how can we have transparency with privacy?
They're the logical opposite of one another. The likely answer is, not with this design.
No they are not logical opposites. Secrecy is the opposite of transparency. Privacy is not the same as secrecy.
Transactions should be private but not secret. If an investigation takes place it should be possible to follow a money trail. If there is secrecy in a system such as then then the secret money would have to show up somewhere.
So if politicians start dressing nice and driving in brand new cars, living beyond their means, then of course it's reasonable to consider the possibility that they could be taking a bribe. If you were a journalist trying to uncover all this then secrecy wouldn't help you. If information is private but not secret then it can be uncovered if you interview the right people or ask the right questions, but as a considerable enough cost that it couldn't be a situation where everyone is investigated by a machine.
At the same time most of us don't want to be associated with corrupt social networks, but that has nothing to do with fungibility. If Bitcoin is not fungible then you have dirty and clean Bitcoins and that cannot work. If Bitcoin is fungible then it means we don't have to care where our Bitcoins come from and this is a necessary requirement for Bitcoin.