Brisbane

Nicholas Gruen E ngruen@gmail.com T @ngruen1

The digital architecture of economic success: Presentation to Locate 15

11th March 2015

Outline

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Public and private goods The free rider problem/the free rider opportunity Some shortcomings of the debate

• Open data is more than PSI • Productivity requires more than competition • An example from spatial information

Takeouts

Public goods – goods that no-one will supply if the government doesn’t

Public goods Public goods . . . present serious problems in human organisation.

Vincent and Elenor Ostrom - 1977

(as a problem)

Public goods (as an opportunity)

That ideas should freely spread from one to another over the globe, for the mutual instruction of man, and improvement of his condition, seems to have been benevolently designed by nature, when she made them, like fire, expansible over all space, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation.

Thomas Jefferson to Isaac McPherson, August, 1813

The Wealth of Nations (1776)

• Private Goods

The Theory of Moral Sentiments (1759)

• The social preconditions of markets (Public Goods)

Language

Adam Smith

Emergent Public goods

The ecology of private and public goods

Private Goods • Traders address

their mutual self-interest

Public Goods

• Marketplace for meeting

• Unit of exchange • Price discovery • Liquidity

What drives economic progress?

Trade Competition Technology ⇒ Progress is mostly market development

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What drives progress?

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Trade Competition Technology ⇒ Progress is mostly market development

But . . . Economic progress requires new public goods

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Web 2.0 platforms => emergent public goods:

Google (1998) Wikipedia (2001) Blogs (early 2000s) Facebook (2004) Google Maps (2005) Twitter (2006)

Ecology of public and private goods

Private Goods • Meeting private

needs • Linking to other

websites

Public Goods

• Google uses this information to rank sites

• Everyone benefits

Google monetises with ads

The economics of abundance: a new birth of freedom

Public goods . . . present serious problems in human organisation.

Vincent and Elenor Ostrom - 1977

He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. Thomas Jefferson

Public goods as a problem Public goods as an opportunity

The economics of abundance: a new birth of freedom

Public goods . . . present serious problems in human organisation.

Vincent and Elenor Ostrom - 1977

He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. Thomas Jefferson

Public goods as a problem Public goods as an opportunity

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PSI and Research Openness

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Conservatively estimated that greater openness would contribute around 0.27% GDP Or 1/7th of the 2% Growth Target

Lateral Economics’ case studies

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Macro-economic management

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5%

7.5%

Better use of existing real time PSI • BAS data on

• Activity • Exports • Capex

• PAYE data

Open-sourcing forecasting models • As Treasury and the US Fed have done

Using real time private data • Supermarket scanner data • Payroll and accounting Data from online

providers Xero/MYOB

Better macro-economic management ($ billions p.a)

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Total GDP $1,554 Consumption $1,136

Existing cost of fluctuations (1.35% of consumption) $15.3

5% reduction in volatility => 9.75% of cost of recessions $1.5

7.5% reduction in volatility => 13.7% of cost of recessions $2.1

Total benefits of open data $3.6

Better Workplaces

Better PSI • Release disaggregated State of service data

• As they do in the US

• Deliver better machine readability on government data

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Benefits to better job matching $0 for better matching within public service 5-10% lower stress at work (=$14 bil) = $1.2 bil $0 for productivity growth Matching teachers better to jobs = similar benefits to higher teacher quality Jensen (2010) estimates a 10% better teacher quality => 0.2% better growth ¼ of that => 0.05% higher GDP growth = $2.3 bil = $3.4 bil

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Lateral Economics Case Studies

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Open Data

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The economics of abundance: a new birth of freedom

Public goods . . . present serious problems in human organisation.

Vincent and Elenor Ostrom - 1977

He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. Thomas Jefferson

Public goods as a problem Public goods as an opportunity Beyond PSI

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Windows on Workplaces

Why isn’t employee engagement data open? Government suasion in education/health workplaces to open more data Comparison requires a standard Government could convene standard setting

• Voluntary standard making and reporting • Government bodies report to it • ABS survey of firms to establish benchmarks

Strengthen the market for good management • From both labour and capital market

Could do the same in …

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Investment advice Real estate agents Safety and quality of hospitals Many professional services

When the economics of abundance runs out

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10,000% Productivity Improvement

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Interfaces • Open Aust • SeeClickFix • CareMonkey

Internal Innovation • OneTouch • FixMyBudget • e-taskr

Chaperone • Murmur

Directory • HealthKit

Public Private Partnerships • 23andMe

Seeding altruism • Code for Australia

Validation • Rate my prof • Rate Govt Services

Building platforms • Open Australia • Sense-t

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Government 2.0 • Getting serious about opening data

Institutions • Mining data • Pharma data

Standards • Windows on

Workplaces

Open Research • Getting serious about opening research data

Data Linkage • Building data

linkage assets Realtime Macro • ATO data • Open forecasting • Private accounting data

Data Sharing • Midata • AP Digital Postbox

Collapsing transactions costs

The technology stack

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Standards

The Wealth of Nations (1776)

• Private Goods

The Theory of Moral Sentiments (1759)

• The social preconditions of markets (Public Goods)

Language

Adam Smith

Standards

Emergent Public goods

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Today’s operational technology systems work largely in silos. However, in the future, a fully functional digital ecosystem will require seamless data sharing between machines and other physical systems from different manufacturers.

World Economic Forum

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Review of Geocoded National Address File (G-NAF)

“many organisations doing similar things with the same data by different address custodians on different timeframes with differing results and costing a lot.”

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Review of Geocoded National Address File (G-NAF)

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These systemic issues with the current supply chain for geocoded address data in Australia lead to a national dataset that: Is cost-inefficient Has significant duplication of effort, inconsistencies, and ambiguities Is based on a supply chain that is structurally unable to provide currency levels that many users expect Doesn’t allow users to identify non property-based locations, or locations that don’t have a (complete) street address Makes it impossible or cumbersome for citizens to report errors or updates Is not designed to support emerging requirements and use-cases.

From G-NAF review

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Sharing of geocoded addresses (sourced from G-NAF) between government agencies is impeded by the current licensing model designed to support …. funding … and protect the existing PSMA distribution channels. While guaranteeing product sustainability, this licensing regime limits business improvement initiatives for government agencies needing to collaborate in providing more cost effective and efficient community services.

From G-NAF review

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The reverse information flows, or back-channels, from Users to VARs to PSMA to Jurisdictions to Councils are either ad-hoc, informal and undocumented or non-existent. This weakens the whole geocoded address supply chain, as valuable user feedback which could be used to improve the quality of both the address datasets and the systems that constitute the supply chain is lost.

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(35) Una mensura vini sit per totum regnum nostrum, et una mensura cervisie, et una mensura bladi, scilicet quarterium Londoniense, et una latitudo pannorum tinctorum et russetorum et halber-gettorum, scilicet due ulne infra listas; de ponderibus autem sit ut de mensuris.

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(35) There shall be standard measures of wine, ale, and corn (the London quarter), throughout the kingdom. There shall also be a standard width of dyed cloth, russet, and haberject, namely two ells within the selvedges. Weights are to be standardised similarly.

Takeouts on G-NAF G-NAF is digital infrastructure Collaboration more important than competition Should be freely available – with funding from general revenue

• Meets textbook economics (marginal cost pricing) • Lowers transactions costs

Requires top-down urgency, bottom up implementation These principles apply for all digital infrastructure

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Midata data sharing

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Citizens Advice Communications Consumer Panel Consumer Focus Information Commissioner’s Office (ICO) OFCOM Office of Fair Trading (OFT) Which?

AMEE Avoco Secure billmonitor British Gas Callcredit EDF Energy E.ON Garlik Google Lloyds Banking MasterCard

Moneysupermarket.com Mydex npower RBS Scottish Power Scottish Southern Energy The UK Cards Association Three Visa

The end

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