OECD’s Digital Economy Report Gets It Right, but With the Wrong Headline!

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The OECD’s Digital Economy Outlook, which was released yesterday, confirms the economic and social importance of software, information technology and digital content.  Key findings include:

  • The ICT sector employed more than 14 million people in OECD countries in 2013, almost 3% of jobs in the 34-country bloc. ICT employment ranges from above 4% of total employment in Ireland and Korea to below 2% in Greece, Portugal and Mexico.
  • ICT venture capital is on the rise again and is now back at its highest level in the US since the dot-com bubble.
  • The US is the top exporter of ICT goods and services when trade is calculated in value-added terms, due in part to the high presence of US ICT services embodied in final products.

This reflects the same reality as the recent SIIA study showing that software alone contributes $425 billion to the U.S. economy and directly employs 2.5 million workers and supports millions of other jobs.

But the emphasis in the rollout of the report was troubling.  Instead of focusing on the many advantages of the ICT sector, the public framing of the report was on the need to avoid the “disruptive effects” of the sector on jobs and privacy.

Of course, some people have been displaced by innovations caused by technological advances, and there has been a lot of discussion of the possibility that the net effect of ICT technology might be fewer jobs.  But all that discussion is pure speculation.  There is no evidence of a net loss of jobs resulting from the use of ICT technology. In fact, the OECD’s own data document the contribution of ICT to job growth, as did SIIA’s study.

Waves of technological innovation over the last century and a half have displaced existing workers only to create jobs elsewhere in the economy.  On balance, employment has grown, and society has become a better place to live and work thanks to technology’s productivity and life-enhancing gains.

It is true that there is no economic necessity in this.  It is conceivable that some day people might become as economically obsolete as horses are today.  But history suggests otherwise.  People find a way to make sure that the real economy has room for their own productive activity. The real issue is not net loss of jobs, but transition planning to ensure that those who are displaced receive special help to find a dignified new role in the new economy.

Moreover, there is no intrinsic reason that the greater use of ICT should threaten privacy.  For a couple of generations now, new techniques for gathering and storing digital records have allowed businesses, governments, hospitals, schools and non-profit institutions to have a clearer picture of the people who use and need their services. This has enabled them to perform their economic and social functions much more effectively – for the overall good of society.

In the past, information about what people do in their everyday lives was lost because the techniques to record it were not available.  That has changed.  We now have the capacity to understand people more fully. Some think that this capacity to collect and store information is intrinsically threatening to privacy.  But that’s wrong. It just means that privacy norms have to adapt.  When the telephone and telegraph were invented, new rules for keeping the business and personal information transmitted over these wires had to be developed over time and become part of the culture.  When the snap camera arrived, as Warren and Brandeis noted in their celebrated law review article, new legal rights needed to evolve.

New technology is not in itself a threat to privacy.  It depends on whether those who gather and use data are responsible stewards, adhering to fair information practices, even as the constitutive elements of fair information practice adapt to technological development.  This evolution is not a crises but part of the normal interaction between social norms and technological change.

The OECD has a history of nuanced and supple approaches to privacy.  Their 1980 Privacy Guidelines influenced all subsequent privacy regimes.  Their sophisticated 2013 update provides an important model for governments and intergovernmental organizations such as APEC and helpful guidance for privacy practitioners around the world.  The discussion of privacy within the body of their 2015 Digital Economy Report is similarly enlightening.

But the headline message on their Digital Economy report is a disservice.  It gives oxygen to the misleading idea that technology is the enemy of jobs and freedom.  As their report itself shows, the reality is that the properly managed use of technology can provide economic growth, innovation, jobs and privacy.

Mark Mark MacCarthy, Senior Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy.