One of the great truisms about our world is that the truly stupid ideas arise from people not understanding how the world works. Such is true of this latest idea that Facebook, and by extension companies like Google and so on, should be paying us for our data.
The contention is that this data is valuable and that’s where the mistake is: it ain’t. Certainly the information extracted from that data is valuable. But as anyone with even an ounce of knowledge of the real world should know, data and information are not the same thing.
This idea has been tried before. The first time I saw it was from Jaron Lanier, someone who seems never to have met an economic idea he didn’t misunderstand. Today’s expression of it has managed to reach the Financial Times of all places. Brittany Kaiser used to work for Cambridge Analytica, the company that’s got into so much trouble over their mining of the data Facebook has collected. We should assume she has some industry knowledge. She has also set up a petition. A central demand of both her article and petition is that Facebook should pay us the value of our data.
That’s something of a problem, for the value of our data is close to zero. One individual commenting something or liking a post doesn’t have any value. It’s the system of collecting that data which adds value. The agglomeration of data on 2 billion people has substantial value – which is why Facebook makes money and has a vast stock market price (recently a little lower than it once was, but still).
This is what is being missed here. Any one individual preference is worth nothing. Those engineers and server farms which make up Facebook don’t come for nothing. But it’s those engineers and server farms that are adding the value, precisely because it’s the activities in collecting, slicing, and dicing then presenting the accumulation of each valueless datum which adds the value. It’s a reasonable enough thought that those who add the value should be those who collect it, no? The system which adds value should be at least able to cover its costs, perhaps make a margin on it.
Of course, we should be, as we are, entirely at our liberty in deciding what data we allow to be hoovered up. If we don’t like the deal offered by tech giants, we don’t have to take it. We don’t have to use Facebook if we don’t like its data policies. But what we don’t get to do is demand that we be paid for value we’ve not created.
It’s entirely true that we are what’s being sold on Facebook, or at least the data about our likes and preferences. But it is Facebook itself which is adding the value through turning that valueless individual data into information people are willing to pay for. The money, therefore, belongs to Facebook, the very people creating the value — however many misunderstandings there are about this, however many petitions are launched.
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
