Businesses and governments are alike in that they thrive on the use of
information. Information about people has value to both. They differ in
important ways, however, ways that change how they use the information
they have collected.
To businesses, information is a scarce resource that must
be paid for one way or another. Businesses may lose customers if they ask
for too much information. Governments do not have to pay for information
the way businesses do. For a trivial incremental cost, governments may
require the submission of information on tax forms, on applications for
licenses and benefits, and in numerous other ways. This means that governments
do not have market incentives to limit their data collection. They will
tend to collect more information than necessary to carry out their functions.
Unlike businesses, governments do not lose the value of
their information if they abuse it. A business that gives away or sells
information has reduced the value of the information it still holds. A
government, on the other hand, may share all the information is has without
reducing its ability to carry out its mission. A business loses customers
and the ability to continue collecting information if it uses information
in a way that is offensive. It may be sued or suffer bad public relations,
for example, which is bad for business. A government may make offensive
uses of information without reducing its ability to function, or its ability
to collect more information.
So, where a business must make tactful and intelligent
use of scarce information, a government has few similar incentives. This
has dramatic consequences for how the two operate when it comes to protecting
privacy.
Links:
Comments? comments@privacilla.org
(Subject: GovPrivIncentives)
[updated 10/1/00]
