Data privacy issues can be tricky for libertarians. On the one hand, the shortcomings of government intervention are significant and predictable. Regulations often fail to accomplish intended goals while empowering incumbents and burdening consumers. A “cure” should not strengthen the disease.
On the other hand, internet platforms can be really terrible. One needn’t be a commie pinko to take umbrage with invasive, misleading, or even outright fraudulent data tracking and advertising practices—to say nothing of some tech giants’ sneaky little habits of sharing data or tracking technology with governments.
Here is an example: The retail giant Target is known to have quietly tracked card payments to build behavioral advertising profiles for each customer, whether one liked (or knew!) it or not. Their statisticians were able to predict which customers were pregnant, “even if she didn’t want [them] to know,” and target surreptitious ads to make a lifetime shopper of them.
In one case, the company inundated a teenage girl’s mailbox with “advertisements for maternity clothing, nursery furniture and pictures of smiling infants,” tipping off that girl’s father to the unplanned pregnancy before she got a chance to break the news.
Such arrangements may not be strictly “involuntary.” No one is forced to shop at Target. The company’s purpose is to maximize profits; why shouldn’t they leverage freely given information? Some people may not think these big data antics are a big deal, or they might even appreciate that companies proactively send them tantalizing deals.
But private data surveillance is usually clandestine, and to many people, creepy. It is also more pervasive than many realize. Besides, should buying toilet paper really be this adversarial?
In this case, we don’t need to choose between clumsy government regulations or submission to uncontrolled data harvesting. We have already had a robust market solution to marking tracking for about a decade now: Digital cash is a market escape from the financial panopticon.
My colleague Jerry Brito made the case for digital cash as a fundamental tool of human autonomy in his recent paper, “The Case for Electronic Cash.” (I helped with research for the study.) It explains how cryptocurrency provides a check against malfeasance by public and private bodies. Or to paraphrase the economist Arnold Kling: Intermediated markets fail; that’s why we need disintermediated markets.
People rightly praise cryptocurrencies like bitcoin for their privacy-preserving and hard currency properties. They give us important tools to counter government overreach.
But Brito’s paper highlights a novel and underappreciated benefit of cryptocurrencies. Direct person-to-person exchange online also provides a critical alternative to private intermediaries that could exploit or limit our transactional freedom. That is to say: Digital cash preserves our financial autonomy.