Hmm.. Who is talking about invading anyone's privacy?
If you upload music ripped off CDs, or a copied movie to a web-site that has public access and share those files between people, then there no real privacy there, as long as other people have access.
Don't know how you connect "lobby government to make people wear tracking devices", which I have not seen anyone argue, with stealing other people's content?
Your post, however, does document the main disconnect people have with the concept of property ownership and the money, work and investment that goes into it. The belief that if you cannot "throw" what you steal, then it does not exist.
shoplifting causes real and not "virtual" damage
Thats where you are wrong. When someone steal my content and uses it for their own benefit, uses it to improve their own SEO rankings and thereby dropping mine, that is not "virtual damage" to me or any other content owner. It is real, physical, and financial.
If you own a physical music store and sell physical CDs and DVD, someone copying (stealing) music and movies electronically and further sharing them with all their "online friends" is not merely a "virtual damage" to even the physical store owner either, when the store revenue drops like a stone because people can just as easily download stolen music/movies from the web, without adequate fear of being prosecuted for that theft. Neither is it "virtual" when we all have to pay more money for CDs/DVDs when buying them legally, because the prices go up for the producing companies to keep their required profit margins. Without the electronic theft, we could all buy cheaper movies and music in a legal fashion.
When the financials of people that create any type of content drop, there will be less content produced, because the typical financial benefit is simply not there to produce it anymore. Either that, or prices become so sky-high for legally purchased content, that this in turn lead to even more stolen content, because there is now more incentive for people to copy it and "get something for free". No different from buying counterfeit or stolen physical goods.
Bottom line in my opinion is, that there is NO difference between theft of physical goods, and "virtual goods". The motive for having a store or web-site is no different, whether your store has a front-door and sells shoes or DVDs, you are Apple's iTunes store and you sell digital media, or a web-site owner hoping that your "virtual" hard work attracts web-site visitors. As a site owner you further hope that your work and content is not merely stolen and copied onto some other web-site for that person's "free" benefit.
In both physical and online cases there is have the same motive of making a living and be able to pay our rent, put food on the table, and pay for our kids college educations.
It sounds like you are saying that only your physical store "shop-lifters" are real and cause real damage, while all the online "shop-lifters" are merely imaginary and cause no "real" damage? If that is what you are stating, I know some good Economics 101 books that might help.