I've come up with a response to this which seems to drive the point home. I simply say something along the lines of:

You think I'm paranoid? You have nothing to hide? How about you give me all your passwords (Gmail, Facebook, your laptop, etc). I'll download everything about you, and I'll post it online for the world to see.

Oh, you wouldn't want that to happen? Well that is the risk I am talking about. Governments can be hacked, too (and have been many times, recently). Hence if they have access to your data, all your data could potentially be leaked on the open internet.

Government surveillance and hacking can affect everybody!