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Privacy is Expensive

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The high price of not capturing and sharing every moment of our lives will soon dwarf the cost to our privacy.

-Pew Cashmore, Cable News Network, Oct.28, 2009

All of us live a portion of our lives unseen by anyone else. We assign different values to this solitude. Each of us has a different sense of privacy, and the concept of privacy changes from one culture to the next and from one generation to the next.

In our era, as access to personal information has increased, expectations of privacy have waned. Our tolerance for the privacy needs of others has declined. Information considered intensely personal a few decades ago is now routinely released for public consumption. Intimate details of a president's sexual behavior become front-page news. after being posted on the I internet. Ordinary citizens document every moment of their lives via Webcams or online blogs and share vicariously in others lives by watching reality television shows.

The sheer quantity of information collected from all sources-businesses, governments, and individuals is soaring. In 2005, humans created 150 billion gigabytes of data. In 2010, we created an estimated 1.2 trillion gigabytes. A single gigabyte is roughly equivalent to a pickup truck with its cargo bay filled with books. This data onslaught is transforming our lives in ways we're only now beginning to appreciate. 25

One important effect of this data deluge is, in effect, to make privacy more expensive for those who don't wish to be part of it.

Privacy has always been expensive, and the Internet has made it even more so. The job market is a good example: the more prospective employers you can interest in your qualifications, the better chance you have to find employment. When I graduated from college in the 1970s, I sent out dozens of resumes to prospective employers. But only those employers to whom I sent resumes knew I existed.

The Internet has changed this status, but at the price of privacy. You can post online resumes at a variety of job-related Web sites. You can create a page at a social networking Web site, such as Facebook and encourage prospective employers or business partners to sign up as "friends." You can build an audience at a Web site like Twitter and send out daily or even hourly updates of your most mundane activities. Some “twitter-celebrities" have more than a million people following their "Tweets."

Naturally you're free to pitch yourself-or whatever you’re selling - to your followers. This has obvious appeal to companies looking to hire representatives with an established following. And if you gather enough followers, you can establish yourself as a freelance pundit in whatever subject you are an expert.

You can also let others know your physical location at all times. Modern smart phones come with global positioning system (GPS) chips. The chip, when activated, can pinpoint your physical location within a few feet. You can now sign up for services that let others track the whereabouts of your smart phone online. Web sites like ULocate (http://www.ulocate.com) show a cell phone’s location and the speed at which it’s moving, superimposed on a detailed digital street map. And even if you don’t have a GPS chip in your phone, pursuant to federal E911 requirements, all cell phones must contain technology permitting their location to be tracked within 100 meters of their actual position.26

Your own home will soon be watching you as well. If an electrical device in your home needs service, it will alert you via e-mail or a text message. Smart utility meters will keep tabs on your electricity consumption. A sudden, consistent spike may result in a police visit to make certain you’re not cultivating marijuana in your basement.27

Thanks to new technologies such as “e-books,” your reading habits are becoming public knowledge as well, with surprising consequences. For instance, in 2009, the electronic bookseller Amazon.com pulled two titles from the library of titles available on its Kindle reader, the wireless e-book reading device it has developed. It turned out Amazon had purchased the electronic rights to the books from a source that didn’t really own them. Amazon then remotely erased the two books from the Kindles of customers who had bought and paid for them. Ironically, the two books were George Orwell’s 1984 and Animal Farm.28

All these trends reinforce one another. As Pete Cashmore has observed, “attention is the new currency.” With so many competitors for our attention – billions of Web sites, social networking opportunities, etc. – it’s not hard to see why. Getting others’ attention has economic value. Privacy equates to lost opportunities.29


You have fewer rights to control your digital data than you do with those letters and papers in your own possession. The Fourth Amendment to the U.S. Constitution prohibits police from barging in your home and searching your files without a search warrant. E-mail, text messages, and other digital communications often lack such protection. Even data you mark “private” is often available without a warrant.30

The cost of data storage has dropped dramatically in recent years. So has the cost of organizing and indexing this data. And since you don’t own data about you, it’s difficult to persuade anyone to delete it. Indeed, law enforcement agencies want it maintained as long as possible, for both investigative and data mining purposes. 31

The FBI is now “encouraging” Internet Service Providers to record which Web sites their customers visit for two years. Legislation placing this proposal into law is also pending. Proponents justify the plan as necessary to catch terrorists and pedophiles. 32

You can view Web pages modified months or even years ago through the Internet Archive, also known as the Wayback Machine; http://www. archive.org. When I tested the Wayback Machine to view old versions of my own Web site, I found more than 100 of now obsolete pages.

Do you have any secrets you don’t want others to know? Then you should deactivate your Facebook account immediately. Facebook postings have led to loss of insurance benefits, arrest, and detention.33,34

Your network of friends also reveals much about you. In 2009, two students at the Massachusetts Institute of Technology wrote a program that looked at the gender and sexual orientation of a person’s Facebook friends, and then used statistical analysis to predict if that person was gay. Based on their personal knowledge of their subjects, they discovered the program was very accurate. 35

Indeed, your postings on Facebook and other social networks now constitute virtual “mug shots.” Several start-up companies are now scanning billions of photographs posted on social networking Web sites with face-recognition software. Law enforcement agencies are said to be keenly interested in the ability to instantaneously scan international photographic databases to identify individuals subject to arrest or wanted for interrogation.36

Thus, the benefits we receive from innovations such as the Internet can easily become liabilities. And the entire process is mostly invisible. With the click of a mouse, investigators can delve into countless databases set up to track your highway toll records, your telephone records, your bank records, and your credit card records to gather evidence in criminal and tax investigations. Lawyers use the same techniques to gather evidence in lawsuits. In many cases, no search warrant is required to obtain this data.

Debit and credit cards are a perfect example. Only a few decades ago Americans usually paid for goods and services in cash or with a check. Few used credit cards. Today, most transactions are made with a debit or credit card. Some goods and services are only available with a debit or credit card. But every time you make a purchase with your card, you create an electronic trail. First, the information on your card’s magnetic stripe goes to a clearing facility for approval. Then it’s logged into a database of information collected by your card issuer.

At every stage of the process, computers probe your purchasing patterns. The primary uses of this probing are for marketing and fraud detection. But, if you start using your card too much to purchase discount groceries, second-hand clothing, or used furniture, you may raise a red flag. Your card issuer may lower your credit line or even cancel your card altogether. And if you fall behind on your payments? In that event, the computers will use information on your spending patterns to develop a psychological profile to determine the best approach to persuade you to pay up.37

Using checks issued by a domestic bank isn’t any more private. Banks use the same tools to analyze checks drawn on your bank accounts as they do for your card purchases.

Naturally, the same companies that create exquisitely detailed data profiles of your purchases rent out their services to law enforcement and intelligence agencies.38 Thanks to the War on Terror, there are few legal formalities.

People who understand this loss of privacy gladly pay higher transaction fees for debit cards issued by offshore banks, and also conduct banking transactions offshore, to avoid such surveillance. You’ll learn more about offshore banking in Chapter 5 of The Lifeboat Strategy.

Another reason privacy is disappearing in the United States is that no legal framework exists to protect it. Federal privacy law is a piecemeal affair combining constitutional law, congressional statutes, administrative regulations, and court decisions. Even more variation exists between the states.39


In other countries, the legislative framework to protect privacy is stronger. In the European Union, a data protection directive came into effect in 1995 imposing minimum standards for privacy laws in 15 (now 27) EU countries.40

Yet that framework is unraveling worldwide, as a consequence of the “War on Terror.” We are at the cusp of an era where wholesale government surveillance is possible. The world’s largest surveillance organization is the U.S. National Security Agency (NSA). Congress has authorized the NSA, in effect, to continuously tap into the Information Superhighway, looking for patterns of communication or keywords that might indicate a conversation between terrorists. To store the massive amount of data it intercepts, the NSA is building massive data warehouses. Just one of these warehouses occupies more than one million square feet. There are no legal limits to how long it stores the data. 41

Networks of closed circuit television cameras now blanket our cities. They can track every person in an area, identify them with face recognition software, and record their movements for later analysis. Numerous cities now have license plate scanners installed that keep records of every vehicle that passes, and save that data for later analysis. Homeowners install cameras in their homes to thwart crime and vandalism–but also to spy on passers-by. This type of surveillance is most advanced in the United Kingdom – but there is nothing to prevent similar developments in the United States.42

That this power can be abused is without question. Wayne Madsen observes:

In 1940, the German Army invaded Denmark, Norway, the Netherlands, Belgium, Luxembourg, and France. While the military exploits of the Wehrmacht received widespread attention, the surreptitious achievements of a specialized branch of the [Nazi] SS, the SD (Sicherheitsdienst des Reichsfuhrers or Security Service of the Chief of the SS in the Reich) received much less notice. All the invaded countries maintained advanced systems of paper records on their citizens. Some of these were held by local governments such as town clerks’ offices, while others were held by churches, private clubs, organizations, and national government ministries. These records were seized by the SD shortly after occupation.

SD information analysts proceeded to examine closely birth records, voting records, and business records … The results of these personal data analyses are now well known. Jews and those of Jewish descent, Jehovah’s Witnesses, seminary students, Gypsies, the mentally retarded, Socialists, Communists, pacifists, Liberal Republicans, Catholic Action and Catholic Youth members, Protestant theologians, and homosexuals were rounded up by the SD’s sister service, the Gestapo, for shipment to concentration camps and in most cases to their deaths.45

The Nazis identified their victims from paper records. How much more efficient would their extermination efforts have been had they been equipped with today’s data mining software and the rapidly advancing network of law and technology designed to monitor our personal and financial transactions?

THE LIFEBOAT STRATEGY

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