Agree & disagree.

Re this:

  Even a government will only have the capabibilty to
  perform meaningful surveillance on a limited number of
  people not to mention act on it.

That claim is currently true, but if you understand Bayes' Theorem and Moore's Law, you know that it's just a matter of time.

But re this:

  It's probably more effective to simply pretend that
  you're performing surveillance as an intimidation
  tactic, than to actually perform surveillance unnoticed.

iirc, former East German Stasi or KGB have said essentially the same thing.