Universal Basic Income Funded by the Commoditization of the Personal Data Market

Executive Summary:

Universal Basic Income (UBI) is not a new concept, having its roots in historical proposals like Thomas More's "Utopia" in 1516 and being championed by influential figures such as Martin Luther King Jr. in the 20th century. Seen as a remedy for societal challenges, UBI has recently gained renewed interest as a means to address escalating economic disparities—exacerbated by the 2008 financial crisis and the subsequent slow recovery—and the unpredictable employment landscape shaped in part by automation and the gig economy. As unemployment rates fluctuated, reaching a staggering 14.7% in the U.S. during April 2020 amidst the COVID-19 pandemic, the need for a safety net like UBI became even more pronounced.

However, while the benefits of UBI are touted by many, finding a consistent and substantial funding source has been its Achilles' heel. Tax hikes and diverting funds from other welfare programs are frequently suggested, but these solutions often face significant political and economic opposition.

In this rapidly evolving digital age, where data is often referred to as the "new oil," a revolutionary idea has surfaced. Major tech corporations, from Facebook to Google, have accumulated vast fortunes by leveraging personal data. This paper delves into the untapped potential of commoditizing this personal data market, suggesting it as a viable revenue stream for UBI. By instituting a regulatory body similar in function to the Federal Communications Commission (FCC), we can ensure transparent, ethical, and efficient monetization of this data.

This innovative approach not only promises a steady flow of funds to ensure UBI's longevity but also offers a potential solution to reinforce Social Security, a program that faces its own financial challenges. Furthermore, by giving individuals a stake in the wealth generated from their own data, this proposal aligns seamlessly with principles dear to conservatives: economic freedom, individual rights, and a vision of limited yet effective government.

In the following sections, we will dissect the feasibility, economic implications, and societal benefits of this groundbreaking proposition.

1. Introduction

In the ever-evolving landscape of the digital era, the significance of data has skyrocketed, drawing parallels with the oil booms of the 20th century. Just as oil once transformed industries, powered economies, and sparked geopolitical tensions, data now sits at the core of a technological revolution. In today's world, our every click, purchase, and online interaction contributes to vast reservoirs of personal data.

Historical parallels are telling. The late 19th and early 20th centuries saw the rise of oil barons and massive conglomerates, which eventually led to antitrust movements and the establishment of regulatory bodies to ensure fair competition and protect consumer interests. Similarly, in recent decades, tech giants like Facebook, Google, and Amazon have ascended to unprecedented market dominance, primarily through the adept collection and utilization of user data. Recent estimates indicate that the global data economy is worth over $3 trillion, rivaling significant sectors like banking and energy.

The commodification and trade of personal data, often done without explicit user consent or benefit, have raised ethical, security, and privacy concerns. Notable incidents, like the Cambridge Analytica scandal in 2018, where data of millions of Facebook users was harvested for political advertising, underscore the urgent need for robust oversight.

Drawing inspiration from history, the establishment of the Federal Communications Commission (FCC) in the 1930s brought order and ethical standards to the rapidly expanding and unruly radio and telecommunication industries. Given its success in navigating the complexities of a new technological landscape while safeguarding public interest, an analogous governance system for the personal data market seems not only logical but imperative.

By harnessing this colossal industry through structured and responsible regulation, we stand at the precipice of an opportunity to redirect vast sums of wealth. Instead of these funds being concentrated in the coffers of a few corporations, they can be channeled for the broader societal good, funding initiatives like Universal Basic Income and ensuring a more equitable distribution of the digital age's riches.

2. The Value of Personal Data

2.1 The Size of the Market

The modern world finds itself in the throes of a data-driven revolution. From retail and healthcare to finance and entertainment, virtually every sector has been influenced by the transformative power of data. In terms of sheer economic might, the data market's trajectory has been nothing short of astonishing.

A 2021 report from the International Data Corporation (IDC) quantified the global data market's worth to be over $200 billion, with a growth rate that surpasses many traditional industries. This staggering figure predominantly includes direct revenues like data brokerage and analytics services.

However, when one considers the cascading value generated indirectly—such as targeted advertising, recommendation engines, or subscription models driven by personalized user experiences—the actual economic footprint of personal data becomes even more monumental. For instance, Google's parent company, Alphabet, in 2020, amassed over $146 billion in ad revenue, a significant portion of which can be attributed to its advanced data-driven advertisement targeting.

By channeling even a modest percentage of this vast market towards a Universal Basic Income (UBI) system, not only can the foundational costs be met, but there's potential to create a substantial surplus, ensuring the program's resilience even in economic downturns.

2.2 Higher Payouts for Citizens

The very nature of the data market sets it apart from conventional revenue sources. Traditional commodities like oil or gold are finite, with prices that fluctuate based on scarcity, geopolitical events, and extraction costs. In contrast, data generation is virtually inexhaustible, with each new device, application, and online interaction further feeding this digital reservoir.

Reflecting on history, during the California Gold Rush in the mid-19th century, initial prospectors made substantial gains. Still, as easily accessible deposits were exhausted, returns diminished. In stark contrast, the data market has shown a consistent growth pattern. With the proliferation of the Internet of Things (IoT), increasing online user base especially in emerging economies, and the development of more sophisticated data collection tools, we're witnessing an expansion rate that's unprecedented.

The World Economic Forum projects that by 2025, the number of connected devices will surpass 75 billion. With more devices come more data points, creating a perpetually self-reinforcing cycle of growth.

What this implies for UBI is profound. Unlike static or dwindling funding sources, the data-driven revenue model offers not just sustainability but the genuine possibility of incrementally increasing payouts. For citizens, this means a UBI system that's not just reliable but one that might improve their financial standing progressively, ensuring a buffer against inflation and rising living costs.

3. Precedents & Case Studies

3.1 Alaska Permanent Fund

One of the most often-cited examples of a successful implementation of a dividend-style system is the Alaska Permanent Fund. Established in 1976, this sovereign wealth fund was created to share oil royalties with the state's residents and ensure future generations would benefit from Alaska's non-renewable oil resources.

Historical Context: The discovery of oil at Prudhoe Bay in 1968 marked a transformative moment for Alaska. Recognizing the finite nature of this resource, state leaders made a visionary decision to invest a portion of the oil revenues into a dedicated fund. The intent was twofold: to provide Alaskans with an annual dividend and to conserve resources for future needs.

Economic Impact: Since its inception, the Alaska Permanent Fund has distributed over $25 billion in dividends to Alaskans. In 2019, for instance, every eligible resident received $1,606. This dividend not only offers residents supplemental income but also bolsters the local economy through increased consumer spending.

The Parallel to Data: If we consider personal data as a modern-day, renewable resource, akin to oil in the previous century, the parallels become clear. Just as Alaska shared the benefits of its natural resources with its inhabitants, so too can nations harness the economic potential of data, distributing its dividends among citizens. This approach amplifies the broader philosophy: when a shared resource is monetized, the benefits should be equitably shared.

3.2 European GDPR

Introduced in 2018, the European Union's General Data Protection Regulation (GDPR) has become a beacon for personal data regulation globally. While its primary focus is on data protection and privacy, the framework demonstrates that large-scale, structured regulation of the data market is both feasible and practical.

Historical Context: In the face of growing concerns over data breaches, misuse, and the sheer scale of data collection by corporations, the European Union introduced GDPR to give individuals greater control over their personal data.

Economic & Societal Impact: Since GDPR's rollout, companies are now more accountable, facing hefty fines if they mishandle personal data or violate privacy rights. As of 2021, over €275 million in fines had been levied against companies in breach of GDPR rules. Beyond the economic implications, GDPR has reshaped corporate behavior, promoting transparency and ensuring users have a say in their data's use.

Lessons for Data Monetization: While GDPR doesn't specifically address the commoditization of data for public good, it establishes a precedent. The regulation demonstrates that with a well-crafted framework, it's possible to oversee a sprawling digital ecosystem effectively. If elements of GDPR were adapted to facilitate data monetization—by imposing fees on large-scale data brokers or by sharing ad revenue, for instance—a substantial revenue stream for public welfare initiatives, like UBI, could be realized. This European model, in essence, offers a blueprint for marrying data protection with societal enrichment.

4. Strengthening Social Security

4.1 Additional Revenue Stream

The Social Security program, established in 1935, is a cornerstone of America's social safety net, providing financial support to retirees, disabled individuals, and survivors of deceased workers. However, it has long been recognized that without reforms or additional funding, the Social Security Trust Fund risks being depleted.

Historical Context and Current Challenges: The Social Security Act was signed into law by President Franklin D. Roosevelt as part of the New Deal, in response to the Great Depression. It was designed as a countermeasure to poverty among senior citizens. Fast forward to the 21st century, and this program faces sustainability challenges. The Social Security Board of Trustees reported in 2020 that the trust funds would be exhausted by 2035, resulting in the program only being able to pay out 79% of promised benefits.

Integrating Data Market Revenues: Given the massive economic potential of the personal data market, a portion of its proceeds could be funneled to ensure the longevity of Social Security. This would be akin to how the Alaska Permanent Fund uses oil royalties to fund dividends. By establishing a dedicated stream of revenue from data monetization, we can alleviate some of the financial strains on Social Security, ensuring its viability for future generations.

4.2 Reducing Dependency

Universal Basic Income, if implemented, could redefine how citizens interact with existing welfare systems, including Social Security.

The Potential of UBI: If every citizen receives a regular UBI payment, it could, in essence, reduce the number of individuals who turn to Social Security for support due to financial hardship. A study from the Roosevelt Institute suggests that UBI could raise the income of all Americans by 12.56%, potentially lifting millions above the poverty line.

Impact on Social Security: By providing a consistent financial safety net, UBI may reduce the number of citizens who rely on Social Security before reaching the retirement age due to financial distress or disability. This reduced dependency allows Social Security to better serve its original intent—catering primarily to retirees and those genuinely in need. With fewer people drawing from the program prematurely, it would alleviate some of the system's financial pressures.

Historical Precedent: Historically, when new social programs are introduced, they can change the dynamics of existing systems. For instance, when Medicare was introduced in 1965, it provided dedicated health coverage to seniors, reducing their dependence on private insurance or out-of-pocket expenses. Similarly, a well-implemented UBI could redefine the role of Social Security, ensuring it remains a robust safety net for those who need it most.

5. Appeal to Conservative Values

5.1 Economic Freedom & Innovation

Conservatives have long championed the principles of free markets and fair competition as the bedrock of a thriving economy. When markets operate without undue restrictions and monopolistic behaviors, innovation thrives, and consumers benefit.

Historical Context: The Sherman Antitrust Act of 1890 and the subsequent Clayton Antitrust Act of 1914, though passed in different political environments, are classic examples of legislative efforts to promote fair competition and curb monopolistic tendencies in the U.S. economy. These acts have been pivotal in ensuring that businesses compete on a level playing field, leading to economic prosperity and consumer benefits.

The Data Market Scenario: In recent years, concerns have grown over the monopolistic behaviors of tech giants in the data market. A few corporations hold vast amounts of global data, wielding considerable influence and stifling competition. By regulating and commoditizing the data market, we can democratize access to this invaluable resource, enabling startups and smaller firms to innovate and compete effectively. Such a move resonates with conservative ideals of ensuring that the market remains dynamic, diverse, and driven by merit rather than monopolistic might.

5.2 Empowering the Individual

At the heart of conservative philosophy lies a deep respect for individual rights, personal freedoms, and self-determination.

The Principle of Ownership: From the writings of influential thinkers like John Locke, who believed in the individual's right to the fruits of their labor, to the U.S. Constitution's protection of individual rights, the theme of personal sovereignty is recurrent. One's data, generated from personal interactions, behaviors, and choices, can be viewed as a modern extension of this principle.

Data as Personal Property: By ensuring that citizens reap direct benefits from the commoditization of their data, we affirm the idea that personal data, like any other property, belongs to the individual. Such an approach is not just ethical but aligns perfectly with conservative values, ensuring that individuals have a stake and say in how their data is used and monetized.

5.3 Fiscal Responsibility

One of the cornerstones of conservative governance is the principle of fiscal responsibility, which emphasizes efficient spending, minimal government intrusion, and avoiding unnecessary taxation.

Historical Precedence: President Calvin Coolidge, who served in the 1920s, famously remarked, "The collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny." This sentiment underscores the conservative stance on taxation and government spending.

Tapping into New Revenue Streams: The proposal to fund UBI through the commoditization of the data market exemplifies fiscal prudence. Instead of burdening citizens with higher taxes or increasing national debt, the approach seeks to generate revenue from a burgeoning and largely untapped resource. This strategy not only ensures that the government remains efficient but also minimizes its intrusion into the wallets of everyday citizens, perfectly aligning with conservative principles of governance.

6. Conclusion

In every era, societies face unique challenges that demand innovative solutions. As we grapple with the realities of the 21st century—technological advancements, the digitization of nearly every facet of life, and economic disparities—it becomes imperative to adopt strategies that not only address present concerns but also safeguard our future.

Historical Parallel: The establishment of the Federal Communications Commission (FCC) in 1934 serves as an insightful parallel. Born out of a need to regulate and streamline the rapidly expanding radio and telecommunication industries, the FCC's formation ensured that the airwaves—a shared national resource—were used responsibly and equitably. Today, we face a similar juncture with the digital data revolution.

The Economic Case: The sheer scale of the personal data market is undeniable. In 2019, the global big data market was valued at approximately $49 billion and was projected to grow to over $103 billion by 2027, according to Statista. Tapping into just a fraction of this could significantly fund programs that benefit all Americans, such as UBI.

A Call to Conservative Principles: For our conservative peers, this proposal offers a unique alignment with core values: the spirit of innovation, respect for individual rights, and a commitment to fiscal responsibility. By regulating the data market, we ensure fair competition. By commoditizing it, we return the value of individual data back to its rightful owners—the people. And by funding UBI through this mechanism, we craft a fiscally responsible solution that avoids unnecessary taxation or government expansion.

The Road Ahead:

While the potential is vast, so are the challenges. The intricacies of the data economy, concerns over privacy, and the mechanics of a UBI system would all require careful exploration. Stakeholders—from tech giants to the everyday American—must be consulted. Legislation, crafted with foresight and flexibility, will be crucial.

In conclusion, by considering the commoditization of the personal data market to fund a sustainable UBI, we are not just addressing current economic disparities but are also charting a course for a brighter and more equitable future. We urge conservatives, and indeed all Americans, to join in this conversation, recognizing the vast potential that lies at the intersection of technology, economy, and shared values.

This white paper is but a starting point—a beacon to guide a deeper dive into this critical topic. Success, as always, will hinge on collaborative efforts, rigorous research, and a collective commitment to the American dream.