When we think about privacy, it's usually in the context of an individual being able to hide something, usually from the government, but also from lots of other entities. It's a security issue in the greater discourse because there are bad people that can and will use information about you to reveal embarrassing information, blackmail, or even steal from you.
This is not just true of criminals, but also of companies and even governments. They can and do use information about you to propagandize you or demand taxes from you. These are, of course, understandable concerns and good reasons to want privacy.
Status Games
But there's another aspect of privacy which is just as important, perhaps more important than these and it's the social dynamic at play.
Privacy, you see, is a necessary buffer between people to keep order. This is because people are, in the end social creatures and in every social group, there is a constant jockeying about for position, what I would call status games being played.
The problem with status games is that they are by nature zero-sum. Whoever is at the top is usually both admired and envied, while whoever is at the bottom is generally pitied. This is especially true when the participants can change their position, whether through achievement, violence or politics.
Envy and Resentment
Too much clarity on the status of individuals in the group causes strife in the form of envy. This is not just for people at the bottom, whose envy of everyone above them is understandable, but also for those near the top, who likewise will envy people above them. A big enough group of disaffected people in a status game will cause some form of revolution. In other words, strictly ordered status games are not stable.
Thus, too much information sharing is bound to cause bitterness and resentment which in turn causes unstable organizations because humans are very status-aware. Marxism tries to solve this by making everyone equal, but of course, this doesn't work because the entity which controls this equality ends up being higher status than everyone else. You cannot have full transparency and social order. There will be too many dissatisfied people.
This is where privacy is important because it gives groups ambiguity about where each individuals stand. For example, most social groups in the US have as a default, social standing that corresponds with their level of wealth. The richer you are, the higher on the status ladder you are and the poorer, the lower. A very strict pecking order where everyone knew exactly how many assets everyone had would breed a significant amount of envy and resentment. Any group where this level of transparency was required would be unpleasant to be in strictly for that reason. We need a level of ambiguity to socially interact in a reasonable way.
Decentralized Status Games
That's not to say that everything is completely obscured. Most people that have money signal in various ways, with their clothing, car, topics of conversation and so on. They signal with various levels of loudness and reveal status information to the people that they're targeted at. One of the features of "old money" people is that they're very good at identifying other "old money" people while simultaneously hiding their wealth from people that are not as rich as they are. In a sense, this is a survival mechanism because envy, bitterness and resentment are not pleasant to deal with and oftentimes dangerous.
Privacy is the ability to disclose information at our discretion, not someone else's and that's exactly what happens in groups to keep the peace. Privacy has deep social value because it gives individuals the discretion to reveal where they are relatively in status. That protects not just them from attack, but also protects the group from upheaval. The less envy, bitterness and resentment there is, the more cohesive the group can be.
Conclusion
Privacy is a necessary part of civilization because cooperation is hard and nothing destroys cooperation like bitterness and envy. And those two in turn are caused by too much clarity on status. Privacy is what adds ambiguity and empowers individuals to calibrate group dynamics.
Privacy: it's not just for cypherpunks anymore.
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