An Introduction to Privacy in Economics and Politics

Abstract

THE enormous increase in interest in privacy in our society is evident in the public press and in the statute books. In some respects this interest in privacy is paradoxical, for the average citizen has more privacy-more areas of his life in which his behavior is not known by his fellows-than ever before. He lives in a large city, where no one is his keeper; in the small towns of former times privacy was won only by the cleverest people. He works in large organizations, and indeed he (or, more likely, some self-appointed spokesman) laments his alienation. He can shake off most of his past simply by moving-to the South, the West-and no earlier generation except the immigrant waves before World War I was as mobile. If then the privacy issue is a real issue, and not one of those contrived issues that march across the headlines for a time, it probably exists because of the vast growth of government. Governments (at all levels) are now collecting information of a quantity and in a personal detail unknown in history. Consider: it would have been quite impossible for a public official in 1860 to learn anything of the income of a citizen chosen at random without leaving Washington, D.C. Today the files of Social Security, the Internal Revenue Service, the Securities and Exchange Commission, the microfilms of banking transactions, and other sources are potentially available to answer the question, to say nothing of the fact that perhaps one family in three or four receives payments directly or indirectly from the federal government. In addition the government has become the major instrument by which the information-collecting and information-using practices of private citizens are controlled. Technology has enormously changed the mechanics of gathering and disseminating information, but it is politics and economics that direct the uses of the machinery. Three topics in this large subject are explored here: the nature of privacy in economic behavior; the economic effects of