One of The Economist’s “Christmas Specials” stories raised the problem of official ID papers. It reviewed the danger and the usefulness (perhaps stressing the latter too much) of having one’s individual identity codified and certified by the state. A few excerpts from the article, titled “Establishing Identity Is a Vital, Risky and Changing Business”:

… the provision and policing of identity is one of the foundations of the modern state …

In the 19th and 20th centuries the power to issue legal identity, like the power to issue fiat money, became a state monopoly. When states do not properly apply this power, people suffer. In the poor world those without proof of identity may be cut off from food rations, public housing, and other government assistance. That is why the 1989 UN Convention on the Rights of the Child lists the right to birth registration and to a name second only to the right to life, and why the aim of a “legal identity for all” is included in the sustainable development goals the un has set for 2030. … Being undocumented means being cut off from the modern economy—or working in the shadows and risking exploitation. …

In a country [India] where both national parties stand accused of using voter lists to systematically target and murder minorities, it is not paranoia to fear a government with access to a comprehensive database on every citizen. …

For several months this year, students from Johns Hopkins University and members of Living Classrooms, a local NGO, operated an “identity clinic” for anyone who walked in. Visitors tended to be ex-convicts who had lost their documents.

The economic argument for identifying individuals with official ID papers seems straightforward: it reduces transaction costs both in private transactions and in transactions with government. It would thus allow more beneficial exchange.

To make life more convenient for the French was the first official reason given in the preamble of a law creating a “French Identity Card” in 1940, under Philippe Pétain, the chief of state in the non-occupied zone. The diversity of existing ID documents, the preamble also said, “prevents any real control.” Less than three decades before, the French government had imposed an ID card on vagrants and foreign residents.

Today, in all countries, the necessity of formal or informal ID cards—“government-issued photo ID”—to claim services or entitlement from the state looks like a no-brainer. And being “without papers”–like an illegal immigrant or a homeless fellow citizen–has become a major handicap.

If official ID papers reduce transactions costs, they also alas reduce the cost of tyranny. In liberal democracies, they help government impose and enforce at low cost thousands of little invasive regulations and also a few massively invasive ones—money-laundering controls or sex-offender registries, for example. (On sex registries, which seem to have been an unfortunate American export, see the instructive “Unjust and Ineffective” story in an older Economist.)

In less liberal regimes, government ID cards often show such things as address or ethnic origin, which reduces the cost of persecution if not genocide. The Independent of July 7, 1994 reported:

When the Hutu militias, the gangs of killers, began their genocidal massacres of Tutsis in April, they needed only to ask for identity cards to decide who lived and who were chopped or speared to death.

That the government of China, like that of India, has been imposing a massive ID system suggests that freer countries should stay clear of “government-issued photo ID.”

Another problem—admittedly less serious than tyranny—is that government-issued ID contributes to identity theft. Data breaches are much more serious and more tempting when the thieves find identities certified by government numbers, such as Social Security numbers or driver’s license numbers. Government-issued numbers tie together all of a person’s identity documents and define his identity. Your identity is guaranteed by Leviathan himself. When there was no government-certified identity, there was not much to steal.

Without government in the identity business, one would expect the development of private identity tools if they are useful on the market. Credit cards and bank cards, as well as employee or student cards, played that role before the invasion of government-issued photo ID some decades ago. Private ID documents would likely have spread had it not been for their eviction by government competition and the public’s resistance to the addition of photographs on credit cards. That people fear private identity tools—The Economist is scared of Facebook—more than government ID papers reveals an irrational fear of decentralized private businesses and an irrational trust in government.

Yet, e-identity tools have spontaneously developed on the internet (passwords, two-factor authentifiction, fingerprint readers, etc.). The Economist mentions other ongoing efforts currently underway.

Those who are too young to have known a world without omnipresent government-issued photo ID may have problems believing it, but this world existed in advanced countries and even through the online-commerce revolution. In Québec, where I long lived, one could lead a peaceful and efficient life without government-issued photo ID until the late 1990s; even drivers’ licenses did not bear photographs. I started buying books on Amazon in early 1998, without anything but a credit card from a Canadian bank. It is true that Canadian passports bore a photograph, but they were seldom used for anything else than foreign travel.

It is true that transaction costs are higher without a government identity certification. The seller who accepts a credit card or a check without official ID runs a higher risk of fraud, which translates into higher prices. Establishing face-to-face relations with contractual parties like banks or other suppliers takes more time. But minimizing transaction costs at any cost is not the goal of economic life or life in general. Some individuals may prefer to avoid the state’s Judas kiss. A market not dominated by government would offer a variety of options suitable to different individual preferences.

As government’s quasi-monopoly on identity became established, people discovered—or, for latecomers, are now discovering—that their government-issued ID papers are not really theirs: they belong to the government and can be revoked. In 46 states, drivers’ licenses can be canceled for non-payment of child support. In some states, they can also be revoked for drug offenses or failure to respond to a court summons. U.S. passports can now be denied or revoked for as little as $51,000 in tax debt.

There is no real reason why identity is so dominated by the state, except for increasing state power. Constraining Leviathan requires limiting its ability to control identity. It would also boost the private market for identity tools.