[if there's two posts - I couldn't edit the first one to fix formatting, nor could I delete it]

TLDR: the author first steelmans the "nothing to hide" argument, we can present it as: "People who take part in illegal activities have no right for privacy of those activities. Intimate aspects of one's life are filtered by mindless automated algorithms, and are unlikely to be of interest to NSA; even if they happen to be, they will be processed by few government officials and unlikely to leak outside; regardless, it is a (statistically) small privacy sacrifice for a potential national security gain".

Then the author proceeds to explain what is privacy. It looks like he has spend a lot of time conceptualizing privacy and the subject of the paper is just an excuse to present his taxonomy of privacy. This motivation strongly hampers the argumentation in the book, which simply points out that as privacy is not just about "hiding the wrong", which is an incorrect premise of the "nothing to hide" argument. The author doesn't really tackle the "sacrifice" argument he himself brought up, other than arguing why privacy is more important than it might seem (and therefore the sacrifice is greater):

"Even surveillance of legal activities can inhibit people from engaging in them." - no source for the claim, there is a source however to the statement that it would be hard to prove:

"The nothing to hide argument focuses primarily on the information
collection problems associated with the NSA programs. It contends that
limited surveillance of lawful activity will not chill behavior sufficiently
to outweigh the security benefits. One can certainly quarrel with this
argument, but one of the difficulties with chilling effects is that it is
often very hard to demonstrate concrete evidence of deterred behavior."
[Daniel J. Solove, The First Amendment as Criminal Procedure, 82 N.Y.U. L.
R EV . 112, 154–59 (2007).]

Another counterargument is that even if you think whatever information there about you can be known by government without harm to you, through aggregation and cross-analisys, new information about you can be evaluated, which you wouldn't want to be known to the government. Also, amassing knowledge about citizens gives government power and therefore creates disbalance between the power of government and its citizens.

So the only way the "sacrifice" argument is countered in the book is to put some light on how the sacrifice is actually quite bigger than it might seem - which doesn't require philosophical approach to privacy, just listing various negative effects of (mass) surveilance.

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Fragments I found interesting:

The argument is not only of recent vintage. For example, one of the
characters in Henry James’s 1888 novel, The Reverberator, muses:
“[I]f these people had done bad things they ought to be ashamed of
themselves and he couldn’t pity them, and if they hadn’t done them there
was no need of making such a rumpus about other people knowing.”

--

Everybody probably has something to hide from
somebody. As the author Aleksandr Solzhenitsyn declared, “Everyone
is guilty of something or has something to conceal. All one has to do is
look hard enough to find what it is.” 29 Likewise, in Friedrich Dürrenmatt’s
novella Traps, which involves a seemingly innocent man put on trial by
a group of retired lawyers for a mock trial game, the man inquires
what his crime shall be. “‘An altogether minor matter,’ the prosecutor
replied . . . . ‘A crime can always be found.’”

--

As one comment to my blog post noted: “If you have nothing to
hide, then that quite literally means you are willing to let me photograph
you naked? And I get full rights to that photograph—so I can show it to
your neighbors?” Canadian privacy expert David Flaherty expresses a
similar idea when he argues:
There is no sentient human being in the Western world who has little or no
regard for his or her personal privacy; those who would attempt such claims
cannot withstand even a few minutes’ questioning about intimate aspects of
their lives without capitulating to the intrusiveness of certain subject matters.

--

As one commenter aptly notes:
By saying “I have nothing to hide,” you are saying that it’s OK for the
government to infringe on the rights of potentially millions of your fellow
Americans, possibly ruining their lives in the process. To me, the “I have
nothing to hide” argument basically equates to “I don’t care what happens, so
long as it doesn’t happen to me.”

--

[Stronger forms of the argument are presented, like:]
Privacy involves a person’s “right to conceal discreditable
facts about himself.”[...]Posner asserts that the law should not protect
people in concealing discreditable information. “The economist,” he argues,
“sees a parallel to the efforts of sellers to conceal defects in their
products.”

--

In a less extreme form, the nothing to hide argument does not refer to all personal
information, but only to that subset of personal information that is likely
to be involved in government surveillance.[...]
Information about what phone numbers people dial and
even what they say in many conversations is often not likely to be
embarrassing or discreditable to a law-abiding citizen. Retorts to the
nothing to hide argument about exposing people’s naked bodies to the
world or revealing their deepest secrets to their friends are only relevant
if there is a likelihood that such programs will actually result in these
kinds of disclosures. This type of information is not likely to be captured in
the government surveillance. Even if it were, many people might rationally
assume that the information will be exposed only to a few law enforcement
officials, and perhaps not even seen by human eyes. Computers might
store the data and analyze it for patterns, but no person might have any
contact with the data.

--

The taxonomy I developed is as follows:
Information Collection
Surveillance
Interrogation
Information Processing
Aggregation
Identification
Insecurity
Secondary Use
Exclusion
Information Dissemination
Breach of Confidentiality
Disclosure
Exposure
Increased Accessibility
Blackmail
Appropriation
Distortion
Invasion
Intrusion
Decisional Interference

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Under current Supreme
Court Fourth Amendment jurisprudence, when the government gathers
data from third parties, there is no Fourth Amendment protection because
people lack a “reasonable expectation of privacy” in information exposed
to others. 76 In United States v. Miller, the Supreme Court concluded that
there is no reasonable expectation of privacy in bank records because
“[a]ll of the documents obtained, including financial statements and
deposit slips, contain only information voluntarily conveyed to the banks
and exposed to their employees in the ordinary course of business.” 77 In
Smith v. Maryland, the Supreme Court held that people lack a reasonable
expectation of privacy in the phone numbers they dial because they
“know that they must convey numerical information to the phone
company,” and therefore they cannot “harbor any general expectation that
the numbers they dial will remain secret.”

--

Most privacy problems lack dead bodies. Of course, there are
exceptional cases such as the murders of Rebecca Shaeffer and Amy
Boyer. Rebecca Shaeffer was an actress killed when a stalker obtained her
address from a Department of Motor Vehicles record.