Eli Dourado

Surveillance and the modern administrative state

News about the extent of NSA domestic surveillance continues to unfold. I join with others in their outrage, revolutionary zeal, and so on. But among my fellow opponents of domestic surveillance, I don’t think there has been an honest reckoning of what it would take to eliminate domestic surveillance, broadly defined, of innocent Americans. It’s worth thinking through how we could structure the government’s activities in order to minimize the amount of information it could have a plausible excuse to collect.

My point is not to convince non-libertarians that they should become libertarians. I’m not going to argue for a particular level, or a particular incidence, of taxes and spending. My point is to show how much we would need to change to really solve the problem of the US government collecting personal data about innocent citizens.

Most obviously, we would need to expect less of our intelligence services. We are asking too much of them if we want to a) have an imperial foreign policy, b) keep us perfectly safe from the enemies we create with (a), and c) abide by the Constitution. So we would need to tell them that they really need to do (c), and that it’s OK if they can’t keep us perfectly safe. We would also need to scale back our foreign adventurism. I think up to this point, most people who oppose domestic surveillance would agree with me.

But tackling the foreign policy establishment is not enough. Domestic policy also generates lots of excuses to collect records. For example, consider the income tax. By taxing income, we require millions of Americans to report to the IRS: where they work, how much they earn, which charities they support and how much they support them, medical expenses, and more. To enforce the tax, the IRS collects much of this data from counterparties, too, so it’s not just a matter of choosing not to report deductions.

There is also surveillance associated with the regulation of economic activity. To enforce the prohibition on dealing in illegal substances (as well as to supposedly hamper terrorism), the government has extensive financial surveillance capabilities. FinCEN monitors (at least) all large bank transactions. It requires hawaladars and Bitcoin exchangers to register as money service businesses and report suspicious transactions. The SEC also collects data on who trades what securities, in order to enforce the ban on insider trading.

The way social programs are structured also rely on government data collection. For example, Social Security is based on an individual record of contribution, the EITC is based directly on the income tax, and other programs also depend upon income level and require data collection if fraud is to be prevented.

How could we structure the activities of the state so that the government did not need to keep very many records about ordinary Americans? I can think of several reforms:

  1. The obvious one, already explained above, is to have a much less ambitious foreign policy and not to expect our intelligence services necessarily to keep us perfectly safe.
  2. Replace the income tax (and other taxes) with a revenue source that does not require extensive record collection or significant enforcement. Discussing these ideas on Twitter, Ashok Rao suggests taxing land value and minerals. See also Ashok’s previous post on rent taxation. (n.b. that desired progressivity can be made up on the spending side. See point 4 below.)
  3. Eliminate money laundering, insider trading, and any other financial crimes that require extensive monitoring of financial flows. End the war on drugs.
  4. Implement social programs in a way that minimizes the need for record keeping. Instead of means-tested or contribution-based entitlements, the government could just unconditionally provide the kinds of services that poor people tend to consume. Everyone could save for their own retirement, but to ensure that nobody starves in old age, the government could provide a high baseline of services in the form of high-quality food kitchens, meals on wheels, nursing home care, etc. In practice, this kind of spending would be progressive, since the wealthy would probably still prefer commercial restaurants to public food kitchens.

In short, ending extensive government record keeping about ordinary Americans would require a tremendous overhaul of our foreign and domestic policies. I don’t think that there is a large constituency for these reforms. In a Washington Post poll, only 27 percent of registered voters “strongly” opposed NSA domestic surveillance programs. Of these, what percentage do you think would be interested in some version of reforms 2-4 above? My guess is it would in the single digits.

The modern administrative state is popular, and it seems inextricably linked to surveillance. I despair.