The "Hidden" Cost Of Privacy 217
Schneier points out an article from a while back in Forbes about the "hidden" cost of privacy and how expensive it can be to comply with all the various overlapping privacy laws that don't necessarily improve anyone's privacy. "What this all means is that protecting individual privacy remains an externality for many companies, and that basic market dynamics won't work to solve the problem. Because the efficient market solution won't work, we're left with inefficient regulatory solutions. So now the question becomes: how do we make regulation as efficient as possible?"
Re:Here's how: (Score:5, Insightful)
Privacy for individuals. Transparency for state.
Re:Here's how: (Score:4, Insightful)
Agreed - the government should be transparent, and its dealings should be public and open.
Private lives, however, literally require privacy.
Privacy cost beyond market efficiency (Score:2, Insightful)
Reframe this debate into the cost of doing business in a democracy.
Ubiquitous networks capture data from home address to everyday transactions in detail. Private informations accumulate. Markets function on personal information. The expectation of privacy, its protection and concommitant personal security relying upon privacy regulation is a straw man standing in-place of an individual right.
Simply raising the strawman argument that your right to privacy is political, denigrates its consititutional status to regulatory statute.
Either the right to privacy is immutatable, codified in the constitution or too expensive? Reframe this debate into the cost of doing business in a democracy.
Ferengi (Score:4, Insightful)
"What this all means is that protecting individual privacy remains an externality for many companies, and that basic market dynamics won't work to solve the problem.
Most problems, even when you're talking about business, cannot be solved by the free market. Privacy problems could be solved by legislation and/or regulation, but unfortunately governments care even less about your privacy than the corporate Ferengi do.
"Free market" is an oxymoron. Anyone who believes it can solve all the world's problems is just a moron.
Begging the proposition. (Score:5, Insightful)
It's funny that one could look at this and say the markets don't work. The markets ARE working and that most people don't actually care about privacy.
If people -cared- about privacy, they would be willing to pay for the extra care it takes to ensure that their data is private. But, we live in a world where most people really don't care so much if everyone else knows what they are doing, so long as they are not confronted with it, or misuse the information.
Like, if you told someone at a grocery store that, to get their "club card" savings, the store would know exactly what they bought, they would say, they probably didn't care. Now, if they got a letter from the grocery store saying, "hey, since you like strawberries, you might like our sale on blueberries", they might dig that too. And, if they got junk mail from blueberry and strawberry growers, even that might be ok. But, if they got an email saying, "hey, you are killing humanity because you are eating strawberries and your preference for red fruit makes you some kind of a communist", then they would be pissed off.
Bottom line is, people don't care about privacy, but they do care about having their personal information being used to hurt them. It's pretty much the 5th amendment proposition, writ large and writ everywhere. Nothing is really private, but, you can't have your personal information be used to attack you, and that is what the market reflects.
Simple solution (Score:5, Insightful)
Define the ownership of personal data to include the person whom the data applies to.
If I enter into a business relationship with someone else, all the information I provide should be considered to be co-owned by both of us. Any subsequent sharing of that information with a third party should involve both the consent of both of us as well as sharing the proceeds of that subsequent exchange. When the costs of managing such transactions are factored in, far fewer of them would occur.
The idea that anyone complains about the costs of complying with such regulations puzzles me. I mean, I could start a business stealing cars and then complain that the costs of complying with auto theft laws were onerous and harming the profitability of my enterprise. Tough sh*t. Its all based on fundamental property rights. Just because someone has developed a business model based upon a legal oversight doesn't legitimize their complaint when the law catches up and plugs the loophole.
You don't? (Score:1, Insightful)
Ideally, you come up with a simple baseline standard, whether through harmonization of existing laws and policies or by determining exactly how much privacy we deserve and enforcing it across the board. Then you push the standard at the federal level.
In practice, they will do the above, but to a minimal standard that is riddled with loopholes and overriding state laws that offer greater protection.
It's comparable to the security vs. convenience problem. There's a far greater cost to this patchwork system, and it's not nearly as good as it should be, but while it'd be far more convenient to harmonize everything the lobbyists will ensure the result will be evenly ineffective.
Re:Here's how: (Score:5, Insightful)
Except that "the State" is merely an abstract concept for certain actions of individuals, not some concrete thing that exists independently of any individuals.
Those individuals that comprise "the state" should also have the right to privacy, but not in their profession as public servants. Whatever they do in their jobs should be open for anyone to observe, even if their private lives shouldn't.
You are wrong. (Score:5, Insightful)
Yes, it is.
Transparency for the state means transparency on laws as they are prepared, transparency towards regulatory bodies of those laws, etc... It means that the rules that state officials prepare and their work is fully transparent.
Still, the said officials can retain the full privacy of everything that isn't directly work related (IE. What they do on their time off work, what they do during their lunch breaks, whose photo they have in their wallet and what bodyparts have they pierced...)
State is indeed some concrete thing, independent from individuals. Ideal situation is that state represents the masses but it never represents the individuals.
CISP\HIPPA Compliancy (Score:5, Insightful)
You have:
SOX, CISP, GLBA, HIPPA as the most expensive for corporations. I can speak to CISP and HIPPA from a professional standpoint. The others I cannot.
CISP compliance has a serious impact in that test environments cannot use raw customer data for testing for banks. Sanitized data must be used in test environments normally. In the event of a product fix that needs to be testing back in a test environment offshore resources for instance cannot have access to those environments and the data must be documented and exist only for a limited time. Pulling 20,000 records for testing for instance may take 4-6 hours pre-CISP but post CISP the sanitization process may push that out to 5-10 hours. If you are attempting to do that process in the evening, with only a 6 to 8 hour window CISP meant that many had to beef up their systems to ensure the process was complete within the window. For smaller banks the costs must have been harsh. Updating software, policies and procedures can easily rack up a 6000 labor hours in the first year.
On average CISP complaince can double the turn around time of a production fix (say 20-60 hours of labor) into 40-80 hours for turn around. YOu have an entire chain of events that fire off and kicking out certain staff due to the existence of customer information takes time with SAPs, VPN connectivity, etc... Great for the customer, I cannot argue it, but expensive.
HIPPA I can speak to growing up in hospitals and clinics as well as painting in those locations part time. Part of the requirement that I see directly is, if I have to paint a clinic or office the clinic staff (not I the painter) has to go through and ensure that ANY AND ALL patient documentation is out of sight prior to me starting. HIPPA has too many "reasonable" language mistakes in it as who defines "reasonable"? The judge? Lawyers? JACO? Who? So paranoia is high with patient data (as it should be.) But getting staff to lock all that up prior to maintenance adds time.
Another hidden factor is space. A clinic now has to try and keep other patients out of ear shot pushing the lobby out farther.
Further segragation of roles and even something as simple as those privacy screens add up. In a typical hospital with 200 computers in it let us say, means at $10 bucks a screen you have $2000 in new expenses.
I've seen a few locations require the inter-office mail couriers to have locked boxes while moving around the facility. Those have to cost at least $350 bucks a box for those.
Now all those HIPPA forms are going to double if not triple the amount of paper you are ordering. Liability and insured communications also increase costs and add delays. More cerified mail goes out now as far as I can see since HIPPA also.
One thing to keep in mind is that ANY GOVERMENT COMPLIANCE that exists is disporotionally expensive to smaller organizations. SOX killed a lot of smaller corporations due to the cost of compliance. The smallest get exemptions, the largest can afford it, it's the mid-size businesses that get crushed.
Re:Simple solution (Score:3, Insightful)
1. It would be difficult to define and easy to use such laws to sue to an over-reaching extent.
2. As with many laws, it favors the rich and powerful (people or corporate) because they have the means to sue exhaustively.
3. Corporations are considered legal "persons" in some ways. If such a law applied to corporate information, this could be disastrous.
4. The rich and powerful (e.g. politicians) would use this to block transparency and get away with more than they already do.
5. Much of public knowledge would become illegal, or at least regulated.
6. Transaction costs for any customer interaction would increase dramatically, since even information like a name or address would seem to be implicated.
I'm sure there are plenty of others that could be added to this list. I don't think defining new kinds of ethereal property is the way to go...
Efficiency (Score:2, Insightful)
"Because the efficient market solution won't work, we're left with inefficient regulatory solutions."
What a load of clap-trap...read this and ignored the rest of the article as it's obvious they don't understand economics.
Re:Begging the proposition. (Score:3, Insightful)
However your worst case scenario would have a backlash effect. People would avoid using that that store to prevent institution. So the store will either face closing down, or be more particular to who they give information too.
We actually have a lot more privacy shopping now then we ever did. Back in them old days you go to the mom and pop store they know who you are and are often hubs of gossip. So the entire community would know what stuff you are buying and make guesses on why you are buying such things.
Today we are just a number most of the data goes back and forth without a person analysis the data. Customer 24601 has purchased strawberries consistently throwout the month of June and July. Statistics show that people like Strawberries and blueberries, so lets give Customer 24601 a coupon for blueberries. Kinda heartless and calculating, but most individuals don't care about your data as your self but in aggregate. But back in them old days your data was about you and the aggregate was to complex to calculate.
Stop collecting unnecessary information (Score:5, Insightful)
Re:Begging the proposition. (Score:5, Insightful)
It's funny that one could look at this and say the markets don't work. The markets ARE working and that most people don't actually care about privacy.
The problem with your statement is that markets only work when there is freely available knowledge. In the case of privacy, I would say that the markets are "working" not because people don't care, but rather that they don't know. So it is not really a free market scenario that they are entering into.
If I offered you a service and didn't mention the punch in the head I would also give you, then are you taking up that service because you don't care about being punched in the head?
Re:You are wrong. (Score:5, Insightful)
Tranparency on voting on public initiatives and referenda? (That's, after all, part of the process of making laws.) Transparency on voting for public officials (after all, choosing lawmakers is part of making law.)
So, no private personnel matters (including health matters) for any public employee?
And does the rule for "state officials" apply only to public employees, or does it apply to contractors as well?
No, its not. Its an abstract concept with a fuzzy boundary, and is, in any case, comprised of, not independent from, individuals.
The idea of "privacy for individuals, transparency for the State" is perhaps a useful starting point in determining how to balance the fundamentally conflicting goals of privacy and transparency, but its just that--a starting point in how to balance conflicting interests--not some kind of clear answer.
Re:Here's how: (Score:4, Insightful)
It's a pretty simple equation, really:
As power increases, so should transparency.
The more people to whom you are accountable, the more transparent your organization should be. Of course there are occasions upon which certain, highly-accountable things need to be temporarily withheld from disclosure, but they should be explicitly reasoned and have a timeline for their eventual dissemination to those holding them accountable.
Re:Ferengi (Score:5, Insightful)
"Free market" is an oxymoron. Anyone who believes it can solve all the world's problems is just a moron.
On the other hand, a well-designed market is one of the most effective machines for achieving as close to Pareto-optimal results as anyone has ever found. Well-designed markets are actually able to achieve the state that socialist managers of the economy should be aiming for, and they do it much more reliably and cheaply than socialist managers have ever been able to achieve. And they do this despite having right-wing nitwits on one side who think that any regulatory or legal oversight is somehow a violation of their god-given right to screw people over, and left-wing nitwits on the other side who believe that markets are somehow the agents of satan, rather than just a particularly good social management tool.
It's unfortunate that so many on the left take the right-wing nutjob view of markets seriously, because if you adopt the view of markets as just an ordinary tool of neo-socialist economic management you can find a whole lot of ways to deploy them usefully to achieve efficient allocation of limited resources across the whole economy. Well-designed markets can't solve all the world's problems, but neither can anything else, and markets have a long history of solving problems more effectively than most of the alternatives.
Simple solution! (Score:3, Insightful)
The problem is that we don't have enough regulations. If one regulation isn't working, slap another on top of it. Keep piling them up until the problem goes away. Remember, the government is our friend, and only sociopaths would object to more government involvement in their lives. ... but seriously folks...
The core problem is that the property rights around privacy are ill defined. Who owns the information? Regulations can be minimized while being more effective, if they addressed the property rights involved. While I don't think the information itself can be owned, the media upon which it resides can be. Your diary, your server, etc. For example, you don't own your address information, and cannot legitimately stop someone from disseminating that information ("Bob lives at 123 Main Street"), but that letter is your private property, and you should be able to sue the crap off anyone who opens it and reads the contents. Mail servers are typically the property of the ISP, but you are renting its use so your emails are as much your property as your clothes hanging in a closet of a rental apartment.
Re:Simple solution (Score:4, Insightful)
1. It would be difficult to define and easy to use such laws to sue to an over-reaching extent.
2. As with many laws, it favors the rich and powerful (people or corporate) because they have the means to sue exhaustively.
Not really. Using current property law removes the issue of civil suits. Following my obligatory bad car analogy, stealing a poor person's old beater earns the thief the same penalties as stealing a rich guy's Beemer.
3. Corporations are considered legal "persons" in some ways. If such a law applied to corporate information, this could be disastrous.
Time to fix this loophole. If a corporation is a person, then why can't it go to prison for a felony? Why is there no corporate death penalty? A corporation is a creation of the state. As such, it shouldn't have powers that the state does not possess. I have some rights to be secure in my property and papers from aqusition by the state without due process. So why is the state running around creating entities not bound by these same restrictions? If a corporation wants to define itself as a person, then it should lose the shield of limited liability, just like a sole proprietor.
4. The rich and powerful (e.g. politicians) would use this to block transparency and get away with more than they already do.
5. Much of public knowledge would become illegal, or at least regulated.
Quite the opposite. We (the public) own that information. If politicians (entrusted with managing our property) choose to distribute it selectively, then the rest of us should be compensated for such an uneven distribution. Want to keep publicly funded research out of the hands of the public? Its going to cost you extra.
6. Transaction costs for any customer interaction would increase dramatically, since even information like a name or address would seem to be implicated.
Which transaction? The data exchanged between myself and a business as a part of some transaction would proceed as it does now. What would (and should) 'cost more', is the subsequent exchange of that information with some third party. Its like me putting money in a bank. Its still my money. I'm just entrusting that bank with its safekeeping. When they turn around and use it for their own benefit (making loans), the result to me is that I receive interest on my deposit. Why shouldn't information be treated the same way? In fact, the company has already profited once from that exchange of data (when we did business). And if all of that is too much for them to handle, there's always the option of an anonymous sale. Once the deal is done (with the possibility of transaction being managed by some trusted third party), I walk away with the product and they walk away with the cash and no data.
Re:Begging the proposition. (Score:3, Insightful)
I would assume that if I went to buy a cup of soup from you, and you punched me in the head, that I probably would not buy soup from you any more.
Therefor, if people are getting punched in the head, they don't care.
But what if the punch is delivered 3 days later, by someone not affiliated with me at all? In fact, the only thing I did was tell them that you bought soup from me. And then they come up and punch you in the head. It's directly because you bought soup from me, but you've no way of knowing without a lot of effort, even if you have a clue on where to start on figuring it out.
That's how corporate privacy invasion works. You give data to a few people in some manner, then they give it to someone else, who then uses it in some way to screw you over in some fashion.
Re:Here's how: (Score:3, Insightful)
Privacy is a stopgap measure for preventing oppression. When some people have greater access to information and ability to act on it than others, they have an unfair advantage. The right to privacy is an attempt to combat this unfairness. If everyone had equal access to information, privacy would be unnecessary, because no on could use information against you unfairly without the attempt being known. The real problem with the notion of privacy is that it requires people to give up their natural ability to sense their own environment for a negotiated right not to have their information used against them.
Re:Here's how: (Score:1, Insightful)
Without expressed permission of the individual, none of their personally identifiable information can be transmitted/transferred between companies.
Question: if I work for Company A, and I phone a friend who works for Company B to tell him that I spotted a mutual acquaintance of ours at the mall on the weekend, but I don't first obtain permission from that acquaintance to transmit personally identifiable information between companies, have I broken this law?
What if it's just idle gossip between two friends about another? And what if it's not? What if our jobs involve monitoring people's shopping habits for advertising purposes? What if the acquaintance is someone we both know as a result of monitoring their shopping habits professionally? Where, exactly, do you draw the line between idle gossip amongst friends and businesses trading personally identifiable information? Or do you draw that line? If not, are you essentially suggesting that we outlaw all discussion of other people?
Re:Here's how: (Score:3, Insightful)
In a world without fences and walls, who needs windows and gates?
Personally I could do without Windoze and Gates.
Re:Here's how: (Score:4, Insightful)
Correct!
And to help simplify things, rather than this hodge-podge of laws. Just make one. Without expressed permission of the individual, none of their personally identifiable information can be transmitted/transferred between companies.
The information about an individual should be the property of the individual, not the company (or govt. agency) that holds and collects it.
That's all well and good, but in general, the greatest harm does not come from personally identifiable information being transferred in the course of normal business. The harm comes from the information being collected and stored, and then compromised by a third party (or possibly someone internal to the company) who uses the information in a way that was not anticipated by the person the info belongs to, and that might damage them (their credit rating, their legal standing, the safety of their family, their eligibility for insurance, etc.)
So I think we need to back up a step on the privacy discussion, and make it perfectly clear that, regardless of whether provable harm comes to an individual as a result of private information being shared, an entity that collects and stores personally identifiable information may be financially liable for any breach of that information, regardless of whether they intended to share it or took measures to prevent it. The fines would be higher for certain types of info, like SSN and birthdate (things that are hard or impossible to change and used to identify you), and lower for less "useful" information (like shopping habits)... but would be chargeable for each and every occasion of your information ending up in someone else's hands.
Then you also need to require companies to disclose how they got your information. Get a random call from Bob's Remodeling? Before you say "We're on the Federal Do Not Call list" and hang up, you say "Where did you obtain this name and number?" and they have to tell you. If you did not opt-in to having your information shared for that purpose (and it would need to say something pretty specific, like "telephone marketing" for example), then the source is again liable.
This would lead to companies like Google, who collect info that's mostly useful in the aggregate, to carefully de-identify databases wherever possible, because the reciprocal is that non-personally-identifiable information will NOT incur fines if disclosed. It would also possibly stop your doctor's office, child's school, and everyone else in creation asking for your SSN, because they know that if someone happens to read your SSN off your form and use it for ID theft, they might have to pay $BIGNUM.
Computers and the cheapness of disk space make everyone want to save every bit of data they can, and ultimately this is the biggest threat to privacy. That's the behavior we need to change.
Re:Here's how: (Score:5, Insightful)
I agree in principal but in many areas a single function is made up of several companies or entities. Without the ability to share info, many a business will grind to a halt. What if it is your insurance co. to an emergency ward at the hospital ? Are we going to have to individually authorize every 2 or more entities that actually need to share 'personal' info to conduct business on our behalf ? How is your financial information to be tracked for a credit rating without every company involved getting authorization from you ? What about property ownership and so-called public info that actually contains significant private information ? The fact that I own property at xxx mystreet doesn't insure I live there but it is a good indicator...
IMHO there needs to be 2 sets of rules, #1 that applies to entities you are DOING business with that defines and limits the scope of what, when, where, why and how they can share my info, and #2 a set that prohibits entities that I am NOT DOING business with from seeking, receiving or utilizing any of my personal info without first seeking my permission.
Re:You are wrong. (Score:5, Insightful)
Can't tell if you are being serious or not, so I'll assume you are.
Next time you are doing well in a job interview, preferably with a small company, mention that you have some chronic condition that is really expensive to manage. Do this regardless whether you actually have the condition or not.
What do you think your chances are that you'll be getting an offer as compared to if you'd not mentioned it at all? Does your opinion change?
Re:Schneier the capitalist (Score:5, Insightful)
I agree, with additions. When I say that wealth flows upwards, I mean that the wealthy do not create wealth. The poor and middle class create wealth.
And luck has more to do with poverty and riches than any other cause. Look at Bill Gates - his parents were lawyers working for IBM. If he'd been born in poverty, there would never have been a Microsoft. If the guy IBM was going to buy their OS from hadn't gotten sick of IBM's BS and told them where to shove it, PC/M would have been the dominant OS, rather than DOS.
My uncle was rich. He was wounded in WWII, and several lucky things caused his wealth. First, creativity and eye-hand coordination runs in the family. Second, he was in the right place at the right time. If his ship hadn't been bombed, he wouldn't have wound up in the hospital with his future partner, who had lost a leg. When the guy showed his new artificial leg to my uncle, my uncle said "that's a piece of shit, I can make a better leg than that", and did.
His partner was a born salesman. He'd walk into the hospital to talk to the new amputees, who would say something to the effect of "what the fuck would you know about it?" and he'd just roll his pants leg up. Instant sales.
Sure, there was a lot of hard work and sacrifice involved, but if it hadn't been for luck he'd never gotten rich.
The same goes with poverty. Few people are born rich and wind up poor. Even if they squander all their money, they still have contacts. A while back there were radio commercials about Donald Trump's "how to get rich" book, what would he know about getting rich? He was born into wealth!
Do you think anyone would have ever heard of Paris Hilton if her parents weren't the billionaires who owned the hotel chain? What chance does a kid born of illiterate drug addled parents who is shuffled between foster homes have?
If you give rich people money, they'll just squirrel it away -- they already have plenty. But give it to a waitress and she'll spend it, because she has to. Only money that's spent helps the economy.