Governments can reap major benefits from the data economy

01 April 2019 10 min. read

In today’s digitised economy, data is everywhere. This is allowing companies of all sizes to use data science techniques such as data analytics, artificial intelligence and machine learning in order to gain a competitive edge. Likewise, the public sector can also reap major benefits from data – Zoltan Tanács, a partner at Horváth & Partners, reflects on how governments can thrive in the new era of ‘dataism’.

In the brave new world of digital disruption, big data and emerging AI, traditional values, beliefs, worldviews and even religions are changing and there is a new, emerging “religion” out there called “Dataism”. According to that, if you have the data you will be able to understand and manage the world around you. Is government a possible domain for “dataists”?

Definitely, governments have no other choice. The power of a ruler has always been secured by his information/data processing capabilities. In ancient times, the most powerful man was the one with the most social connections and best allies in his tribe. In medieval times, a well-organised kingdom with centralised administrative processes could outperform less organised ones. In the modern history, liberal democracy also proves its merits in advanced information processing capabilities through distributed and transparent information exchange between the government and the constituencies.

We don’t know yet, what kind of democracy or other governance models will be the winner of the future – but it must have good and continuously improved data processing capability. Otherwise, the real owner of the data like Google or Amazon will soon make governments irrelevant.

Data is an aspect, but not the holy grail. At all times it was not only the facts (was it called data in the Middle Ages?) that led to decisions and was used for the good of the people. Manipulation is as old as mankind. And nowadays the technology out there is so powerful that we need to control that. The best of data will not help if in the wrong hands.

What kind of data is important for governments?

Well, a nation’s data asset covers a very broad set of data. It consists of Public Sector Information (PSI) and non-governmental data as well. Both can consist of personal data (e.g. names, addresses, personal IDs) or non-personal data (e.g. statistics or business data). Part of the nation’s data asset belongs to its citizens, this is their personal data.Governments can reap major benefits from the data economyIt is easy to imagine the basic, traditional data types like headcounts, social insurance IDs, GDP numbers. Nowadays, this legal data and economical statistics dominate our understanding of data, and even now governments struggle to utilise this kind of data. However, in the future, governmental data management will go through a radical change. Data quantity will explode, quality will dramatically change, and the question of data ownership will be critical. New types of data will emerge, like health/medical data delivered through biometric sensors operating 24/7 or data about human behaviour measured through advanced camera systems with face recognition. Those governments, which can utilise these new types of data, will gain competitive advantage.

What are the best practices for government data asset management?

China, for example, is testing a so-called “social credit system” based on a continuous measurement of its citizens’ financial, social, moral and political behaviours. For instance, “good citizens” in this system would be the one who do not have negative financial credit records, who take care of the senior family members, who are a blood donor, etc. For them, they may get better credit conditions from the banks, privileges in social benefits such as housing and hospital treatment. It is an advanced way of using data, but also an intimidating way of using the citizens’ private information. Is this a best practice? Maybe George Orwell could tell, if this 2019 is his “1984”.

I am convinced that all governments should develop their data management strategy. They should define what kind of data they have and want to have, how they want to store, transform and utilise these data. Governments should consider how far they could open non-personal data. Research has shown that open data policy supports business activities and can improve the economic competitiveness of a country.

Regarding personal data, governments and citizens have to come to an agreement on how far citizens are willing to give away their own personal data for governments to realise the advantages of a centralised, nationwide data ecosystem.

On personal data and privacy, the European Union has a new legislation, the General Data Protection Regulation (GDPR). How would you evaluate the first experiences with the new GDPR regulation?

The protection of personal data is getting more and more important. The Cambridge Analytica scandal of Facebook has shown that the USA, in the future, will have to consider some kind of privacy regulation. GDPR is a big step forward in protecting online privacy – but also a big competitive disadvantage for the EU compared to China or the USA, where much looser legislation exists.

Our first experiences show that companies pay much more attention to privacy issues than before. They have started and implemented big GDPR projects to comply with the new law. The sensitivity of customers improves regarding their own privacy. Still regulation is in many cases just behind real life. It hinders in many cases business and puts many administrative burdens on the normal operation. There will be a new, emerging segment of consultancies and lawyers, who specialise on privacy issues.

“Governments should define their dataism path – they have no other choice – and embrace action.” 
– Zoltan Tanács, a partner at Horváth & Partners

GDPR is about ensuring high standards for privacy – but it does not cover all aspects of data security. How do you see the importance of data security topics in government?

Information security will get on the top of the agenda of government CIO’s in the coming years. Compared to the number and causalities of “traditional” armed conflicts, the number of cyberattacks is increasing rapidly. The example of the past US presidential elections showed that cyberattacks can influence the global political world. Next to traditional tools of cybersecurity (building redundant IT systems, applying latest firewalls, antivirus systems, encryption tools, biometric identification etc.) artificial intelligence will gain on importance in detecting and preventing online attacks.

Let us imagine that a government has a solid data management strategy and is able to implement it and ensure the necessary level of security as well. What can be the benefits for the government and citizens?

Increased competitiveness for the country and a better life for the citizens by decreasing administrative work, as well as better, cheaper public services. And of course more effective political decision-making. If we know more about health, trade, traffic, crimes etc. we can have systems give us accurate scenarios and options for measures and achievable impacts. Less talking about personal estimations but more fact-based decision-making.

However, this improvement has also its price: we have to share an increasing amount of our own personal data with the government if we want to enjoy these benefits. That is not possible without trusting the government.

How will “dataism” shape the future of successful government models? What do you think will be the winning government model of 2050?

I truly believe that governments of today face a big challenge that threatens their very existence. The governance capabilities of data could directly affect the decision-makers’ ruling power. Governments seem to lag in this race. If governments do not speed up, tech giants like Facebook, Google, Apple or Amazon might challenge the government’s ruling capabilities. Also, if the government cannot regulate such companies on how to use their data properly, it fails to protect citizens’ basic civil right. The big question is how to protect and own national data in a global digital world.

Governments still have the political power to do so – at least for another couple of decades. Nevertheless, what kind of governments will be more successful in this? I think the traditional model of liberal democracy will transform into something new.

Yuval Noah Harari, the famous author of best sellers ‘Sapiens’ and ‘Homo Deus’ describes the first model in his latest book ‘21 Lessons for the 21st Century’ as the “digital dictatorship”. Imagine a state, where all citizens are monitored 24/7 and not just in the ways we know today, by using cameras or checking phone calls or emails, but using wearable biometric sensors and by advanced cameras that measure blood pressure, heartbeats, emotions, even thoughts. Technically part of this is already possible today or will be possible soon. In this digital dictatorship example, the situation where if a citizen looks at a picture of the prime minister in an angry manner, he could be detained immediately.

A much more favourable option of tomorrow is the further development of the actual democratic model, also known as the “data enabled democracy”. In this world, both citizens’ and government’s “data consciousness” are improved and both come to a joint agreement about the utilisation of personal and non-personal data assets of the nation. Although part of the personal freedom might dissolve, it is compensated by the benefits of a more centralised data ecosystem and the better services it enables.

We don’t know yet which model will succeed – maybe something in between. One thing we know for sure: governments should define their dataism path and embrace action.

The interview with Hungary-based Zoltan Tanács is part of a series of interviews with leaders from Cordence Worldwide on the digital future of government services.

Related: The European governments with the best digital services.