The main fallacy of your argument is that you assume you can somehow prevent corruption by technical measures, when the only lesson you can take from history is that government corruption is a question of "when" and "how", not "if". And you're saying "it might be useful" without offering even a single example. (In general you need at least two example to generalize from, you know)

Could you actually give examples where more government knowledge is helpful? Strike "crime fighting" out, because e.g. London's MET police, and the FBI already have almost-all-knowing access to data, and all reports say it doesn't help at all.

In the 2nd half of the 20th century, Eastern Europe and the Soviet Union, are full of examples of why government knowledge of everything is bad.

Assume government knows everything you do, all is fine, and then one day, Hollywood gets a law that says you can't watch a DVD with friends (you each have to own an independent copy, so that they get paid). Bam, instant enforcement the next day, because the government knows everything. An almost-as-ridiculous law was almost passed (the recent ACTA treaty), and it's not a coincidence that demonstrations in Europe (especially former eastern block, who have actual experience with that) were far more numerous and vocal than in the US.