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"Living in a Transparent Society": A Commentary

By H. Sterling Burnett

Dallas, TX – The spread of electronic databases in government, medicine, business, and on the job makes our society virtually transparent. Enough of these personal bits and bytes pose a genuine threat to privacy - yours and mine. The crux of the issue is how the information is collected and used, separating genuine invasions of privacy from perceived ones. It's one thing to be victims of spam e-mail; it's quite another to have your identity stolen.

One problem is that different types of privacy are generically lumped together. In truth, privacy issues in medicine, employment, business and government are related only in that they are motivated by a common unease about new technologies.

Most experts in consumer privacy agree that personal information will increasingly become available to those who wish to use it. In fact, some attempts have already been made to compile databases with personal profiles - like Lotus Corporation's "MarketPlace: Households," a direct marketing software package that provided names, addresses and prior purchase behavior of 120 million U.S. consumers. Similarly, Doubleclick.com acquired a database of consumer buying habits that would allow marketers to identify which products a consumer is likely to purchase and where best to advertise.

Both companies dropped these projects because of huge public relations problems. Make no mistake, however, similar programs will become a reality someday.

However rational it might be for companies to use information about you and me, it still raises the possibility that privacy will be sacrificed on the altar of efficiency. Furthermore, disclosure of private information might not be in the individual's best interest. For example, life insurance companies might evaluate potential customers based on past consumer purchases. Do they spend a lot of money on cigarettes, frequent nightclubs, eat a lot of red meat, et cetera?

It is perfectly legal for any commercial concern to collect information about you. There are few areas where communications are legally privileged: husband-wife, client-attorney, doctor-patient and priest-confessor. Other areas of communication are not protected. Until recently, anyone wanting to delve into your personal history paid a high cost, effectively protecting us from excessive breach of privacy. That is no longer the case.

But information sharing can be beneficial to consumers. So it's possible that laws against collecting data could restrict information that might be useful.

The bottom line is that Congress should focus on ways to lower the cost of bargaining between affected parties. Contract law can be a mechanism for agreeing on and enforcing privacy policies. For example, marketers might collect data, but be required to disclose its contents and how it will be used. Suppliers of personalized data might have to post policies on how to view data and correct inaccuracies.

There are no easy solutions to protect your privacy and mine from those wishing to profit from its use. There are, however, risks to our constitutional rights from formulating bad policy, especially if it restricts freedom of speech. Policy should make it easy to negotiate, specify each party's rights and allow the affected parties to bargain.

H. Sterling Burnett is Senior Policy Analyst for the National Center for Policy Analysis in Dallas, Texas.