To better understand Mr. Schmidt's argument on personal data and privacy I would like to focus on another figure of modern society, "The Whiney Celebrity". Found, typically, ranting and raving about the paparazzi on VH1 or "telling all" in some book scattered about the bargain table. Their words have possibly even graced the pages of a magazine or two, hoping to "set the record straight" about whom they really "are".
The medium and genre will always differ but the story of "The Whiney Celebrity" will always be the same; came from nothing, became famous quick, did something or said something stupid (repeatedly), apologized profusely citing the "just a human" excuse. The public's reaction? It differs case-by-case but can usually be boiled down to "you wanted to be rich and famous, deal with it".
Essentially, this is what Mr. Schmidt and his colleagues (e.g. Mark Zuckerberg) are telling us. Want to use their services? Then you are exposing your words and your actions to the world. If you are worried about what the world will think then either change your behavior or don't participate. This is not a novel concept. People have always navigated society according to rules and norms. Only our immediate society has now grown in size and complexity. And that has us concerned for our privacy.