BERKELEY, Calif. (MarketWatch) -- Google Inc. Chief Executive Eric Schmidt got some privacy advocates agitated this week with an offhanded remark that indicated a naïve attitude toward privacy.

He said: "If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place, but if you really need that kind of privacy, the reality is that search engines including Google do retain this information for some time, and it's important, for example that we are all subject in the United States to the Patriot Act. It is possible that that information could be made available to the authorities." Read more about Schmidt's comments.

By turning the argument against the user with "just don't do anything wrong and you'll be OK," Schmidt is essentially saying that we are now going to start spying on you. What else can it mean? This sort of proclamation regarding "the authorities" sounds like something the Stasi or KGB would tell the public. It's a threat.

For a chief executive to make what amounts to a threat to its users is absolutely astonishing. The general milquetoast reaction to this threat is even more astounding, but understandable. Our privacy rights have been eroding for years and just accelerated with the Bush administration. President Barack Obama has been on board since day one.

What sort of society wants to tap the phone calls of all its citizens? What sort of society wants to rifle through your personal belongings after busting into your house? These notions are promoted on TV with shows like "24" and other cop shows, where warrantless searches are common. (Even the actual mechanisms are revealed: "Did you hear a scream for help in there?" "YES! Let's bust in.")

Of course, the bugaboo of terrorism is key to all this. Yes, I'm aware after eight years without a new terrorist attack that one eventually will take place, and that we'll be told it could have been prevented with more surveillance.

“ When someone says if you are not doing anything wrong you have nothing to fear, that person is being misleading and disingenuous. ”

In the technology world, where libertarianism and human rights have been contentious issues, one too many Scott McNealys (the chairman of Sun Microsystems Inc. JAVA ) have come along making abhorrent and cavalier comments, such as "privacy is dead, get over it." It's no coincidence that this cancerous surrender was transferred to Schmidt, the former chief scientist at Sun under McNealy.

Schmidt, it should be noted, had a few personal details of his life revealed a few years ago by CNet in an exercise to show the power of Google's GOOG, +0.01% search engine. Schmidt was incensed that, for instance, his home address was unearthed, and the company then banned CNet from its press events. Read the CNet article at issue.

Using Schmidt's logic, one has to ask: Why did he care if he wasn't doing anything wrong?

Lack of concern and failure to protect privacy is a lack of concern for the nation and its democratic institutions. While the system may be in full failure mode -- with full-time surveillance, prying and out-and-out spying on the citizenry combined with various redundant police forces -- we've created a culture of fear and corruption.

Google CEO Eric Schmidt. Google

It's the corruption that's the problem. When someone says if you are not doing anything wrong you have nothing to fear, that person is being misleading and disingenuous.

Privacy concerns are not about you; they are not about me. They are about everyone else. We have to protect the minor philanderers and the mildly kinky politicians and judges and those who really have something to hide from blackmail that affects you. A member of Congress who is having an affair is compromised, and a lobbyist may use that information to sway his or her vote -- a vote detrimental to our interests. This is the problem, not the fact that you have a secret bookie unbeknownst to your wife that Google rooted out with data mining. Big deal.

So for starters there is blackmail and undue influence of public officials. Then there is the ability to data-mine personal stock transactions. Imagine how easy it would be to figure out M&A activity with lax privacy standards. Give me the Gmail database for a week; I'll be a billionaire overnight.

This hurts the integrity of the stock market and the foundations of the market-based system. Capitalism itself is threatened. Yet, according to McNealy, we have to "get over it" -- get over it and just let the whole system become corrupt.

What about news coverage of Google itself? "Sir, you've been a critic of Google. Does your wife know that you've been buying jewelry for this woman named Raven Strauss?" This sort of thing is why we should be concerned about privacy, and not about spying on you in particular. "Where did this whistle-blower get information? Let's tap her phone and find out!" Again, this is not about you.

I'm remiss to point the finger at Schmidt and McNealy, because there are many irresponsible executives in the tech sector who spew the same misleading garbage. (I wonder what they're trying to hide. Maybe we should look into it: Grab their browser cookies, put spyware on their machine, monitor their searches. Or go to work for Google; it seems to be doing that already.)

Maybe Schmidt will come to his senses. Google traditionally has been protective of the information it has accumulated. What changed? Was Schmidt compromised and is this the result? What do they have on Schmidt? Also, who are "they?" What's in the dossier?

Yes, this is how it works. Welcome to the Privacy is Dead era, comrade.