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Customer Relationship Management

Notes A distribution of privacy rights on a free-market basis would provide no protection for citizens
against encroachment by the state. The only effective limits on government are those established
through constitutional and statutory means. Therefore there would have to be two types of
privacy rules, one for transactions among private parties, the other for transactions between
private parties and the state. The former would be left, in part, to the market to allocate; the
latter would involve a constitutionally protected right. Yet the question may be asked whether
such a bifurcation in the treatment of the most mobile of resources – information – is sustainable
and practical.
Perhaps the most prevalent argument against markets in privacy is that affiance is not the only
societal goal. Thus, some resources, such as privacy allocations, might be in the category of
inalienable rights that are protected from encroachment and “commodification” by the market
system.
This position leads to several responses to the notion of transaction-generated privacy:
 Privacy is a basic human right, and not subject to exchange transactions.
 Consumers cannot correctly assess the market value of giving up personal information.
 A transaction system in privacy will disproportionably burden the poor.

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Caution Privacy is a basic human right is a noble sentiment, but it does not follow that
privacy therefore is outside the mechanism of transactions.
As mentioned, a right is merely an initial allocation. It may be acquired without a charge and be
universally distributed regardless of wealth, but is in the nature of humans to have varying
preferences and needs, and to exchange what they have for what they want. Thus, whether we
like it or not, people continuously trade in rights. In doing so, they exercise a fundamental right,
the right of free choice.
In most cases, a person does not so much transfer his right to another but chooses not to exercise
it, in return for some other benefit. An accused has the right to a jury trial, but he can waive it for
the promise of a lenient sentence. A person has the freedom of his religion, but may reconsider
in order to make his spouse’s parents happy. One can be paid to assemble or not to assemble, to
forgo bearing arms, travel, petition, or speak. Voluntary temporary servitude in exchange for
oceanic passage has peopled early America. Students have the right to read faculty letters of
recommendation written in their behalf, but they usually waive that right in return for letters
they hope will have greater credibility.
These departures from textbook civics are socially undesirable if the rights in question were
given up under some form of duress, for example if in a single-employer town workers must
agree not to assemble as a condition of employment. But when an informed, lucid, sober, and
solvent citizen makes a choice freely, the objections are much harder to make. They then boil
down to a transaction being against public policy, often because it affects others outside the
transactions (i.e. “negative externalities”). To make these transactions illegal, however, does not
stop many of them, if there are willing buyers and sellers, but it makes them more difficult and
hence costly. The extent of the success of such a ban depends, among other factors, on the ability
of the state to insert itself into the transaction. In the case of privacy, which by its nature is an
interactive use of information, such insertion is difficult. All it usually takes is to make the
information transaction consensual. And if it becomes illegal to offer compensation to obtain
consent, one can expect imaginative schemes to circumvent such a prohibition. After all, we now
have over 3.0 lawyers per thousand population, up from 1.3 in 1970. Indeed, the success of
government enforcement would then depend on intrusive actions by the state into private
transactions. As important as privacy is, it will not necessarily override other values, such as
free choice, the right to know, and the right to be left alone.

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