The “sickness of government” updated

The Welfare-Warfare State is entrenched…for the time being

Peter F. Drucker (1909-2005) was one of the most prolific authors of the 20^th century.  He wrote three dozen books, countless articles and essays, was a much sought after management consultant, an influential professor, and a self-described “social ecologist.”   The “father of modern management theory and practice” was thus one of the most consequential business thinkers in history.

I first became interested in Drucker’s writings when I read his Wall Street Journal essay about the nonprofit sector and the welfare state in December 1991.  His essay contains nuggets of insights about the failure of the welfare state and the bureaucracies that perpetuate it.  Drucker provided examples of how nonprofits outshine government programs in providing social services to the public.  He asserted that the nonprofit sector would eventually replace the welfare bureaucracies just as “privatization” had begun to replace the ossified socialist economies that perpetuated widespread poverty and low living standards.

In reviewing Drucker’s body of work for my presentation at the Mises Institute last month, I came across an essay that was published in 1969, “The sickness of government.”   The essay is more applicable today than when it was published 55 years ago.

For example, Drucker wrote, “There is mounting evidence that government is big rather than strong; that it is fat and flabby, rather than powerful; that costs a great deal, but does not achieve much. There is mounting evidence also that the citizens, less and less believe in the government and is increasingly disenchanted with it. Indeed, government is sick – and just at a time when we need a strong, healthy, and vigorous government.” (Emphasis added).

He also noted, “Government has proven itself capable of doing only two things with great effectiveness. It can wage war. And it can inflate the currency.  Other things it can promise, but only rarely accomplish.”  (emphasis added)

The above quotes reflect what I call the Drucker Paradox.  He realized government programs are ineffective and costly but calls for a “strong, vigorous government.  In short, he believes a “societal consensus” must be created to forge a harmonious country.  He also correctly observed government is a destroyer: of the people’s money by inflating the currency and their lives and property by conducting legalized murder (war). 

The solution to “sick” government is not Drucker’s naive view that government should be a “conductor” directing society toward shared values.  He calls for a “new political theory and probably very new constitutional law.”  If Drucker had consulted the Constitution, he would have realized the federal government is bound by Article I, Sec. 8.  The Constitution authorizes a few clearly defined activities that would achieve Drucker’s goal of “effective government.” 

Regrettably, Drucker asserts, “We do not face the ‘return of laissez faire’ in which the economy is left alone. The economic sphere cannot and will not be considered to lie outside the public domain.” 

Years later, in a Forbes magazine interview, Drucker stated, “The wisdom of government only exists in textbooks.” 

If Drucker had read any of Ludwig von Mises’ books and essays how a laissez faire economy would be the best way for a society to organize he would have realized that the sickness of government is a universal phenomenon.  Mises’s essay, “The Middle of the Road Leads to Socialism,” is one of many critiques that he penned during his 60 year career. 

Despite Drucker’s shortcomings he recognized the failure of the welfare state and the strength of nonprofits.  His message of nonprofitization should be spread far and wide so we can begin the restoration of a limited government republic.

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Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the inexecrable business cycle.  Sabrin's autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.