The New York Times recently reported that in 2006 a German executive at Volkswagen gave a presentation on how the company’s cars could evade emissions tests. Who was the German executive at the root of a scandal that will cost VW shareholders tens of billions? The New York Times stated that it could not identify him or her because of German privacy laws.
This example nicely illustrates how privacy laws undermine liberty. Their direct harm to liberty is clear. Because of fear of liability in Germany, the New York Times cannot exercise its free speech rights in the United States to name a key executive in a story about one of the most important business scandals of the decade.
The harm to society is clear as well. Executives in companies (and officials in government) are likely to behave better if they fear exposure. Indeed, privacy laws will reduce the number of investigate reporters trying to uncover malfeasance. Newspapers are naturally more interested in running stories where names are attached than stories about faceless executives or bureaucrats, because they are more likely to interest readers.
But the laws also impose more indirect, but pervasive costs to liberty. By reducing the power of private social norms to restrain bad behavior, they make a more intrusive state necessary. The less civil society governs itself by decentralized, informal means, such as by circulating information, the more there will be a need for the heavy handed enforcement mechanisms of a top-down bureaucracy.