All in all, I’d rather not aim for 100% detection + swift punishment as the improvement metrics for deterring theft.
The thing is, even if you spend more initially on stopping crime, it will eventually drop off as people work out you can no longer get away with it. Spend the extra cash collecting all the security video and know it will teach one person that they can not get away with theft and that person will likely communicate it with their peers.
I would personally rather spend $600 extra in tax for police over having the negative feelings of a $500 item being stolen.
I don't believe much in terms of privacy has to be lost as most of the time we already have the data, we just don't have the human resources to do anything with it.