Oh yeah you can have data dug up, but they need a court order for that and obviously there has to be other evidence for the court order to be issued. Also, your house gets raided for something (drugs or whatever) due to an informant and all your computers, HDDs and backup discs are seized then they go through everything. But even if that happens, for piracy there really needs to be evidence that you were running a business making heaps of copies and selling them. Your own collection of pirated movies/CDs sitting there? They'll take that but you won't be charged for anything related to it.
Getting a court order for phone info etc isn't the same as actively monitoring people. They're only proactively looking for pedos and terrorists.
And file hosts aren't blocked by ISPs because that's what the government "told them to do".
I mean shit has been posted on facebook and the cops are oblivious until after a crime has been committed. Then it's all "oh so this guy was planning something"

They aren't watching everything because there are better things to spend time and money on. Not enough money or people.