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May 2000
Volume 18, Number 5


Privacy's Real Enemy
Timothy D. Terrell


Thechnology is Now Available that would allow your grocery store to track the movements of customers across the store using the distinct infrared signature of each individual. By linking the data with information at the checkout counter, the purchasing habits and meanderings of each person could be analyzed. 

Stores of all kinds hope to use the information to place products where they will be most convenient for shoppers and least likely to be passed over by potential purchasers. For instance, if the data reveal that customers who buy hats also buy scarves, hats could be located near scarves so as to reduce the time cost to customers and boost scarf sales. Customers have expressed some concern about the possible misuse of the vast quantities of data gathered by such a system. Could information about an individual' s health gleaned from purchases at the pharmacy be sold to a third party, perhaps a direct mail company, an employer, or a prying neighbor? What rights do individuals have not to be watched? What rights do firms have to observe customers or employees on their premises? The question becomes even more salient in an age when vast quantities of personal information are transmitted via the Internet. Online shoppers have become wary of sites that collect information about individuals, frequently without their knowledge, and use it to aim ads at those most likely to be customers, or sell the data to others who will use it for their own marketing campaigns. Some web surfers and others have objected, claiming a "right to privacy." A March Harris Poll indicated that 57 percent of respondents wanted government to pass laws on how personal information is collected. Senator Robert Torricelli (D-N.J.) has been pushing a bill that would require websites to get the explicit permission of visitors before collecting most kinds of data. 

But government is no friend of personal privacy. In light of the Census Bureau' s and Internal Revenue Service' s recent demands for highly personal information on each US resident, and the presence of other intrusive agencies, it is surprising that so many Americans would turn to government for protection from firms gathering highly personal information. 

At least privately-run websites don' t have text spread across the screen implicitly threatening the use of force if information is not handed over. In contrast, large bold letters on the envelope from the Census Bureau reminded the recipient that a response is required by law. We can be thankful the census comes only once every ten years. Perhaps the most outrageous offense comes annually, at tax time when the government pries into our personal finances. IRS abuses are well-recorded and universally despised. 

The list of government privacy abuses seems endless. Anyone who has been called for jury duty knows the invasion of privacy that takes place when being examined during jury selection. Truthful responses to all questions, no matter how absurd or intrusive, are required by law. Government can be far more invasive than any website, and cannot be trusted with the confidential information they collect. Americans have reason to be concerned that personal files compiled by the FBI might end up in the White House, being perused for the private details of political opponents. 

The problem is no better outside the United States. In a move that caused concern among privacy advocates worldwide, the government of Iceland sold the medical records of its 275,000 citizens to DeCode, a US medical research company. Genealogical records were sold as well, though citizens were at least allowed to refuse participation in the genealogical database. 

If privacy abuses are a concern, then government is the first and greatest offender. Beyond confronting the most serious privacy offenders first, we should consider what legal limitations on the use of knowledge an individual in a free society is entitled to place upon others. Murray Rothbard pointed out that "there is no such thing as a right to privacy except the right to protect one' s property from invasion." How can there be a right to legally prevent someone from using the knowledge in his own mind, even if it is knowledge gained about another individual? Most people recognize that a store manager has the right to observe his patrons. Hardly anyone, except a thief, has a hatred for security cameras. When on another person's premises, visitors are subject to being watched. To deny the proprietor the right to view what happens on his property- or to record what goes on for later reference- would seem to be an egregious violation of his own property rights. For a grocery store owner to observe customers or employees (whether with an eyeball or an infrared scanner) is entirely within his rights. 

Much of the proposed legislation for websites (including a Senate bill sponsored by Ron Wyden [D-Ore.] and Conrad Burns [R-Mont.]) focuses on requiring such elements as - opt-out- clauses in privacy policies¶ the user can choose not to have information shared, or receive certain mailings. Senators Wyden and Burns are forgetting a key distinction between the market process and government. A free market always has an implicit opt-out policy. If the shopper doesn' t care for the product or the uses made of information gathered on him while on the site, he can refrain from using the product or visiting the site! 

If the site doesn' t disclose its privacy policy, and if a sufficient number of potential customers are put off by the omission, market forces will produce either privacy-respecting competitors or a change in the existing site. Of course,  "opting out" of the most offensive government information-gathering expeditions is typically not allowed. 

Private firms seeking information about individuals are almost entirely doing so for the benefit of the individual - to offer a product well suited to the individual without wasting resources sending ads to those who are not interested. The same cannot be said about governments seeking personal information. 

As Chris Westley observed recently on, "the federal government needs [census] data for the same purpose that Proctor & Gamble needs market research, the difference being that P&G will use it to try to meet consumer demands through voluntary exchange, whereas the state will use it to force involuntary exchange - to identify municipalities that should be placed on the dole, and those that should fund them." 

Government' s hypocritical crusade for privacy in Internet commerce shouldn' t divert our attention from the genuine problem of government snooping. Instead of proposing further restrictions on how individuals and businesses use information, we should repeal the laws that make government the real enemy of privacy. 


TIMOTHY D. TERRELL [], an adjunct scholar of the Mises Institute, teaches economics at Liberty University. FURTHER READING: Ludwig von Mises, Economic Policy: Thoughts for Today and Tomorrow (Washington, D.C.: Regnery Gateway, 1989); Murray N. Rothbard, "Knowledge, True and False," in The Ethics of Liberty (New York: New York University Press, 1998), pp. 121-28; and Christopher Westley, "Weathering the Census," at www.


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