In analyzing any industry and the need to regulate that industry, it is important to balance the needs of that industry for growth with any real interest on the part of the government for the protection of some larger interest. This is what is involved in the present debate taking place over the Clipper Chip, an encoded device to be placed in all telecomputer products that makes it possible to protect the need of the consumer for privacy while also enabling the government to protect its need for surveillance and for the curtailment of criminal activity. The industry has been resisting any law mandating the use of the Clipper Chip for a number of reasons--it is seen as a governmental intrusion into private business interests, it is considered an added and unnecessary expense for manufacturers and retailers, it undercuts the notion of privacy that is so important in computer communications, and it may not even work as promised.
There is an argument among business leaders and government officials over whether government will or should regulate an industry over the objections of or against the interests of business. Regulation, say many theorists, is primarily designed and operated for the benefit of a given industry, but the situation may be more complex than the paradigm might indicate. While it is true that politicians and business both act out of self-interest, with the one most interested in votes and the other in profits, this is not necessarily the rationale for all regulation. In terms of the Clipper Chip, the industry has an interest in satisfying the desire of customers for a product that protects the privacy of electronic communications, while the government has a law-enforcement function that is considered endangered when privacy is absolute.
The battle under way at the present time developed because the Justice Department is pressing for a change in coming telephone technology to allow for wiretaps. The government ...