The origin of “You have nothing to fear, if you have nothing to hide” is unclear but the saying is believed to be based on George Orwell's book 1984. It has also been attributed to Nazi Joseph Goebbels. The argument is not of recent vintage. One of the characters in Henry James's 1888 novel, The Reverberator, muses: "If these people had done bad things they ought to be ashamed of themselves and if they hadn't done them there was no need of making such a rumpus about other people knowing." My response to the "If you have nothing to hide" argument is simply, I don't need to justify my position. You need to justify yours. Come back with a warrant, because I don't have anything to hide. But I don't have anything I feel like showing you, either and it's about things not being anyone else's business.
George Orwell depicted a harrowing totalitarian society ruled by a government called Big Brother that watches its citizens obsessively and demands strict discipline.
In Franz Kafka's, The Trial, the novel centers around a man who is arrested but not informed why. He desperately tries to find out what triggered his arrest and what's in store for him. He finds out that a mysterious court system has a dossier on him and is investigating him. The Trial depicts a bureaucracy with inscrutable purposes that uses people's information to make important decisions about them, yet denies the people the ability to participate in how their information is used.
The problems portrayed by Kafka are of a different sort than the problems caused by surveillance. They are problems of information processing, e.g. the storage, use, or analysis of data, rather than of information collection. They affect the power relationships between people and the institutions of the modern state. They not only frustrate the individual by creating a sense of helplessness and powerlessness, but also affect social structure by altering the kind of relationships people have with the institutions that make important decisions about their lives.
Legal and policy solutions focus too much on the problems under the Orwellian model of surveillance and aren't adequately addressing the Kafkaesque problems of information processing.
The problem with the nothing-to-hide argument is the underlying assumption that privacy is about hiding bad things. By accepting this assumption, we concede far too much ground and invite an unproductive discussion about information that people would very likely want to hide. Surveillance, for example, can inhibit such lawful activities as free speech, free association, and other First Amendment rights essential for democracy.
The deeper problem with the nothing-to-hide argument is that it myopically views privacy as a form of secrecy. In contrast, understanding privacy as a plurality of related issues demonstrates that the disclosure of bad things is just one among many difficulties caused by government security measures. The problems are not just Orwellian but Kafkaesque. Government information-gathering programs are problematic even if no information that people want to hide is uncovered.
In “The Trial”, the problem is not inhibited behavior but rather a suffocating powerlessness and vulnerability created by the court system's use of personal data and its denial to the protagonist of any knowledge of or participation in the process. The harms are bureaucratic ones, i.e. indifference, error, abuse, frustration, lack of transparency, and accountability.