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Why the US needs public-private partnerships for digital infrastructure

vector illustrations of various home devices and computers connected by lines

The Senate’s proposed infrastructure bill includes billions of dollars for broadband, but financial investment alone won’t be sufficient to keep America on top. It’s critical that legislators go one step further, leveraging public-private partnerships that benefit society at large. 

Similar to investments in the postal service and railways in the early 19th century, building creative public-private partnerships will play a vital role in spurring innovation and building prosperity, not just for Big Tech but for American families. As we’ve seen time and again, markets are great at wealth creation but agnostic about its distribution, so governments need to step up to the plate — and quickly. It is important for the state, society and Big Tech to find the right balance of power that increases the capacity of our state to serve us, our privacy, prosperity, security and liberty.

In their new book, “The Narrow Corridor,” Daron Acemoglu and James Robinson remind us that much of America’s physical infrastructure was built on public-private partnerships. By design, the newly created American state in the early 19th century was a “shackled Leviathan” with very limited capacity to accomplish anything ambitious, so it had to be creative about building state capacity through novel partnerships with markets.

For example, in the 1800s, mail was carried between physical post office locations by private mail contractors. The Pacific Railroad Act of 1862 went further, giving railroad companies five square miles of land on each side of the track for every mile of track laid, which they sold subsequently as the land became valuable. Essentially, investors did the heavy lifting and took the risk. Such initiatives gradually enhanced the capacity of the state, while simultaneously empowering its citizens to create wealth by leveraging the infrastructure.

The digital economy is similar in several ways. In principle, Section 230 of the Telecommunications Act of 1996, which has protected platforms from liability related to their content while enabling them to expand their capabilities, isn’t much different that the Pacific Railroad Act of 1862. It gave Big Tech free rein to build the digital railroad, and the content flows along its rails. Their “free land” has been data while no one was paying attention or until their monopolies were established.

Google, for example, owns the digital advertising marketplace while simultaneously being a seller — akin to the New York Stock Exchange trading on its own behalf. We would not accept this in the financial industry, so why are we permitting it in the digital economy? Amazon falls into the same category. Facebook’s algorithms manipulate individuals in toxic ways, arguably increasing teen girl depression and causing political polarization. It’s time for change.

The good news is that the digital railroad has already been assembled by the existing partnership with private enterprise, thanks to Section 230. But unlike capital- and labor-intensive physical infrastructure like railways, airports and building planes, digital platforms involve unique risks to “operate” that are worth considering.

The danger with digital platforms is the risk of unintended consequences at scale. We’ve glimpsed this with social media already, where algorithms have impacted election outcomes and changed the course of history without the explicit goal of their designers — arguably, as a side effect of algorithms designed to maximize “engagement.”

But we cannot afford such risky unintended consequences with public systems where we get just one chance. We can’t tolerate errors with Blockchain technology that records transactions, for example, or an error-prone tax department machine or a Robocop making wrongful arrests. That’s why current-day systems of governance have multiple levels of human oversight. But that’s neither the future, nor an efficient way to build the right kind of state capacity. We need to think about technology for society in new ways.

Some core design principles for thinking about public digital infrastructure and data rights are emerging from India. Their goal is to keep the objective and function of platforms simple and data private. India leverages the authentication platform Aadhar, designed to confirm identity in real-time. Payments is similarly viewed as a generic digital utility, as is the ability for users to consent to how their data are used through platforms that act as “data fiduciaries.” For U.S. lawmakers, this type of public-private partnership is not new — it just requires recasting the physical railroad into a digital one.

If the state leaves internet and data governance unregulated, it’s likely to be worse both for it and society, leaving just one winner, Big Tech.

Vasant Dhar is a professor at the NYU Stern School of Business and director of Graduate Studies for the PhD program at the Center for Data Science at New York University. 

Tags Amazon digital economy Facebook Google Information economy Public–private partnership

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