That argument feels like a cheap cop-out. I want my government to follow a different ruleset than I have to: They should have the monopoly on violence and taxes.
Now, whether that applies to privacy is a different question, but it's clearly not as black-and-white as your neighbor makes it out to be.
> I want my government to follow a different ruleset than I have to
That's the definition of tyranny and authoritarianism. The same rules that apply to them should apply to us. To suggest otherwise is to accept there are special classes of people who are more deserving of freedoms than common men. The government people are just fallible, corruptible men. They are not a superior class of people who have a unique capacity for the lawful application of violence. They're just humans like us. They deserve to have exactly the same freedoms we ourselves enjoy, no more and no less.
Now, whether that applies to privacy is a different question, but it's clearly not as black-and-white as your neighbor makes it out to be.