CFP'93 - A Contract Approach to Informational Privacy

by Jacob Sullum

Associate Editor
Reason Magazine

Everyone likes privacy. This is unfortunate. If "privacy advocates" actually had to contend with vigorous opponents of privacy, they would be forced to clarify what the argument was about. Instead, a false consensus prevails, based on a fundamentally vague notion.

Yet if we are talking about a right to privacy -a claim against others enforced by law- we have to be explicit. We also have to be careful. A right protects the freedom of those who exercise it by restricting the freedom of others. Your right to take a shower without being photographed or to speak on the telephone without being recorded imposes constraints on other people's behavior.

Most of us have no problem with these limitations. But it is easy to imagine how, in the name of privacy, someone might demand restrictions that would be unacceptable in a free society. Suppose I don't like the fact that people talk about me behind my back. I insist that the government protect me from this invasion of my privacy. Even the most ardent privacy advocate would have qualms about that sort of prohibition.

Traditionally, the limits of one's right to privacy have been defined by contract and property rights. When I purchase or rent a home, for example, I acquire the right to be left alone in the shower. When I purchase telephone service, I acquire the right to make confidential calls. But unless I have a no-gossip contract with everyone who might be inclined to speak ill of me, I have no right to demand that they stop.

For many privacy advocates, there is something unseemly about reducing the lofty concept of privacy to such mundane arrangements. But we live our lives through such arrangements. Contract and property rights allow us to exercise all those rights conventionally viewed as more important: freedom of speech, freedom of religion, freedom of association, freedom of travel, and so on.

Consider how contracts protect informational privacy. By attaching conditions to the disclosure of information about themselves, people can prevent its misuse. Sometimes the conditions are implicit. You shouldn't have to tell your bank, your doctor, the phone company, or the local library that records of your credit-card purchases, your medical treatment, your telephone calls, or the books you read are to be treated confidentially. In other cases, though, you may need to make your wishes clear. You can say, "I am buying this car from you on the condition that you not tell anyone about the purchase," or "I am telling you my age on the condition that you keep it secret," or even, "You may give my name and address to one other person (who is bound not to divulge it further), but only if you pay me."

In addition to preventing information from falling into the wrong hands, the contract approach is a vital safeguard against the excesses of well-meaning but overzealous privacy advocates. The power to control information about you is the power to control the speech of others. Based on contract, such control is strictly limited. Based on nebulous concerns about privacy, it is open-ended. Thus, a concept intended to protect individual dignity and autonomy could become a new rationale for censorship.

This is not an idle concern. In California, for example, a law that went into effect last year prohibits companies that help landlords screen tenants from reporting pending or dismissed eviction actions. This information is publicly available, and collecting it does not violate any agreement of confidentiality. In essence, the law bans speech that some people consider unfair.

Even the American Civil Liberties Union, dedicated to defending the First Amendment, supports speech restrictions to protect privacy. The ACLU maintains that employers should not be permitted to ask inappropriate questions in job interviews. You might think that the person who has a job to offer would be the one to set employment conditions. But the ACLU argues that, precisely because the employer has a job to offer, and therefore has economic power over the applicant, he or she has to be prevented from asking for irrelevant information.

Similarly, Janlori Goldman, director of the ACLU's Privacy and Technology Project, says banks should not be permitted to require credit-card applicants to sign a waiver approving the sale of their data to direct marketers. Thus, in the name of privacy, the ACLU would restrict the right of individuals to decide for themselves what information they are prepared to divulge under what circumstances. This paternalistic attitude is also apparent in objections to frequent-shopper programs and product-registration cards. Even when consumers voluntarily consent to the use of their information for marketing purposes, some privacy advocates still cry foul.

So we see that a sufficiently broad right to privacy can even require that people be protected from themselves. Something is wrong here. The statutes and regulations that many privacy advocates promote would impose a one-size-fits-all solution on a problem that each individual sees differently. People should be free to obtain the amount of privacy they want, rather than the amount that someone else thinks they should have.

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