Privacy, Piracy, and the New Internet

by S.M. Oliva, Mises Economics Blog
Dec. 23, 2010

The Federal Trade Commission’s campaign to abolish the internet in its present form and replace it with a Depression-era model of government cartels protecting politically connected incumbent firms is predicated on a single word -- privacy. Internet privacy is a “mess,” according to FTC Chairman Jon Leibowitz, and it’s his job to clean it up.

Privacy is just another word for “piracy” in this context. The FTC’s crusade is joined at the hip to intellectual property firms that desire greater internet cartelization so they can strip the web of “proprietary ideas” that, in their minds, should only be distributed through more traditional, top-down channels. Decentralization is the enemy of both government regulators and companies that depend on a lack of innovation to maintain the status quo.

(I’d also remind readers that Jon Leibowitz’s job prior to joining the FTC was as a lobbyist for the Motion Picture Association of America, aka the Copyright Lobby.)

Leibowitz and company say the internet threatens “privacy,” specifically consumer privacy, because the individual cannot adequately control the quantity and quality of personal information that gets out onto the internet. That is true to a point. If you choose to participate in social networking websites, for example, you can disclose as much or as little as you wish. But you also can’t control any information that other people might publish or use without your knowledge. “Privacy,” as defined by the Leibowitzes of the world, has little meaning on a decentralized, global information network.

Some libertarians actually side with Leibowitz on this, however. They’ve sounded all sorts of “privacy” alarms and insist you can never trust anyone with information, especially those Big Evil Corporations. Again, I think this misses the point. Information -- even information about yourself -- is not a sacred or scarce object. Those who argue for “privacy” over data fall into the same trap as those who demand copyright or patent protections for ideas or “inventions.”

The problem, of course, is when information is used to commit acts of aggression, such as using a credit card number assigned to a person without that person’s knowledge. There is aggression -- fraud -- both against the person and the credit card company. However, the mere fact that the number becomes public information does not violate some abstract notion of “privacy.” Heck, virtually every employee of the credit card company, not to mention every merchant you’ve ever deal with, has access to this information.

The FTC is on especially shaky ground to make “privacy” arguments given that it is one of the nation’s largest gatherers of “personal” information. Even the most routine FTC investigation can generate thousands of pages of documents in response, often containing intimate details of an individual business -- and that includes consumer information.

When the FTC announces consumers will get a refund of a few dollars because some company made a “misleading” claim about a product, all that customer data -- which can include credit card information -- goes to an outside contractor hired by the FTC. While Leibowitz now clamors for a mandatory “Do Not Track” feature on all web browsers, there’s no “Do Not Regulate” option for businesses and consumers to keep the FTC from obtaining their information by force.

And that’s the crux of the problem. It’s not a matter of protecting the “privacy” of information. It’s about protecting individuals from acts of aggression. Technology changes, basic ethical principles do not. Aggression is always wrong irrespective of the means.

The FTC is an aggressor. It persistently obtains information through the use of force or direct threats to use force. If you don’t give us your information, you will be punished!

Yet the FTC claims the threat to “privacy” comes not from its aggression, but from websites that gather browsing data from people who voluntarily visit the site. Understood, some consumers aren’t technically savvy enough to know how this information is gathered or how to block it if they’re really paranoid, but that doesn’t mean such activities constitute aggression. Unlike the FTC’s fake “consumer protection” activities, the majority of websites that gather this non-scarce information use it an attempt to make the website -- particularly the advertising -- more attractive to the consumer.

Really, what angers the FTC about the internet is that it’s largely supported by advertising. The FTC is advertising’s natural predator. Advertising “misleads,” it engages in speech not previously approved by the government, it preys on people who are really, really stupid. In the FTC’s world, there wouldn’t be any advertising at all -- just government-approved propaganda informing people about what’s best for them.

The Leibowitz-FTC model of the internet is not one where services are free to the consumer and supported by advertising (e.g., Google, Facebook, Twitter). Their model is based more on IP principles: government control, licensing fees, lobbying over innovation, and most importantly, assigned exclusivity over “ideas” and information. This internet will charge you through the nose for the privilege of sharing your personal information in a manner that the government deems appropriate.