When business leaders complain about government regulation, they usually mean its unintentional side effects. They don’t typically question like preventing fraud or ensuring product safety.

Sometimes, though, government agencies actually create fraud and prevent products from being safe. We had a good example just this month.

On December 17, Juniper Networks (JNPR) said it had discovered “unauthorized code” in the software for its internet firewall products. The code allows unauthorized persons to read encrypted data while the persons sending that data stays blissfully unaware. It may have been introduced as early as 2007.

This is obviously a big problem for Juniper, but it ought to alarm everyone. Juniper hardware and software powers thousands of government and corporate networks all over the globe.

The ostensibly encrypted data might include your bank account, your health insurance claims, or anything else you think is safe from prying eyes. We now know it wasn’t safe at all.

Security researchers who have examined the code make Juniper look like a virtual playground for hackers. Evidence strongly suggests the National Security Agency introduced the original flaw. Other parties then took advantage of it.

Think about what this means, if it’s true.

An agency of the U.S. government purposely prevented a U.S. company from delivering the product its customers expected.

If Juniper knew the NSA had introduced a security weakness and sold the products anyway, the company is guilty of fraud.  If Juniper didn’t know, then it is obviously incompetent and no one should buy its products.

Which is it?

We don’t know. The FBI is supposedly “investigating.” Yet the FBI belongs to the same government that probably attacked Juniper. Does anyone think they will follow the evidence wherever it leads?

FBI Director James Comey has been saying all year that companies like Juniper should have to give law enforcement back-door access to private data. Now it appears the government simply took what it wanted. Yet Comey wants the tech industry to trust him.

Nice try.

If we learn that China, Russia, ISIS or some other foe used the NSA’s Juniper back door to harm American companies, where can the companies turn for help? Not the FBI.

We can’t do business this way.

Worse, the back doors don’t even help national security.  Our potential enemies know not to trust American technology. They presume NSA has already penetrated it – and they’re probably right. They communicate in other ways.

The losers are all on this side: Juniper itself, Juniper customers, and everyday people who assume their online activities are reasonably safe. In fact, they aren’t safe and probably never were.

A good rule of thumb is that any government project will create results opposite from its original intent. The rule applies in this case. In attempting to ensure national security, our government actually put Juniper customers in more danger.

This has real costs to the economy. Like it or not, we all get to pay them.

Patrick Watson is an Austin-based financial writer. Follow him on Twitter @PatrickW

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