Matt,

Government funding is distorting science and medicine in all sorts of areas.  Not only can bureaucrats be as coldhearted and shortsighted as anyone else, but they can print their own money and they have all the nukes.  Why would you trust such an entity with scientific and medical research?

I will give you three examples where government funding is distorting or has distorted science:  global warming, HIV/AIDS and, probably the most egregious example, the Third Reich’s eugenics research.  I’d also point to the hysterical and uninformed debate on drug prohibition and medical marijuana.

Private clinics, to attract investors and customers have to produce results, i.e., cures.  Politically connected government contractors are relieved of this obligation.

The point is, government is a political entity, and will dangle money in front of people who will tell bureaucrats what they want to hear.  Now, everybody likes to be told what they want to hear, but market actors are forced to deal with reality:  the bridge will collapse with such a design, people will not be cured, etc.  Thus, despite evidence to the contrary, the government funds hysterical studies on global warming that support, naturally, more government regulation.  Likewise, very early on in HIV/AIDS, it was determined that there was a virus causing immune system suppression.  When Stephen Duesburg at Berkeley pointed out that this virus was not acting like a virus and that use of toxic amyl nitrate combined with extremely promiscuous anal intercourse might be the culprit, or that HIV was simply an opportunistic virus in people with immune systems handicapped by hard drug use, blood transfusions, etc., he found his government funding cut.  There was no scientific reason for this; science advances by people questioning hypotheses, after all.  Rather, the motive was purely political:  the homosexual lifestyle has been declared off-limits for criticism.

I use the Third Reich only as an extreme example:  the Nazi government eagerly funded junk science to support its propaganda campaign that Jews were untermensch.  Likewise, Solshenitzyn gives several examples of scientists and engineers dismissed and imprisoned for their work because it didn’t support the Beloved Leader’s grand vision.  Again, the point being that per human nature, bureaucrats will reward science that supports the ends set by their employer and there need never be a “reality check” on the behavior.