mr. greenspan looks at some important issues arising from new information and communications technologies remarks by the chairman of the board of governors of the us federal reserve system, mr. alan greenspan, at the conference on privacy in the information age held in salt lake city on 7 / 3 / 97. it is a pleasure to be with you this afternoon as you discuss some of the most fundamental issues raised by our new information and communications technologies. the topic senator bennett has asked us all to address is privacy in the information age. the central dilemma in these discussions almost always involves fundamental choices about how to strike prudent balances among the needs of individuals for privacy in their financial and commercial transactions, as well as their personal communications ; the needs of commerce to bring us new products and new means to communicate ; and the needs of the authorities to provide for the effective administration of government and to ensure the public safety. these are not easy choices. i think we all need to have a healthy respect for all sides of the debate. even further, we need to be aware that the balances we strike in one era may need to be reexamined as technology and circumstances change. the dictionary defines privacy as the state of being free from unsanctioned intrusion. this concept, to which americans feel a very deep - seated attachment, is reflected in the fourth amendment to the constitution, which assures “ the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.... ” for the government to intrude on one ’ s privacy is in a very fundamental sense a deprivation of freedom. it is one of those deeply sensed issues that transcends people ’ s constitutional or legal views and delves into the realm of one ’ s sense of person. this is why the perceived threat to privacy from burgeoning technological advance, coupled with an increasing sense of inefficacy in the face of sophisticated new technologies, has created such a stir. the fears of invasion of privacy, as a consequence of inexorable forces seemingly out of the control of the average american, has risen to a major public policy issue. a half century ago a number of writers expressed concern at a perceived ever widening intrusion of government into the lives of individuals. they feared the ultimate collectivization of our society where individualism would be significantly diminished or expunged, and the emergence of “ big brother ” would come to define and dominate

##s over the business cycle and maintains that fiscal discipline over time is the will of the political system to make the necessary hard choices on government spending and taxes. one possible means of expressing that will, would be for the congress to reinstitute a set of budget rules, possibly along the lines of the discretionary spending caps and the paygo rule originally included in the 1990 budget act ; these rules may assist in the process of making the difficult choices among competing budget priorities. however, although the paygo budget rule, for example, appeared to help keep legislation from increasing federal deficits for a number of years, paygo did not provide a mechanism to deal with the long - term budget imbalances already in place. thus, it is worth considering whether future budget rules should go beyond the scope of paygo and require more fundamental adjustments to spending and taxes. clearly, there are numerous ways in which budget policy could be adjusted to bring the budget back into balance in the short run and to maintain it over the long run. in any event, these difficult choices must ultimately be made. if left unchecked, persistent and widening federal government deficits will have an increasingly corrosive effect on the u. s. economy because, all else being equal, federal government borrowing takes up some of the funds that would otherwise go to finance capital accumulation or to purchase capital assets from abroad. a good deal of controversy has swirled around the question of whether increased federal borrowing reduces domestic investment, and presumably increases interest rates, or whether it increases u. s. borrowing from abroad. viewed from a broader perspective, however, that distinction is probably not very consequential because future national income is lower in either case. for the federal government to run a deficit in the short run as a temporary response to an emergency event, such as the recent devastating hurricanes, or a recession or a war is not the type of fiscal policy imbalance that tends to have a negative long - run effect on an economy. to the contrary, appropriate discretionary fiscal responses to these types of situations can have beneficial economic effects, as i suggested earlier in my remarks. however, it is imperative that the nation come to grips with the fiscal implications of the retirement of the baby - boom generation. creating a budget strategy and implementing policy changes to balance the federal government's budget over the long term will require hard choices, which will become more difficult the longer they are delayed. moreover, changes made to federal government spending programs and taxes to