Regulating Privacy: At What Cost?

WASHINGTON — Privacy advocates who successfully transformed such previously arcane matters as credit bureau databases and DoubleClick cookies into mainstream concerns are close to winning a truly epic battle.

WASHINGTON — Privacy advocates who successfully transformed such previously arcane matters as credit bureau databases and DoubleClick cookies into mainstream concerns are close to winning a truly epic battle.

After years of agitating by liberal groups like the American Civil Liberties Union and the Electronic Privacy Information Center, both Democrats and Republicans are suddenly expressing their support for sweeping new regulations of U.S. businesses.

Yet schemes like a federal privacy commission — suggested this year by a bipartisan duo in Congress — don’t exactly cheer free-market organizations, which have been largely silent in this debate so far.

In response to increasingly aggressive bills and shifting public opinion, libertarian groups in Washington and elsewhere have begun to quietly gird themselves for an all-out battle in new and unfamiliar terrain.

George Mason University’s Mercatus Center will hold a privacy event on Tuesday populated with laissez-faire economists, while the Competitive Enterprise Institute is about to publish a book titled The Future of Financial Privacy, which blasts private-sector regulations.

CEI has also recently hired more policy analysts in this area, and held a related conference.

“Why did it take so long? Because there are more of ‘them’ than there are of us — advocates of liberty and limited government have too many battlements to defend,” says David Boaz, vice president of the Cato Institute.

The Cato Institute and other like-minded groups generally oppose government regulation of what information firms can and cannot collect, arguing that consumers should make up their own minds instead.

Some libertarians also stress the economic benefits of information-sharing by saying it lowers prices. “What the privacy-regulation advocates just don’t get is the benefits of information,” Boaz says. “There’s a positive value to being offered things that will interest you, and it’s hardly something to be feared.”

Sonia Arrison, director of technology policy at the Pacific Research Institute, says her group and others were slow to realize the public impact of their opponents’ arguments.

“I think libertarians were slow off the mark because they simply couldn’t believe that the public could be convinced that government is best in protecting privacy,” Arrison said. “Throughout history, government has been one of the biggest violators of privacy, so some libertarians cannot fathom why anyone would think that government should now be trusted to protect it.”

Last week, former Republican Hill staffer Jim Harper launched a libertarian privacy website, privacilla.org. A half-dozen groups, including the Heritage Foundation and Citizens Against Government Waste, paid small sums to support his effort.

Its theme, as described in the title of a report on the site: The Government Sector — Greatest Menace to Privacy by Far.

“I’m not at all certain that EPIC et al. captured public opinion so much as correctly assessed the public’s appreciation for anonymity,” says Erick Gustafson of Citizens for a Sound Economy, which is chaired by former White House counsel C. Boyden Gray, who served during former President George Bush’s term.

“An individual has free-floating anxiety about others knowing too much about him or her — a general predilection toward paranoia — but individuals don’t care enough to (take their business elsewhere),” Gustafson says.

Business-world allies of Citizens for a Sound Economy can be notoriously fickle.

Last month the group condemned a speech by Hewlett-Packard CEO Carly Fiorina in which she called for government regulation. Groused CSE: “Privacy legislation will only serve to empower government at the expense of liberty.”

Gustafson says that another useful tactic is to compile a list of government privacy misdeeds — a move that’s consistent with libertarians’ general focus on limiting state power.

Liberal groups also oppose government surveillance such as Carnivore, the Clipper Chip, and mandatory backdoors in encryption software. But they see corporations as the real — and growing — problem.

Marc Rotenberg, director of EPIC and a careful student of privacy trends, says: “I don’t doubt that government is a real threat. But I think increasingly the tools of surveillance will come from the private sector. Things have changed a lot since the days of Clipper.”

Adds EPIC General Counsel David Sobel: “I think that libertarian focus on the government to the exclusion of the private sector is short-sighted, because increasingly what we’re seeing is that the government is (obtaining information from) the private sector collectors of information.”

Cato’s Boaz replies: “We need strong protections against government access to information about individuals, including strong protections for companies that don’t want to give information about their customers to the government. But I wouldn’t want to ban money just because the government might try to get it.”

Making a tough fight even more difficult for libertarian groups is that some conservatives — their usual allies in opposing regulations — have sided with liberals.

“If the private sector is so callous with regard to the identities they’ve collected, then I think the government needs to step in and rein in the private sector,” says Lisa Dean, vice president of the Free Congress Foundation. The group was founded by legendary conservative Paul Weyrich, who also was the first president of the Heritage Foundation.

“I think people (at other groups) have jumped on the bandwagon here because it’s a money-maker for their organization,” Dean says.

That’s not a surprise, says Arrison of the Pacific Research Institute. “Conservatives will always have a problem with privacy because they are not consistent in saying that government should stay out of the lives of citizens,” Arrison says. “They allow for government meddling in issues such as abortion and religion — two things most people consider private.”

Even the Electronic Frontier Foundation, with board members that include Net-libertarian icons John Perry Barlow and John Gilmore, supports government regulation.

“We aren’t against the whole concept of creating laws. We don’t believe that self-regulation is working,” says EFF executive director Shari Steele. “Self-regulation as far as privacy is concerned has proven itself to be a huge flop.”

One staunch friend that libertarians have inside the federal government is FTC Commissioner Orson Swindle, often a lone free-market voice inside the commission.

“I think the advocates have claimed the high ground because privacy is an easy issue to demagogue and play on emotions,” says a source close to Swindle.

Author: Declan McCullagh

News Service: Wired News

URL: http://www.wired.com/news/politics/0,1283,38878,00.html