Government: The Bigger, the Leakier

November 8, 2013

One of the many problems with Big Government is that it abuses our privacy. The potential for abuse has been greatly heightened in the information age. The problem is not just that government officials themselves can abuse the vast troves of data that they collect, but that thieves, hackers, organized crime, and other private actors can gain access as well.

Federal bureaucracies are collecting vast amounts of data and storing it in giant sieves. Officials promise to put safety procedures in place, but those procedures always fall short because the government is so large and vulnerable to human failure. Two stories in theWashington Post today highlight the problems.

One story solves the mystery of how Edward Snowden was able to walk away with tens of thousands of secret NSA documents. As a computer systems administrator, he apparently just asked a couple of dozen agency employees for their log in passwords.

Another story describes how a defense contractor in Asia allegedly used moles in the U.S. Navy Department to gain access to sensitive data about contracts, ship movements, and internal investigations. The contractor used old-fashioned tools to prey on the weaknesses of Navy officials: money and prostitutes. The leaks happened “despite past pledges by the Pentagon to strengthen oversight,” notes the Post.

The huge data data collection effort to support Obamacare is another threat. Despite government promises about ensuring privacy, we now know that the administration skipped crucial security and privacy testing as it rushed to launch the health website.  

Politicians and officials will keep promising to fix things, but as long as the government is a giant vacuum cleaner sucking up and storing vast troves of data, sensitive information will leak. Another dimension of risk is the increased proclivity of our government to share tax, financial, security, and intelligence data with other governments.

In researching our 2008 book, Global Tax Revolution, Dan Mitchell and I looked into these issues because of the growing tax data collection and sharing efforts going on between governments. Here are some of the government data leaks we mentioned in the book:

  • In 2007, the Treasury inspector general found that over a three-year period, 490 IRS laptops were stolen, many of which contained unencrypted personal taxpayer information.
  • In 2007, a low-level United Kingdom tax official lost computer disks containing the detailed tax, financial, and banking records of 25 million Britons.
  • In 2006, the electronic records for every U.S. veteran discharged since 1975 were stolen from the home of a Department of Veterans Affairs employee. The records included information on 26 million veterans, included names, Social Security numbers, and other personal data.
  • In 2006, the Department of Transportation lost a laptop containing 133,000 records of personal information on Florida residents.
  • In 2007, the Transportation Security Administration lost a computer hard drive containing personal information on 100,000 of its employees, including Social Security numbers and bank deposit data.

On our current trajectory, these sorts of problems will probably only get worse. I’m not a privacy expert, but it seems that government leaks usually stem from simple human error, sloppiness, and malfeasance. We’re not going to solve those human character flaws any time soon. So the bigger the government’s data collection and storage empire becomes, the more humans will be involved, and the more leaking and stealing that will take place. 

What’s the solution? From my perspective, it’s straightforward: vastly downsize the federal government and end many of its data collection activities.

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