by Gordon Hull
Judge Richard Posner’s well-known application of law and economics to privacy yields results that appear, well, ideological. First, he considers what individuals do with informational privacy. What is an interest in privacy of information, he asks? Well, it’s an interest in enforcing an information asymmetry in markets. Information asymmetry is presumptively bad because it causes distortion in the price mechanism; the price mechanism is in turn the reason that markets can claim to be both epistemically and normatively justified. They are epistemically justified because market price signals the social value of something much better than any sort of centralized planning process would do, and it does so without introducing all the inefficiencies of an enormous state apparatus. The price mechanism is normatively justified because it presents no special intrusion into the lives of individuals: we are all free to do what we want and signal (with our willingness to pay) what is important to us. In the case of privacy, for example, if I present myself or some good I am selling to you, “privacy” basically means that I’m trying to withhold relevant information about that good from you. If I apply for a job and hide a criminal record, then I’m trying to get you to overvalue me as a potential employee by keeping you ignorant of my past. Accordingly, the law should not protect such refusals to disclose, and in some cases ought to compel disclosure. Thus the first part of Posner’s article.