There is a constant stream of posts and press articles about people discovering that numerous government intelligence agencies, surprise surprise, collect a huge amount of information on people. It's kind of their mandate, so I don't blame them for trying to do their job as effectively as possible, but I do blame those who gave them such sweeping mandates in the first place.
So what do I blame them for, you might ask? In a nutshell, I blame them for facilitating despotism.
The United States was founded on a basis of mistrust for centralized power, and that mistrust was built on their experience of the abuse of such centralized power. It was, however, only one of many steps in the direction of limiting executive power, a process whose most visible early sign was the Magna Carta. The constitutional monarchies of the British Commonwealth are a different answer to how executive power should be limited. Significantly, though, Canada's Fathers of Confederation had considerably more faith in the value of an efficient, centrally controlled government, expressed in the motto, "peace, order and good government." (Contrast this against the United States motto, "life, liberty, and the pursuit of happiness.")
It has been shown repeatedly in the last century that a critical tool of despots is the ability to identify and quash dissent. Consider the Nazi Gestapo, SS and SA, the Soviet NKVD, KGB and GRU, particularly under Stalin, Mussolini's MVSN, Communist China's MSS, and many others, as examples. Gathering information without the consent of the people involved is a crucial tool for dictators to control a populace whose discontent might otherwise coalesce into effective action.
I contend that the increasingly efficient information-gathering and -correlating systems which the US, Canadian and British governments have deployed (I don't know as much about other governments, although the Chinese seem to have done a pretty thorough job in this regard) can, and, if allowed to continue to expand, eventually will, be used to suppress "undesirable" elements.
These systems are nothing new. The most alarming such system is ECHELON, a very powerful information-gathering system which has been monitoring pretty much all internet traffic in North America and Europe for quite a few years (details unknown, but Margaret Newsham's testimony would be most interesting to read!). It also monitors cellular phone traffic, and may have other SIGINT functions. It is a logical extension of such projects as MINARET and SHAMROCK. Computing capability has come a long way from the old system of legions of intelligence operators reading and listening to everything, though. The Harvest Computer was an early supercomputer dedicated to this task. You've probably also noticed how many cameras there are all over cities. This network can easily (and may already) form the infrastructure for facial recognition, license plate tracking, and other surveilance methods. Telephone calls are also routinely digitized for ease of computerized compression and switching, which has the side effect of priming them for automated analysis. Most financial transactions are now conducted using computer networks, and even discounting government covert surveilance, large transactions have to be reported in the USA and elsewhere.
So what's happening now? Data mining is making it possible to connect all of this information and draw sometimes-surprising conclusions from it. This wouldn't be such a big deal, except that these conclusions (which are generally not proofs, but merely statistical fits) are then used as a basis for more intensive violations of the rights of individuals. I hardly need to go into much detail about the indefinite imprisonment of various foreigners by the USA at Guantanamo Bay, although the article is worth reading. Such actions have also been taken against their own citizens, as in the case of José Padilla. Maher Arar, a Canadian travelling via the USA (on his Canadian passport) was also redirected to Syria for interrogation by US authorities with the probable (at least tacit) approval of the RCMP. Hassan Almrei has been imprisoned without charges for over 4 years in Canada on a security certificate.
I believe that the system is not yet fully corrupt, but that the natural direction in which these activities lead is a dilution of the presumption of innocence, a lightening of the burden of proof from the condition of proof of guilt beyond reasonable doubt, and the right of habeas corpus. These rights exist for a reason: without them, despotism can rise, and any person whose race, creed, affiliation, status, or activity is not deemed "acceptable" by the power of the day is in grave danger. I don't believe that we are as far as we like to believe from some aspects of this. The "War on Terror" has not exactly reduced Muslims' fear of the government, and isn't really doing much to reduce anyone else's terror of them either.
Should covert intelligence agencies even exist, then? Yes, but. Yes, but they should be supervised by an agency whose mandate is at least partially adversarial to them: "Quis custodiet ipsos custodes?" (who watches the watchers?) is a legitimate question. It is imperative that the watchers of the watchmen not be their alumni, managers, flunkies or allies. They should have clearance to know everything the watchers know and use, and should report directly and publicly to the political authorities. The watchers must not only follow the rules, but must be known and trusted by all to be following the rules. The judiciary is far too closely tied to the police and to the executive to provide the necessary independence. In Estonia, the Supreme Court was situated in another city (Tartu) than the Legislature (in Tallinn), in order to underscore the importance of separating these functions. For too long, they had suffered under the Soviet yoke where these were but two arms of the all-powerful Party.
An aside: covert intelligence agencies are required because of the difficulty of coping with asymmetric threats. There are simply too many potential terrorist targets for any government to defend them all directly. Thus, to have any hope of mounting an effective defense, they need to use information-gathering techniques to determine which tagets to defend. Of course, if it were known exactly which information had been successfully captured, terrorists could simply abort any plans which had been compromised and proceed with the others, secure in the knowledge that there would be no extra surprises awaiting them. Thus, the intelligence-gathering must be covert.
So what rules should exist for them? As a rule of thumb, if there's no reasonable probability of a finding of guilt when a requirement for proof beyond reasonable doubt is applied, no rights-reducing action beyond information-gathering is legitimate, in my view. This doesn't reduce the government's freedom to deploy extra resources to defent or surveil a suspected target, of course.
In conclusion, as long as the interpretation of "reasonable" in the above paragraph is made by agencies closely tied to those with a vested interest (by their mandate) in limiting people's rights, the governmental system is fundamentally flawed, and is on a slippery slope towards totalitarianism.
[edit: the José Padilla link doesn't work because of the special character; type it into wikipedia's search bar without the accent.]