haunting the modern world—the specter of crypto anarchy.” I would say that the “modern world” today is anywhere with an internet connection. That’s a lot of people from a lot of different cultures.
Both texts are about liberation. According to May, computer technology liberates individuals from the state, completely changing “the nature of government regulation, the ability to tax and control economic interactions and the ability to keep information secret.” The notions of trust and reputation are, therefore, altered in important ways. I would add the nature of industrial policy to the list of things altered by technological change.
Let me start with the facts. According to Domo’s Data Never Sleeps 5.0 report, 90 percent of all data today was created in the last two years. That’s 2.5 quintillion bytes per day, connecting around 3.7 billion internet users. This isn’t just cat videos; it’s anything from smart cars to cloud computing. Only last week, the Indian central bank removed payment charges for digital transactions. That’s more information making its way across the internet.
Cross-border data flows outpaced commercial and financial transactions, growing 45-fold between 2004 and 2015. The annual growth rate of cybercrime is around 600 percent from 2016 to 2017, according to the Global Data Risk Report from the Varonis Data Lab. This is largely due to the growth of what’s called the “internet of things” (IoT), meaning internet connections in devices such as vehicles, fridges or implants. Imagine you have a heart pacemaker that’s connected to the internet and somebody manages to hack into it. Technology often makes life more complicated.
International institutions like the World Bank, the International Monetary Fund or the World Trade Organization and the United Nations, serving as the building blocks of the post-1945 global order, aren’t becoming outdated only because of the shift of global production to the east - that is the quantitative side. These institutions are left behind due to the emergence of data as a new commodity. This is a more qualitative change. The above figures show us that the world urgently needs a global understanding of data governance.
Think about precision medicine or precision farming in all cases related to new technological advances. Individual data is going to become very important in determining the pace of change in these fields. Starting from data ownership to cross-border data flows, issues related to data governance are all coming to the fore.
Take the data ownership issue, for example. There is no consensus. In the United States, data is treated like oil found on company property, a kind of positive externality. In Europe, there is individual ownership of data. In order to use it, you need to get the approval of the individual creating that data. In China, data is simply state property. In this brave new world of technological change, a government that controls data can create its own national champions leading the economic transformation process.
Around 3 billion Chinese and Indian internet users have the capacity to create more data than around 300 million Americans. Think about Chinese activity in Africa and now in Central Asia. Here is a strong reason for a new global understanding of data governance. This could be a new basis for global partnerships. The trade war U.S. President Donald Trump has launched against China is just a smokescreen for the real debate on data governance, if you ask me.
The 2019 G20 Osaka summit, as a meeting of global leaders, could help to put the whole trade wars debate into perspective and start a global dialogue on data governance. The G20 saved the world economy in 2008-2009 during the Great Recession. Now, it can save it once more by focusing on data governance during the Osaka summit. Otherwise, Timothy May’s “specter of crypto anarchy” will come to haunt us all.