Why Not A Free Market In Privacy?

leviramsey writes: "Julian Sanchez has written an article analyzing the privacy debate and suggesting a free market solution to the privacy issue on Liberzine.com. Very interesting idea that seems to make sense to me." While this essay doesn't lay out how this market might work in practice, it raises the interesting and often scoffed-at idea that sometimes we like to trade some of our privacy for various things, online and off, as a visit to Yahoo personals will prove.

Comments

Typical American bullshit

[Alex Belits]

"Let's declare that something can be traded on a free market, and everything will automagically adjust itself".

Things don't work this way -- if a decision how to value something is left for everyone in each case, ones with more negotiating power, force their decisions on everybody else. In this case corporations who will create their (low) privacy standards will easily leave consumers with no choice, and consumers would have to resort to inefficient and extremely hard to organize boycotts to get anything back.

I have seen people who honestly believed in Communist utopia, and they made more sense than people who honestly believe in this Libertarian utopia.

Re:Typical American bullshit

[Alex Belits]

If people get to make their own decisions (which is the case in a free market), then how is someone able to force their decisions on everybody else? Either you didn't write what you mean, or what you mean is incomprehensible.

No sane person will make "his own decisions" when confronted on any important issue (more important than, say, price of a bagel in a coffee shop) -- he will look for someone else to make sure that large enough number of participants will make the same decision, so it will either become the only solution available to the opponent, or at least represent large enough piece of the market.

This is what I ,mean by "negotiating power", and this is what in simple case of prices and salaries companies exercise when they standardize their products and what workers exercise when they join unions. When things are more important than money (health, civil liberties, life), even if conflict doesn't lead to direct physical confrontations, various groups of people and organizations start all kinds of exercises of negotiating power -- recent example is Ashcroft's confirmation, where more organized Republicans forced large number of Democrats to vote contrary to their true opinion.

In the case of privacy the conflict is over a liberty of being able to keep private information. People want to keep it, however they need very complex and costly process of organizing a boycott to force companies to change their policies -- that forces each person to act as if very little of negotiating power is available to him. OTOH, companies have no trouble of creating all kinds of groups and alliances that force uniform privacy standards -- companies' executives expect that whatever horrendous infringemnet of personal privacy will be in the standard, joining the group will be more beneficial to the company than establishing a better privacy standard, as customers will expect low privacy, and once lost their personal information to one of companies in the group, they won't see any benefit in not "losing it again" to another company. To make things worse, companies may choose monopolists with some essential service (say, FedEx and UPS) and offer large payments for disclosure of customers' data to the rest of the group, thus making any attempt by other companies to respect privacy absolutely pointless, even if the original anti-privacy group will be small.

What ARE you talking about??

[Russ Nelson]

The California misregulation of the electricity market was primarily caused by price controls. If you limit the amount that a price can rise, then if the product demand increases, supply will not increase to meet the demand. This is simple economic theory. Did you sleep through that class, too?
-russ

Re:What about the poor?

[DoorFrame]

So is it impossible for poor people to make any financial decisions on their own, merely because they are poor?

By neccessity right now, I cannot buy a car. It's too expensive for me, I cannot afford it. Is this a social injustice? I would gladly trade some personal information in order to get a substancial discount... does this mean I'm being exploited? Should laws be made to right this wrong?

Re:What about the poor?

[DoorFrame]

He addresses this in the article.

Why do you assume the poor will be willing to trade their privacy for cheaper products? And why would you dream of prohibiting them from doing so if they wish. These people are poor, but they're still rational. If they want to trade some information about themselves for a $100 off a computer, great! Cheaper computers for them and a better educated society.

To assume that you can make better decisions than someone who is poor, simply BECAUSE they are poor, is extraordinarily insulting.

Re:Like pollution credits?

[DoorFrame]

The reason the power plants in California are in trouble is not because of anything EXCEPT too much government regulations. They were told that there was suddenly a free market for them to buy energy. This is good. However, they were told that they were not allowed to raise the price to consumers. This was bad.

When there's a free market for you to buy your basic neccessities of production, but not a free market to sell your output, what chances do you have to not go bankrupt when you're operating costs rise?

The fault for the situation in California rests entirely at the feet of the politicians who deregulated half, but not all, of the energy market. It was a foolish idea doomed to failure.

Free Market in Privacy?

[Anonymous Coward]

After a pleasant evening with my buddy John...
[john] Here are $10 for you, so you don't tell my wife Sarah where we went this evening.
[me] ok.

the next day...
[sarah] So where did you and John go last night?
[me] John gave me $10 to keep it shut.
[sarah] Here are $11 for you.
[me] Nude dancers