Sabin Genestra, for example, does not (as you claimed) screen everyone's thoughts. He can sense that Simon Tarses is hiding something, but he's not intentionally scanning him. He can't help but pick up on it. And even then, sensing emotions is not the gross violation of privacy that forcibly scanning someone would be.
It's not clear how much a Betazoid can get from your mind anyway. They seem to be able to hear surface thoughts, essentially tapping in to your inner monologue like someone eavesdropping on a conversation, but it's not like a Vulcan mind meld where they can uncover your innermost secrets at will.
Babylon 5 had a couple of episodes referencing court evidence obtained telepathically, basically saying it wasn't permitted because it bypassed due process and was ripe for abuse. Opening a door to actual thought police isn't something anyone wanted to set a precedent for, no matter how much Psi Corps may have wanted it.