I was involved in a discussion with a friend the other day about the proper role of government. Particularly with regard to markets. It quickly devolved into the usual memes. I believe in free markets and he, well, doesn’t. Finally…he came out and said it: “the role of government is to hold the private sector accountable”.

This ignores and even dismisses the role of the consumer. If you are a provider of a good or service that does not satisfy your customers the market place will hold you accountable - unless of course the government comes to your rescue and bails you out, which short circuits all accountability. It also assumes that the government and those who toil within it live and work under a higher moral standard than those that work in the private sector. There is no question that the government wields more power. However, participants in the private sector cannot force you buy their products but the government can. Because of this power - the power to take your freedom away - the potential and temptation with regard to the abuse of this power is greater.

It also begs the question, if the role of government is to hold the private sector accountable, who then holds the government accountable? There are those that would quickly respond that you do that at election time. The problem with that argument is that over the last century or so we have built incrementally over time a massive permanent government that is run by folks that are not elected. There are countless agencies and departments spending trillions of dollars that have been moving further and further away from accountability.

A case in point involves the IRS. If ever there was an agency that should be above reproach; that should remain on the moral high ground - it is the IRS - an entity that strikes fear in the hearts of law abiding citizens. However, it is currently the subject of a congressional investigation for allegedly targeting individuals and groups based on political considerations. Lois Lerner, who headed the division in question until she “retired” in September, has called the targeting “inappropriate” but has said that no laws were broken. No laws broken? Really? Lerner has “taken the Fifth” in testimony before Congress. The ironies abound. On top of it all, John Koskinen, the new head of the IRS brought in in December to “clean up the mess” appears to be stonewalling Congress in its requests for emails and other evidence.

Further irony can be found in the testimony of Catherine Engelbrecht, an entrepreneur from Texas. Shortly after joining a local Tea Party group she responded to an urgent appeal from local officials for volunteers to work the polls. What she witnessed so alarmed her that she was inspired to found an organization called “True the Vote” whose purpose is to clean up the election process. It wasn’t long before she and her small manufacturing firm were paid a visit by the IRS who proceeded to audit both her and her company. She also received visits from various other government agencies. Her story is but one of many, acknowledged by the Lerner to be “inappropriate”.

Then there is the story of David Wright of the Office of Research Integrity (ORI), part of the Department of Health and Human Services. According to Science Magazine, “the director of the U.S. government office (ORI) that monitors scientific misconduct in biomedical research has resigned after 2 years out of frustration with the ‘remarkably dysfunctional’ federal bureaucracy”. Prior to his taking the job the post had been vacant for two years! Science magazine adds that Sen. Grassley (R-IA) had recently made an inquiry regarding an AIDS researcher that had faked data to obtain a $19 Million grant from NIH asking why ORI hadn’t recovered the money or properly sanctioned the researcher.

Next on the hit list is the EPA. As posted in zerohedge.com, Americans for Tax Reform reported that “A report released by the Environmental Protection Agency’s Inspector General has found that EPA employees have improperly used federal charge cards to purchase everything from gym memberships to gift cards. The report indicated that over 90 percent of the sampled transactions were prohibited, improper, or erroneous purchases, all paid for by American taxpayers. Ironically, Senate Democrats Monday night [March 10th] carried on an all-night filibuster in the hopes of generating even more power and funding for the EPA.”

The list goes on and on. Scandals abound at the TSA, NSA and the DOJ. The SEC has been noted for bungling the Bernie Madoff case, and the CFTC has been accused of failing to prosecute manipulation in the commodities markets. The Fed is supposed to be the regulator of the banking industry. Look what happened to the “too big to fail banks” in 2008. Since then, those same banks have only gotten bigger.

Instead of providing accountability, government agencies often fail at their given mandates. They also at times overreach, causing needless hardship and economic harm. At times they endeavor to create new law - something reserved only for legislatures. Instead of holding the private sector accountable, favored companies and industries are often protected from market forces and provided a competitive advantage.

There are many, many, competent and good people that work for government agencies, but they are tasked with the impossible. Fallible human beings are too often appointed to offices that command the full weight of law and we then expect them to have moral fiber to resist the corrupting influences of that awful power. When they fail, instead of being held accountable, often they are perversely rewarded with increased budgets and greater power and authority. In other words, failure is rewarded. And then there’s the politics…

Perhaps we need to start thinking outside the box. The Enron scandal of 2001 forced the accounting firm of Arthur Andersen, the keeper of its books, to close its doors. Have we ever closed down a government agency that simply wasn’t working?