1) In what world is this acceptable? Is it okay if I install a keylogger on your machine as part of a job application process?

2) Like watching your search history for terms like "homemade bomb" and putting you on the no-fly list if they find them?

Remember that when you say, "it's okay for the government to do X", you're saying "it's okay for people to do X", because the government is people. And the government is a lot of people, many of whom are good, but some of whom are bad, and others of whom are just plain douchebags.

This only makes sense if information flows both ways. When one party has significant information about another party, and the second party doesn't have similar information about the first, an imbalance is created that gives the first party power over the second. When I know your secrets, I have power over you. You fear my knowledge, perhaps rightfully so, because your secrets might be enough to destroy your life, or at least cause you significant embarrassment.

When the government engages in widespread privacy violations, they are creating this same kind of power imbalance. You know nothing new about the government, but the government may know many things about you. They may have information tha could greatly embarrass you. They might have information they could use to arrest you, even if you've done nothing wrong or illegal.

This is not an increase in awareness or information flow or efficiency. It is merely an increase in government power.