When you think privacy of in in the terms of 'social cooling', or consider things like China's 'social credit' system, I can't help be think we are much closer to the world depicted in the last season of Westworld than we might want to admit.
My dad is one of those old school guys who thinks law enforcement can do no wrong and nobody needs to hide anything unless they're doing something wrong. Even if that were true and I think it is true that many law enforcement personnel are trying to do good, that doesn't always mean the results will always reflect their intentions. When the sample size of facts is too small, as is often the case with mass collection, it's too easy for your sample to get mixed up with someone else's. Maybe your phone is the only other phone in the area when a murder is committed. That doesn't mean you did it, but it sure makes you look like the only suspect.
I was never able to gain an inch on his argument until I asked him why he has curtains on his living room window. I mean, it faces North, so there's no need to block intense sunlight, yet he closes them every night when he's sitting there reading a book or watching TV. Why? He's not doing anything illegal, yet he still doesn't want people watching him. He said he would not be ok with the Police standing at his window all night watching him. That's when he finally understood that digital privacy is not just for criminals, but for everyone who wants to exist in a peaceful state and not a police state.
I'm not doing anything wrong, but I still close the door when I take a dump. The idea that someone wanting privacy means it is nefarious or wrong is ridiculous.
In our culture we feel deep embarrassment if someone sees us using the toilet, but this is not universal across people and cultures, and honestly, it shouldn't be embarrassing. There's nothing inherently wrong with pooping. We irrationally feel embarrassment when we shouldn't have to.
This argument doesn't show any negative consequences of invasion of privacy. It's also not clear how it extrapolates to situations that don't involve toilets or nudity. If the problem is embarrassment, and people don't feel embarrassed that Facebook collects data, does that make it okay?
Obviously there are other arguments for privacy that do show potential harm. I find these more compelling.
But that is precisely the rational reason. In a free society you want people to act freely. To be able to act freely it helps tremendously to not be under constant surveillance by authorities, powerful actors and/or personal and political enemies. If one happens to have the same cultural background or political ideas as all those on the other side and one is generally a careless nature it helps in not feeling threatened by that surveillance.
The new thing digital surveillance brought is the ability to automate and for search things that happened once. Where in communist Germany the state had to have a giant apparatus that would break into your flat and install microphones, have people constantly following you around and listening in on every word you said. The impact this has on a free exchange of ideas is quite obvious, isn't it? These things have become far less resource intensive in the age of the web.
And if you now say: "Yeah but they were communists" — that is the point. If you are hoping those in power will be respectful because your values (currently) align with theirs; or because your information is (currently) more useful to them when not disclosed to your enemies — then this is a very optimistic view of the world. But things can change, and not all have that sense of optimism.
Not having to think about whether somebody will knock your door with state police in a decade because of something you wrote online is the reason why privacy exist. Not having to censor yourself because you are afraid those fringe lunatics on the opposite political side will destroy your life is the reason why privacy exists. Not having to censor yourself because your violent husband reads everything you wrote is the reason why privacy exists.
So maybe you can read this as: Power that sees what you do can (and does) change how you act, even if they don't come after you. Not having them see you is a good way of not having to change.