If you have an expectation of privacy in your regular life- that is, if you have information (like pictures of your junk, or your ATM codes, or anything else) which you want to share selectively, then you still have that expectation online. There’s nothing about using a packet-switched network that magically means you give up any right to control your information.
Unfortunately, network owners have incentives to get you to divulge information about yourself. The more they can get on you, for example, the more-complete a profile they can sell to advertisers. That’s how Google, Facebook and others get their money. They are not fundamentally on your side, so you can’t depend on them to safeguard your information for you.
Whenever you share information on the nets or elsewhere, you are committing an act of trust. If you share sensitive information with one person, you are trusting that person and everyone with whom that person may share to keep that information private. On the Internet, that chain of informational custody extends to many extra parties you don’t necessarily know about. When you send an email, you can’t know in advance how many servers it will pass through on its way to the destination, nor who owns those servers. If you send unencrypted email, that email can be read anywhere along the chain. Just because your connection to gmail is encrypted doesn’t mean that each connection along the entire chain is.
So, if you want to protect your information then you have to take steps yourself. You have to use GPG, Tor, OTR and friends, which means you have to learn to do so and do it right. Operational security is hard, and one mistake can compromise more than one message.
It’s difficult, but people do it. Lots of companies don’t allow unencrypted messages to pass outside of their internal networks, or require secured tunnels for external connections.
Privacy isn’t the same as secrecy, but the two look the same from outside. There’s no way to tell if an encrypted message contains trade secrets or kiddy porn without decrypting the message. Companies, government departments, and individuals rely on these technologies and on the expectation of privacy in order to conduct their business. Removal of this expectation and global monitoring of communications would destroy these activities, most of which are legal. There are a great many legal applications of privacy, and even of secrecy, and a relatively small number of kiddy porn pervs. To blow-up the legal applications in order to prosecute the kiddy pervs is tantamount to society as a whole cutting off its nose in order to spite its face.