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The Data Economy Is a Barter Economy – Harvard Business Review

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What is the best way for businesses to use data in a way that feels ethical to consumers and does not spark a regulatory backlash? This question is sparking endless angst in today’s C-suites. All manner of policy responses have been suggested, but one simple and important place to start is to change the way we talk about it. Borrowing an idea from cultural anthropology and describing this exchange as “barter” will clarify the minds of regulators and investors to focus on the scale and nature of long-concealed exchanges that now lie at the heart of the tech world, and how to create a more acceptable framework that protects consumers.

The use of consumer data today is expanding exponentially — as is public and political criticism of these practices. Just think of the political scandals that exploded a couple of years ago around Cambridge Analytica. Or regulators around the world examining whether social media platforms such as Facebook have abused their monopoly powers.

The new bipartisan bills calling for tighter tech regulation that are now circulating in the U.S. Congress — and the appointment of Lina Khan to head the Federal Trade Commission — will only inflame this debate.

So, what is the best way for businesses to use data in a way that feels ethical to consumers and does not spark a regulatory backlash? This question is sparking endless angst in today’s C-suites. All manner of policy responses have been suggested: breaking up tech giants, redefining monopoly controls, introducing new privacy laws, and letting consumers “own” their data to name a few.

One simple and important place to start is to change the way we talk about it. Policy makers, economists, techies, lawyers, business leaders, and consumers should borrow an idea from cultural anthropology and consider the concept of “barter.” Doing this will clarify the minds of regulators and investors to focus on the scale and nature of long-concealed exchanges that now lie at the heart of the tech world, and how to create a more acceptable framework that protects consumers.

At first, this might sound odd. After all, anthropology is one of the least-known social sciences — it’s probably most famously associated with Indiana Jones. And the word “barter” conjures up images of swapping meat for berries — an image that seems far removed from the modern C-suite, let alone Silicon Valley.

Economists tend to assume that barter is a prehistoric practice that disappears whenever societies invent money — that, at least, was the scornful view of Adam Smith, the 18th century intellectual, and it has shaped economic thinking today. Most Western executives have absorbed a cultural assumption that because “money makes the world go round” — to cite the cliché — the most important things in an economy are measured in monetary units and/or organized with money. Transactions that happen without money (i.e. those which are “free”) are thus downplayed and/or ignored.

Anthropologists, however, have a much broader vision of how the economy works. They look at how exchanges bind societies together in a broad sense and know that money-based exchanges are only one of the flows that bind us together. Systems of social credit, gifts, and barter matter too, even if they are rarely discussed in public and cannot be easily factored into an economic model.

Looking at what is hiding in plain sight — i.e. non-monetary flows — can help frame the modern digital economy. After all, what drives the business strategy of companies such as Facebook, Google, and numerous others, is partly an exchange that does not entail money: Consumer data is being collected in exchange for the provision of internet services, just as berries might be swapped for meat.

I would argue that “barter” is the best word to describe this exchange. And if this phrase was inserted into the language of the C-suite and policy making today, with a broader anthropological perspective, this could deliver several benefits. Most notably:

1. It would make everyone aware of both sides of the transaction.

The idea that the modern tech economy depends on two-way — not one-way — flows is often lost in the public debate about data usage. Consumers are not just giving up data (which they sometimes hate), they’re also getting services in return (which they almost always like). Since they don’t want to lose the latter, they continue to deal with social media sites, even amid political outcry.

2. It illuminates the point that consumers don’t seem to want to pay for these transactions with money.

In recent years, tech companies, have offered internet users ways of “selling” their data for money, and paying for internet tools (with money). For example, in 2019, Facebook, created a “Study” app that paid users for access to their data for market research purposes. But consumer interest and uptake has been low. Maybe that reflects inertia. But I suspect it reflects the fact that digitization has made barter so efficient that Adam Smith’s assumption about the evolution of societies is wrong.

3. It draws attention to scale and significance of these transactions for the wider economy.

At present, these flows tend to be excluded from economic measurements (such as gross domestic product data) and investors’ models of company valuations. This is a big mistake: This barter trade needs to be acknowledged to get an accurate picture of how the economy really works, and what companies are worth.

4. It could help policy makers understand today’s corporate monopoly power.

In recent decades, American regulators tended to assume that the best way to tell whether a corporate monopoly exists (or not) is whether consumer prices were high. Khan, the new head of the FTC, is among those who have argued that this approach is outdated, since companies are using monopoly powers even when prices are low. Talking about “barter” might help frame this more effectively.

5. It would make it easier to build a data system that feels more ethical to consumers.

The current system is provoking endless controversy. This isn’t necessarily because consumers want to abolish the use of barter; they probably do not, given how efficient it is. What is needed, however, is an effort to change the terms of the barter trade to give consumers more power. How? By forcing companies to provide far more transparency in these trades and letting consumers control the duration of a trade (i.e. how long data is retained). Most important of all, consumers should be free to cut barter deals with different providers to create competition — which means that regulators should put the onus on tech companies to provide easy data portability, just as financial regulators put the onus on banks to make it easy for consumers to change bank accounts.

By acknowledging the word “barter” — and talking about what is hidden in plain sight — the private sector could and should reshape the current debate itself, embracing a broader vision of how our data economy works. Instead of talking about this in terms of a negative (i.e. “free” or the absence of money), we need a positive, active term.

Or, if you prefer, ponder another cultural wrinkle that economists and techies also often ignore: the original linguistic root of the word “data,” which comes from the Latin word dare, meaning “to give.” This might seem surprising in our modern numbers-obsessed world. Or maybe not: that original root meaning is a small reminder of the exchanges that bind us together, with far more than just money. We ignore this at our peril today. Think of that when you next toss that “data” word around.

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Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

The Canadian Press. All rights reserved.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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