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On-Line Privacy

Mises Daily: Tuesday, April 27, 1999 by

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Investors Business Daily April 27, 1999

The Internet's Privacy Hounds

Thus far the Internet has been flying fast and high with little regulation. It hasn't been grounded by taxes, nor has it been shackled by government interference. But this happy state of affairs may not last.

Lawmakers have apparently reached the limits of their self-control. Like kids who can't be trusted for too long around an unguarded cookie jar, they can no longer resist sticking their hands into a thriving and unregulated endeavor.

Most proposed Internet regulation comes under the guise of protecting users' privacy. The Online Privacy Protection Act - introduced April 15 by Sens. Conrad Burns, R-Mont., and Ron Wyden, D-Ore. - is one of the most recent of more than 50 bills written to protect users' privacy.

Just one of these bills would stop the government from prying into individuals' lives. The rest prescribe how private Web-site operators can collect data and how they use it.

As is typical of government policy, it's ''do as we say, not as we do.'' The Internal Revenue Service knows how much everyone is paid. The federal government knows how much Americans pay for medical care, how much they invest and how much they give to charity, thanks to the 1040 form.

Law enforcement agencies collect customer information from banks. And it was government, not the private sector, that dreamed up the idea of national ID cards and a health-care database.

Privacy is an issue best left to individuals who decide for themselves to whom they will give personal data and how much they will give. The tens of millions of Americans who voluntarily go online, use credit cards and subscribe to magazines each day are making those choices for themselves -and they keep making them over and over.

Yet our federal nannies persist. To enforce the law, government would require more recordkeeping by e-commerce companies. Then, to make sure the companies were complying, government would have to look at the data that was being collected.

Regulation is like that. It has a way of producing unintended consequences, often completely at odds with the rules' original aim. With the airline, trucking and rail freight industries, rules designed to keep fares low and access high led to just the opposite.

And so it would be with rules to protect privacy. Government would actually have access to more private information, not less.

Market forces have so far provided companies with an enormous incentive to protect customers' privacy. Irving Wladawsky-Berger of IBM told the Senate Judiciary Committee last week that most businesses recognize the importance of ''maintaining the trust and confidence of their customers.'' Otherwise, they'll lose customers.

Markets depend on a flow of information - freely requested and given. Government can't do much to ensure that, except get out of the way.

(C) Copyright 1999 Investors Business Daily, Inc.


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