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Will a strict privacy bill of rights hurt growth?

  • February 28, 2015
  • Michael Mandel

The White House has come out with a discussion draft of a consumer privacy bill of rights. I’m not going to discuss the details of the proposal, which has already come under attack from both sides.

Instead, let me make a broader point: The advocacy of a strict privacy standard has the potential of harming the one sector that has been driving growth in consumer living standards. To summarize:

  • The living standard of Americans is stuck in slow gear. Per capita real consumption has only risen by 3.2% since 2007, in total.
  • More than half of the gain in living standards since 2007 has come from the rapid growth of data-related goods and services.*
  • A strict privacy bill of rights will almost certainly slow the growth of data-related goods and services.
  • Conclusion: A strict privacy bill of rights, if enacted, will inevitably further drag down the already slow growth in living standards.

Do Democrats who support a strict privacy standard understand the economic consequences of imposing more regulations on the sector which has been the main force for lifting living standards since the bust?  Do they understand the political consequences of being anti-growth?  And does the Administration realize that its proposal effectively gives the Europeans and others the ok to go over the top with regulation of US tech companies?

I don’t know the answer to these questions.

*This figure comes from an upcoming PPI policy memo,  “The Tech/Info Sector: Economic Hero or Market Predator?”  The upcoming policy memo defines the ‘consumer data ecosystem’ as including all data-related goods and services—that is, personal consumption of all types of goods and services that involve the transmission, delivery, and consumption of data. This includes personal computing devices, such as smartphones, tablets, and laptops. It also includes video and audio equipment, such as televisions and iPods, newspaper and periodicals, movie theater revenues, books, live entertainment such as music performances, cable and satellite subscriptions, cell phone and data plans, and Internet access.

Other results from the policy memo:

  •  Average prices in the consumer data ecosystem have fallen by 16% since 2007, and by 31% since 2000.
  • The consumer data ecosystem’s share of consumer spending is the same as it was in 2000.

These figures may be revised slightly as the government updates its statistics.

 

 

 

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