Monitoring as a Virtue

Through a public choice approach to authoritarian law, Bruce Benson emphasizes the hazards that may result from inappropriately structured monitoring systems, particularly those defined by high cohesiveness & low norms:

Peers can be a source of monitoring. Most governmental institutions have established self-monitoring systems & have actually discouraged (& in some cases even prevented) monitoring from external sources. Police departments have their internal affairs divisions, for example, & court systems have judicial review boards. But such monitoring is not likely to be very effective. No matter what the goal of a government official might be, he has strong incentives not to expose corruption or inefficiencies within his governmental unit.

Today at Unclaimed Territory, Glenn Greenwald befittingly examines recent interaction between TARP’s Special Inspector General, Neil Barofsky, & officials in the Treasury Department. Since Barofsky issued an approximation of the risk inherent in bank bailouts for taxpayers, officials are disgruntled by Barofsky’s unfettered commitment for his duty, despite whether it is politically affable.

Continuing from the previous excerpt, Bruce Benson recognizes:

It is not surprising, therefore, to find that in the few instances in which an official has reported corruption he has generally been ostracized by his colleagues & superiors, denied promotions, & ultimately forced to resign.

Indeed, in the same post, Greenwald points to an article indicating that officials have withheld documents from Barofsky & sought a ruling from the Justice Department to restrict his independence.

Barofsky’s obstinacy is an exception to the rule, but the recent petition submitted by economists in support of preserving the independence of the Federal Reserve suggests there are some who believe otherwise. Nevertheless, clinging to autonomy as a sufficient mechanism for objective decision making is futile in a politicized framework. There is simply too much impetus for collusion. Without reserve, Robert Higgs properly exposes the petitioners’ wishful thinking:

All in all, the economists’ petition reflects the astonishing political naïvité & historical myopia that now characterize the top echelon of the mainstream economics profession.

In the face of great adversity, Barofsky’s devotion to transparency & accountability is admirable precisely because it cannot be expected. Rather than signing perfunctory requests for unrealizable independence, economists would do well to redirect their attention toward principal-agent models — seeking to understand functions that facilitate the disclosure &, most importantly, prevention of misconduct.

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