The Law of Unintended Consequence

It's hard to dispute the goal of assuring patients that they can share personal information with their doctor or insurance company without risk. But it's unclear how requiring patients to sign a bunch of disclosure waiver forms will help protect privacy, improve health care or alleviate patient anxiety. What is certain is funneling all that information to HHS is a step in the wrong direction. Fortunately, Secretary Thompson has recently expressed his willingness to review and reconsider these new regulations.

A legislative or regulatory solution may be the slowest and least effective way to address consumer concerns. One of the most frequent reasons given for the need to enact commercial privacy legislation is that some consumers refuse to engage in e-commerce because they fear their information won't be adequately secured. I haven't made the transition to online banking myself for that very reason. Nonetheless, more and more people are turning to e-commerce, which shows that not everyone is obsessed with such concerns.

We should remember that these online services have a strong market incentive to address my privacy concerns if they want my business. The market is well suited to adapting and quickly changing to meet new circumstances or to address the concerns of consumers. And that's important because the way we understand the Internet and websites today is changing.

Web sites are simply the way that most of us interact on the Internet today-that may not be true tomorrow. Already, a substantial amount of Internet data, such as stock trades, travels by cell phone or other mobile devices. Imagine trying to read a legal privacy notice on your cell phone before opening that E*TRADE account. Should typing your social security number on your phone keys be treated differently than typing them in on a computer keyboard? Imposing notice rules on web sites may be as relevant next year as requiring airbags on horse buggies.

Some calling for additional online privacy regulations cite the need to address things that are, in fact, already illegal-like stealing credit card numbers or "identity theft." It makes no difference whether that information was illegally obtained on the Internet or by stealing your purse. Perhaps better enforcement of existing laws will address those concerns.

Motivated by the desire to "save" the Internet, others have argued that if Congress does not act soon, state governments will create a host of different and even contradictory rules that might derail our borderless Internet economy. Even if Congress could preempt these state laws-and I am not aware of any consensus to do so-rushing to create a single unworkable federal standard is as bad or worse than having many unworkable state standards. Let's not love the Internet to death.

So what about privacy?
Privacy is a difficult issue, and I don't pretend to have all the answers on this subject. Right now, Congress is an inexperienced and amateur mechanic trying to tinker with the supercharged, high-tech engine of our economy. We need to be careful not to let our good intentions get in the way of common sense.

That doesn't mean that we can't or shouldn't do something about privacy. Far from it. It means that we should start with what we know best and have the greatest ability to affect. We've already seen that the federal government needs serious attention when it comes to privacy. And there are plenty of things we can do to improve the way the federal government uses personal information-both in the bureaucracy and in Congress. We should clean our own house before dictating solutions for others.

Those who live in glass houses shouldn't throw stones. And right now, the federal government's online house is made of pretty thin glass.

— End

< Back to page 1: Privacy: For Those Who Live In Glass Houses

   

Related articles:
	[Oct. 24, 2000]	More to Fear than Carnivore
	[Mar. 17, 2000]	Are Privacy Laws Good or Bad for ISPs?