Last week George Will wrote a powerful column on how "The Heavy Hand of the IRS Seizes Innocent Americans' Assets." The episode involved an immigrant who owned a grocery store in Fraser, Michigan. Because about a third of its sales are in cash, the owner regularly deposited cash in a bank across the street. There is an anti-money laundering law, aimed at drug dealers, which requires banks to report cash deposits of more than $10,000, and also prohibits people from structuring deposits to avoid the law. The grocery store had been audited by the IRS several times in recent years, without any finding of suspicious activity. Last year, under broad power to catch criminals, the IRS without notice seized the grocery store's bank account.
The story, most would agree, is an outrage. What went wrong here? George Will attacks both the law -- the "guilty-until-proven-innocent" forfeiture power -- and the IRS agents who decided that a grocery store making regular cash deposits was a criminal enterprise. However much Americans distrust government, Will concludes, that "distrust of government is insufficient."
Let's unpack the story, and see if there is a moral for how government should work. I'm not an expert on money laundering, but can readily imagine why in certain circumstances the government should be able to freeze assets. Otherwise, with the press of a button, criminal resources can be transferred out of the country.
But that's obviously not the situation here: The supposed vehicle for crime, a local grocery store, is going nowhere. It is perpetually receiving cash for cans of Coke and quarts of milk. The IRS had no need to seize deposits in order to avoid the owner fleeing the jurisdiction with ill-gotten gains.
The main thing that went wrong here is a failure of human judgment. The IRS agents abused their power. What's the solution? In any sensibly-organized democratic structure, after an investigation, the responsible IRS officials should be sanctioned or fired.
But civil servants can't be held accountable. The so-called "merit system" has evolved to become an "anti-merit system." Public employees can't be fired, or even sanctioned, without years of legal proceedings. I don't think I've ever heard of a civil servant losing his job because he abused his power over citizens. It may be that the forfeiture law needs to include a stronger principle that it should be used only when there is reason to believe that targets and their assets will flee the jurisdiction. But that principle still requires human judgment. No set of words in law can ever remove the need for humans to act appropriately.
Personal accountability should be the operating mechanism for any organization. Without it, culture soon degrades. Government today is a tangled jungle of incoherent law and regulation because we look to words, rather than personal responsibility, as the way of safeguarding against error. My conclusion is this: The main flaw in modern government is not that officials have too much power, but that they can't be accountable when they abuse it.
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