Today, most transactions are made with a debit or credit card. Some goods and services are only available with a debit or credit card. But every time you make a purchase with your card, you create an electronic trail. First, the information on your card’s magnetic stripe goes to a clearing facility for approval. Then it’s logged into a database of information collected by your card issuer.
At every stage of the process, computers probe your purchasing patterns. The primary uses of this probing are for marketing and fraud detection. But, if you start using your card too much to purchase discount groceries, second-hand clothing, or used furniture, you may raise a red flag. Your card issuer may lower your credit line or even cancel your card altogether. And if you fall behind on your payments? In that event, the computers will use information on your spending patterns to develop a psychological profile to determine the best approach to persuade you to pay up.37
Using checks issued by a domestic bank isn’t any more private. Banks use the same tools to analyze checks drawn on your bank accounts as they do for your card purchases.
Naturally, the same companies that create exquisitely detailed data profiles of your purchases rent out their services to law enforcement and intelligence agencies.38 Thanks to the War on Terror, there are few legal formalities.
People who understand this loss of privacy gladly pay higher transaction fees for debit cards issued by offshore banks, and also conduct banking transactions offshore, to avoid such surveillance. You’ll learn more about offshore banking in Chapter 5 of The Lifeboat Strategy.
Another reason privacy is disappearing in the United States is that no legal framework exists to protect it. Federal privacy law is a piecemeal affair combining constitutional law, congressional statutes, administrative regulations, and court decisions. Even more variation exists between the states.39
In other countries, the legislative framework to protect privacy is stronger. In the European Union, a data protection directive came into effect in 1995 imposing minimum standards for privacy laws in 15 (now 27) EU countries.40
Yet that framework is unraveling worldwide, as a consequence of the “War on Terror.” We are at the cusp of an era where wholesale government surveillance is possible. The world’s largest surveillance organization is the U.S. National Security Agency (NSA). Congress has authorized the NSA, in effect, to continuously tap into the Information Superhighway, looking for patterns of communication or keywords that might indicate a conversation between terrorists. To store the massive amount of data it intercepts, the NSA is building massive data warehouses. Just one of these warehouses occupies more than one million square feet. There are no legal limits to how long it stores the data. 41
Networks of closed circuit television cameras now blanket our cities. They can track every person in an area, identify them with face recognition software, and record their movements for later analysis. Numerous cities now have license plate scanners installed that keep records of every vehicle that passes, and save that data for later analysis. Homeowners install cameras in their homes to thwart crime and vandalism–but also to spy on passers-by. This type of surveillance is most advanced in the United Kingdom – but there is nothing to prevent similar developments in the United States.42
That this power can be abused is without question. Wayne Madsen observes:
In 1940, the German Army invaded Denmark, Norway, the Netherlands, Belgium, Luxembourg, and France. While the military exploits of the Wehrmacht received widespread attention, the surreptitious achievements of a specialized branch of the [Nazi] SS, the SD (Sicherheitsdienst des Reichsfuhrers or Security Service of the Chief of the SS in the Reich) received much less notice. All the invaded countries maintained advanced systems of paper records on their citizens. Some of these were held by local governments such as town clerks’ offices, while others were held by churches, private clubs, organizations, and national government ministries. These records were seized by the SD shortly after occupation.
SD information analysts proceeded to examine closely birth records, voting records, and business records … The results of these personal data analyses are now well known. Jews and those of Jewish descent, Jehovah’s Witnesses, seminary students, Gypsies, the mentally retarded, Socialists, Communists, pacifists, Liberal Republicans, Catholic Action and Catholic Youth members, Protestant theologians, and homosexuals were rounded up by the SD’s sister service, the Gestapo, for shipment to concentration camps and in most cases to their deaths.45
The Nazis identified their victims from paper records. How much more efficient would their extermination efforts have been had they been equipped with today’s data mining software and the rapidly advancing network of law and technology designed to monitor our personal and financial transactions?
Fewer Refuges for Private Wealth
Only a few decades ago, the bulk of individual or family wealth was in its home, its furnishings, the value of any land, crops and animals, and perhaps a few gold and silver coins. This is tangible wealth.
Today, wealth is represented in many more forms, among them paper currency, holdings in bank and brokerage accounts, etc. Most of these forms of wealth are intangible. They can be bought and sold, or transferred, at the blink of an eye. This makes intangible wealth much more convenient for financial transactions than tangible wealth.
Intangible wealth represents a claim to an underlying asset – debt issued by a corporation or government, for instance, or ownership in a company. This claim takes the form of a stock or bond, issued originally in paper form, but now, more often than not, in the form of a book entry on the electronic ledger of a bank or broker.
The characteristics that make intangible forms of wealth attractive for financial transactions also make them vulnerable. Tangible assets are much harder to deal with: real estate is immobile and relatively illiquid; animals and crops must be maintained. Intangible wealth is both more mobile and often much more liquid than tangible wealth. In the event of a legal dispute, these characteristics make it much more attractive to potential creditors.
Because intangible wealth is often represented by nothing more than blips on a computer screen, its custodians have developed elaborate systems to track it. In the United States, information about these holdings can become public in many ways: lawsuit, divorce, data sharing between companies, etc. Investigators, the IRS, and many other government agencies can often learn what intangible wealth you have, and where you keep it, without going to court.
Privacy for Sale
Wealthy people can afford to place legal and financial obstacles in the path of any would-be privacy invader. They can place their assets in offshore entities and do business through corporate vehicles that shield their identity. If they choose to do so, they can live as expatriates in countries that have less developed surveillance infrastructures. By leaving bookkeeping details to trusted attorneys, they can live practically anonymous lives.
The poor also lead relatively private lives, especially if they refuse government assistance. Undocumented immigrants and homeless street persons aren’t likely to file income tax returns or show up on Facebook. Their lives may be a desperate battle against privation and despair. But it’s a more private existence than most middle-class residents of the United States have.
Most likely, you fall somewhere in the middle of these two extremes. Your public image resides in thousands
