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BOHANON & CUROTT: Data can be dangerous in government hands

November 30, 2018

Economic Analysis by Cecil Bohanon & Nick CurottThanks to “big data analysis,” disputes over the population of Belarus or the calorie content of a chocolate treat can be resolved in the twinkling of an eye by a simple internet search. But as Milton Friedman taught us many years ago, there is no such thing as a free lunch. As if you didn’t know, Big Tech keeps track of our internet searches and uses that information (gasp!) for profit. That’s the price.

While it is a bit irritating to get a barrage of ads for chocolate-laced tours of Belarus, it is even more worrisome to think about who gets access to personal information harvested online. While we rightfully fret about the price we pay for the world of Big Data, Bohanon and Curott think the price is a lot higher in China.

China’s one-party state is developing a social credit score for each individual and business in China. The data companies (Alibaba, etc.) are cooperating and apparently turning over any and all information about anyone and everyone to the State apparatchiks.

In the words of one observer, this will “create an integrated data driven system exquisitely capable of real time assessment with the delivery of reward and punishment all of which will be overseen by the state.”

It’s still under construction but supposed to go full-fledged by 2020. An individual’s score might be enhanced if he or she volunteers at a charitable agency (but probably not a church). It might be lowered if one is late paying a bill. A state-sanctioned reward might be a preference in adopting a pet; a state-sanctioned punishment might be to throttle the offender’s internet speed. Punish unproductive behavior and reward good behavior via centrally planned algorithms. Its advocates truly believe it will enhance China’s growth and economic well-being. They don’t seem to care much about what we’d call privacyor freedom.

During the Cold War, there were serious questions over whether American capitalism or Soviet central planning delivered a higher living standard. While the Cold War’s end seemed to answer the question, some modern-day intellectuals—Chinese and American—believe Big Data can abolish markets and “supplant the imperfections of ‘the invisible hand’” with a centrally planned system to deliver a higher living standard. We don’t agree. We concur with the late Milton Friedman’s advice to always choose freedom. Let’s hope we never get a social credit score system in the USA.•

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Bohanon and Curott are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.

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