I think it's more accurate to say that the free market currently does not think that Internet surveillance is a problem. Consumers in general have decided that

I think it's more accurate to say that the free market currently does not think that Internet surveillance is a problem. Consumers in general have decided that for Internet services and Internet access devices, factors such as cheapness, ease of use, and trendiness are more important than privacy. Governments are able to reach more definitive consensus than free markets - a market would be not easily be able to make everyone use an anonymizing proxy, for example, but a government could legislate that. Governments can also move costs around, such as by funding a national proxy service with tax money. But on one level, free markets and democratic governments are both just methods that societies use to enforce their collective wills. There are limits to how much their decisions can differ. There's a reason Schneier calls a situation created by Internet companies a surveillance state.