Nearly every moment of our lives, we’re producing data about ourselves that companies profit from. Our smartwatches know when we wake up, Alexa listens to our private conversations, our phones track where we go, Google knows what we email and search, Facebook knows what we share with friends, and our loyalty cards remember what we buy. We share all this data about ourselves because we like the services these companies provide, and business leaders tell us we must to make it possible for those services to be cheap or free.

Facebook’s business has relied on the trade of data for free service since we started it in our dorm room nearly 15 years ago, but it’s taken the Cambridge Analytica scandal to educate many users about just how this works. Just like many other business leaders, Mark Zuckerberg describes this as a win-win – people stay in touch with friends and family more often through a free service, and businesses can more efficiently spend marketing dollars to fuel corporate profits, making Facebook free to all. But one party has benefited a lot more than anyone else: Facebook shareholders. Despite all the recent controversy, Facebook is still valued at nearly $500bn.



Our data is not just fueling record profits at tech companies like Facebook, Google, and Amazon. Banks, large retail companies, and health insurance providers have also seen the opportunity to collect and profit from the information their customers are volunteering to share.

We should ensure that everyone creating data shares in the economic value it generates

Media companies like Netflix use precise data about what we watch, for how long, and when to inform the future shows they develop. Traditional blue chip companies like GE and Siemens now describe themselves as data businesses. The healthcare startup Oscar relies on analyses of its customers’ health troubles – and insights about which doctors perform the best – to support its new business model for health insurance. This new avalanche of data has in some cases created better services for consumers, but across the board, it has created historic profits for the companies that collect, organize, and develop insights from all this data. (Advances in artificial intelligence are likely to give even greater advantage to the players who already have so much data because they’ll be able to extract more insights from data that only they have.)



We should not only expect that these companies better protect our data – we should also ensure that everyone creating it shares in the economic value it generates. One person’s data is worth little, but the collection of lots of people’s data is what fuels the insights that companies use to make more money or networks, like Facebook, that marketers are so attracted to. Data isn’t the “new oil”, as some have claimed: it isn’t a non-renewable natural resource that comes from a piece of earth that a lucky property owner controls. We have all pitched in to create a new commonwealth of information about ourselves that is bigger than any single participant, and we should all benefit from it.



Mark Zuckerberg and Chris Hughes, pictured at Harvard shortly after Facebook launched. Photograph: Rick Friedman/Corbis via Getty Images

The value of our data has a lot in common with the value of our labor: a single individual worker, outside of the rarest professions, can be replaced by another with similar skills. But when workers organize to withhold their labor, they have much more power to ensure employers more fairly value it. Just as one worker is an island but organized workers are a force to be reckoned with, the users of digital platforms should organize not only for better protection of our data, but for a new contract that ensures everyone shares in the historic profits we make possible.



The first half of this new bargain – how to create government regulation for effective data protection – is beginning to happen, and even the tech CEOs see this as timely and necessary. Regulation should require companies to be more transparent about what data they’re collecting and storing, and they must recognize their responsibility to safeguard the data they have – or face hefty fines. A regulatory agency could create multiple tiers of responsibility, the highest levels for the big, entrenched companies like Facebook and Google, and lighter ones for startups, to ease their entry into the marketplace.



But the second half of the conversation – how to ensure that citizens share in the wealth their data creates – is only beginning. One approach would be through the creation of data agents, as some, including the legal and economic scholars Eric Posner and Glen Weyl, have called for. These agents would represent Google or Facebook users and collectively negotiate on their behalf with the tech companies, potentially offering even more attention and data from users for more payment. To be fairly compensated for their labor, users would need to be willing to leave these platforms if their demands were not met, and any such arrangement would require a clearer regulatory structure to support it.



Another, perhaps complementary, approach might be to create a new tax on the revenues of any companies that collect and store meaningful amounts of information and data about people to build their businesses. The revenue from this data tax would fund a data dividend to every American each year. Once a year to start – and potentially monthly later on – every American would receive a check as a royalty payment for the data they create.



There is a template for how to do this. In Alaska, unlike in the lower 48 states, the rights to minerals, oil and natural gas, are owned by the state, and not by any single landowner. At the moment of the oil boom in the 1970s in Alaska, a Republican governor there forged an agreement between the public and the oil companies: you are welcome to profit from our natural resources, but you must share some of the wealth with the people. He created a savings account for all Alaskans called the Permanent Fund, and voters approved it overwhelmingly in a statewide referendum.



Google’s CEO, Sundar Pichai. Large companies profiting from Americans’ information could be subject to a data tax on gross revenues. Photograph: Justin Sullivan/Getty Images

Oil companies pay a significant portion of their gross revenues to the state, and a portion of that money is earmarked to fund a savings account for the people. Today, that savings account distributes 2.5% of its total value every year, split evenly between every resident of the state of Alaska. This amounts to about $1,500 a year per person, or $6,000 for a family of four. While oil and gas companies have thrived in the state, the Permanent Fund Dividend has dramatically reduced the number of people living in poverty in Alaska and is a major reason Alaska has the lowest levels of income inequality in the nation.



In the case of the data dividend, any large company making a significant portion of its profits from data that Americans create could be subject to a data tax on gross revenues. This would encompass not only Facebook and Google, but banks, insurance companies, large retail outlets, and any other companies that derive insights from the data you share with them. A 5% tax, even by a conservative estimate, could raise over $100bn a year. If the dividend were distributed to each American adult (although one could argue teenagers should be included given their heavy internet use), each person would receive a check for about $400 per year.



The amount of data we produce about ourselves and the profits from it would almost certainly grow in coming years, causing the fund to grow very large, very fast. You could easily imagine each individual receiving well over $1,000 a year in just the next decade. Unlike oil, this data is not an exhaustible resource, enabling the fund to disburse the total revenues each year.



Chris Hughes, a co-founder of Facebook. Photograph: Jason Gardner/The New Republic

A data dividend would be a powerful way to rebalance the American economy, which currently makes it possible for a very small number of people to get rich while everyone else struggles to make ends meet. (I write about this, and my own role in Facebook’s early days, at length in my recent book Fair Shot.) A data dividend on its own would not be enough to stem growing income inequality, but it would create a universal benefit that would guarantee people benefit from the collective wealth our economy is creating more than they do today. If paired with fairer wages, more progressive taxation, and stricter enforcement of monopoly and monopsony power, it could help us turn the corner and create a country where we take care of one another and ensure that everyone has basic economic security.



The idea of a data dividend is very much in a conceptual stage, and there are many questions about how it might work. Here are the three biggest questions that need further exploration:



Is data the right thing to tax?

It’s not just the big tech companies that are benefiting from the creation of vast amounts of consumer data

A tax inherently creates a disincentive to use or create whatever is being taxed. Thus most people rightly want to tax negative things like alcohol or cigarettes rather than positive things like labor or income. It’s hard to make the case there’s anything wrong with data in and of itself, and in fact, the opposite may be true. More data could help improve the safety of our cars, create new breakthroughs in health science, and support new products and services that create more wealth and prosperity. Would it be better to tax something that we can all agree is bad, like carbon, rather than data itself?

On the other hand, a tax on data would be similar to a payroll tax or any other kind of tax on income or labor. Technically the tax disincentivizes labor or earning more income, but, at reasonable levels, only marginally. If it’s popular and not so large to meaningfully disincentivize data creation, it may be worthwhile.



How do you define which companies would be subject to the tax?

It’s not just the big tech companies that are benefiting from the creation of vast amounts of consumer data. Insurance, retail, consumer finance and banking companies all significantly benefit from knowing more and more about their existing customers or potential ones. But how far might you take the tax? Would any company using a consumer data set in its work be subject to it? A consumer goods company that chooses which markets to invest in based on purchase data? A production company that creates certain movies based on market data about who enjoyed similar ones? Just the companies that agree to “terms of service” agreements with consumers directly? How large would a company need to be to be subject to the tax, and how should we measure size – by revenues, data, or something else?

How do you ensure the tax doesn’t become a justification for giving up on other regulation?

Even Mark Zuckerberg has said that Facebook and companies like it need to be subject to greater regulation. A campaign for a data dividend could run the risk of releasing the pressure to more appropriately regulate companies that derive their profits from the data of users. Advocates would need to tie the dividend closely to the creation of some kind of digital agency with oversight responsibilities or a data privacy bill of rights, a strong intervention that would ensure that the status quo does not continue.

These challenges should encourage more thinking about how a data dividend might work, not less. We have structured an economy that has made it easy for startups to grow from dorm room musings to enormous companies in just a few years. Just as we created the rules of the road to enable Facebook to capture all of this value from its users, we should now modify those rules to ensure that everyone shares in the upside of the success of Facebook and all companies that profit from the data we give them.



There are many questions about how to do this, but the principle underlying it should be clear: companies that benefit from the data we voluntarily provide should be required to protect it and to share that wealth with the people who made it possible.

