Securing the Digital Frontier: Policies to Encourage Digital Privacy, Data Security, and Open-Ended Innovation



Bret Swanson | American Enterprise Institute

Key Points

  • Explosive growth of digital products and services shows that the benefits of data flows far outweigh the costs. Real anxieties about privacy and security, however, could undermine confidence in the digital marketplace if we do not update our laws, norms, institutions, and technologies.
  • Slow productivity growth in many industries stems from a lack of information intensity—too little data. Policy should encourage the use of more data, while putting consumers in control of sensitive information.
  • We need a new national law to consolidate existing industry-specific laws, prevent a patchwork of conflicting state laws, and clarify the Federal Trade Commission’s enforcement strategy for the digital age.


In a world of exploding information, privacy and security are central but vexing policy questions. How we govern the collection and use of data will affect public trust of commercial and public institutions and also help determine the rate of innovation across the economy.

Intense engagement with digital products and services, resulting in an exaflood of data usage, demonstrates that firms and consumers enthusiastically embrace the digital world. In 2018, US internet traffic reached nearly 50 exabytes per month, and in 2019, global data center traffic is expected to reach 14 zettabytes.1 Voting with their feet, consumer actions show that the benefits of these data flows far outweigh the costs.

At the same time, high-profile data breaches, surprisingly intrusive web tracking, and the confusing nature of social interactions in a hyper-transparent world have caused anxiety—for consumers seeking reassurance, for businesses seeking guidance, and for policymakers seeking the right legal balance.

As information continues to diffuse across the economy and culture, digital privacy and security questions are likely to grow in dimension and intensity. Successful economies and cultures are built on trust. If consumers lose trust in the firms offering them products and services, or in the government’s basic protections, the health of the digital economy and our civic culture could deteriorate.

Current laws, written for siloed industries in a pre-digital era, are likely not up to the task. In a world of extreme data abundance and dynamic cross-industry and cross-border data flows, we may need a new privacy law to protect consumers and encourage open-ended innovation. Privacy is a slippery concept, and it is therefore important to set expectations by defining an analytical framework. Bolstering the approach of the Federal Trade Commission (FTC), which focuses on consumer welfare and rigorous analysis of costs and benefits, is a good place to start.

Laws and regulations, however, cannot solve every problem. Evolving social norms, more robust institutions, and new privacy-promoting technologies will play central roles.


[To read the original column, click here.]

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