Reprivatization: The Nixon Battlecry?

...Small wonder that the President is casting about for new concepts...

...At the moment, the Bureau of the Budget has just begun making five-year projections of expenditures...

...Conservatives” who have absorbed the classical liberalism of Milton Friedman or the antibureaucratic strictures of Ludwig von Mises will tell us that they have long anticipated Drucker’s ideas...

...So long as the success of programs is measured by the money spent or by the moral intensity of the President’s commitment, the blame for failure will always lie with Congress, for appropriating insufficient funds, or with the President, for exercising insufficient leadership...

...Already one sees that reforms like tax-sharing with the states, a volunteer army, the replacement of social security, and a voucher plan for education must overcome enormous initial hostility from the intellectual leadership of the “new class”- the academicians and journalists who cling to a statist ideology that has served to justify their own privileged access to the national stage...

...They establish expectations that then give some basis for discipline in every contract and program...

...Given all these preconditions for success, reprivatization cannot in itself be Mr...

...If government puts more stress on procedures than results, it is in part because any violation of procedures will bring public charges of arbitrariness, corruption, and favoritism...

...Even everyday citizens who listened attentively to the speeches of the candidates during the last campaign will have heard intimations of Drucker from Rockefeller, Nixon, Reagan, Kennedy, McCarthy, and Wallace-from every Presidential aspirant, in sum, but Hubert Humphrey, the troubadour of statist liberalism...

...A decentralizing and libertarian strategy of government-if adapted to the present needs of the country, to the rhetoric of the Republican Party, and to the realities of managing a cumbersome bureaucracy - provides perhaps Mr...

...And antiquarians with a taste for turn-of-the-century corporatist thought, and particularly the secular, liberal brand of it enunciated in France by Emile Dirkheim, will also entertain feelings of dhji vu...

...The problem of government is not, then, simply a matter of getting bright young men into public service or of realigning the nation's priorities or of regrouping departments along more rational lines...

...He saw that the realities of large-scale organization required not a man on a white horse leading the charge but a general in staff headquarters who visits the front line only occasionally to garner information or to raise the morale of the troops...

...Drucker has similar examples of government’s inability to provide proper incentives to business and universities...

...Reprivatization is a technique for distributing more evenly the chance to do work in the public interest...

...Yet the bureaucratic state which the New Deal inaugurated will be with us for some time, and it is the third virtue of Druckw’s idea that it provides workable guidelines for redirecting this bureaucracy...

...Such then, according to Drucker’s tenth chapter, is the sickness of government, and his prescription is simple: “Government has to do less to achieve more...

...5-virtual abandonment of federal bank supervision activities in favor of reliance on government licensing of private auditing firms...

...Taken together, these ideas provide the basis for a new definition of the role of government, which will accept an “activist” responsibility to further the public interest but will reject many interventionist prejudices of the New Deal...

...He does so at a time when most advanced countries are badly in need of new concepts to replace outworn doctrines of the welfare state...

...To give him his due, new symbols to dramatize a decentralizing strategy are hard to invent, for the public and the press share a pre-Barnard view of executive leadership...

...Drucker believes that new institutions are necessary within government to avoid such misuse of contracting out...

...For American society to remain vigorous, politically responsive, and productive, a preponderant number of knowledge workers will have to remain work-oriented and, of those who prefer their hobbies to their employment, a substantial number will have to choose politics and social service as their avocations...

...Understanding the motives and capabilities of outside bodies requires some familiarity with them, and in our system familiarity is thought to breed corruption...

...The Bureau of the Budget comes closest to providing this institutional role, yet its traditional orientation toward budgetary and program issues has put a limit on the speed with which it can take up other functions...

...This kind of dogmatic opposition to reforms in one’s own interests is not, of course, an unprecedented irony...

...In his tenth chapter, he is, in effect, doing a bit of cross-pollination, applying The Functions of the Executive to the role of the Executive Branch of government...

...In the first place, reprivatization is good party politics because it is one concept that can give the warring factions of the Republican Party a common sense of purpose...

...Even the small orchestra of Haydn could express a musical range far beyond the reach of the greatest organ virtuoso of the generation earlier...

...In his place was the modern orchestra...

...Thus, Drucker’s tenth chapter should be seen as more than a businessman’s views of government...

...If Mr...

...It will be wasteful to deny such men the chance to assume a consequential public role...

...As such, it is a response to the growth in America of a new class that demands a public role...

...In fact, hospitals have been penalized for investing money in these areas by “offset” reductions in total aid (much like the welfare recipient who finds deductions in his welfare check if he gets a job...

...Whether it involves contracting out government activities or spinning them off totally (as in the case of the proposed post-office reform OF the recent reprivatizationof Fanny Mae), it demands much more disciplined managerial and evaluative judgments within government and probably new institutions to make this discipline stick...

...America is not, after all, a land of gaping savages content to remain passive while the President and his minions from Harvard or Texas or J. Walter Thompson pronounce on world events...

...Peter Drucker’s tenth chapter on “The Sickness of Government” is neither the best nor the most original in his latest book...

...They want to see their President swooping down and visibly changing things...

...For the whole purpose of reprivatazation is to free government for policy-making by sloughing off the "doing" of things to independent maagements...

...First, Americans rely on an adversary system which deprives government of accurate information on how to coax maximum performance out of non-governmental institutions...

...Good hospitals have had to be crooked to divert funds into the right areas...

...Drucker’s notion is good for the country, then, not only because it can generate programs that are apt to be managerially more efficient, but also because it follows a decentralizing strategy of government that is now better suited to American society than the statist liberalism of the New Deal...

...Government has seen them as extensions of the doctor’s office and has given money on a per-patient basis, or for medical equipment, or for drug and disease research...

...Instead of trying to do things itself, government should concentrate on getting others to do them...

...But it is also insufficient in itself and will need to be supplemented and superseded...

...Drucker’s ideas draw political strength from a deeply rooted Republican suspicion of big government...

...If your agency did not exist, what would happen...

...This approach is now inadequate, not only because of the sickness of government, but because of fundamental changes in our society...

...For them there must be a crisis to which the President can respond, a problem on which he can wage war, or a gap which the President can fill with money and rhetoric...

...Take the example of hospitals...

...The New Deal braintrusters were doubtless a talented lot, but in the coming generation men of equal ability will be found on the school boards of most medium-sized American cities and in quite a few corporations and universities...

...Bureaucrats who are preoccupied with rules are likely to impose this preoccupation on the private sector...

...He recently served on the White House staff as research director of the President’s Advisory Council on Executive Organization...

...Right now, Drucker says, government spends too much of its energy in administration...

...I have read through the grant application-all 1,100 pages of it,” Drucker told me when I interviewed him...

...Last spring President Nixon gave several members of the White House staff carefully underlined copies of the essay as it appeared in its pre-publication form in the Winter 1969 issue of The Public Interest magazine...

...Drucker’s view of government falls within this family of decentralizing ideas...

...Barnard rejected this folklore of “leadership...

...they would reduce administrative costs, increase freedom of choice, and provide better distribution of government services at the point of delivery...

...Drucker does not recognize this explicitly in his book, but he shows himself to be amply aware of it in conversation...

...The depression gave rise to public works and welfare bureaucracies, the axis powers to a great military bureaucracy, the veterans’ problem to a veterans’ bureaucracy, international communism to dirty-trick and cable-writing bureaucracies, and poverty to new social-service bureaucracies...

...Drucker uses the analogy with the conductor to suggest how a new role of government can multiply the creative energies of society: It might not be too fanciful to compare the situation [in government] today with the development of music two hundred years ago...

...Second, America’s planning still suffers from the crash programs of World War 11, which used whatever non-governmental resources were handy, without thinking them through properly...

...the next task is to get projections of results...

...There is thus a nice fit between the bureaucratic desire to shift blame and the popular need to find heroes...

...but it is likely to be the most influencial It has already become scripture around the White House...

...So will “voluntarists” who have adopted Richard Cornuelle’s celebration of the “independent sector...

...Drucker believes that the unfitness of government for effective delivery of goods and services is inherent in the nature of the political process...

...For them it is not enough that federal programs may deliver results...

...Such measures, properly designed, would noticeably improve present arrangements...

...It should “try to figure out how to structure a given objective so as to make it attractive to one of the autonomous institutions...

...He speaks of the emergence of “knowledge workers” as a new social class in American society-a class at once proletarian and aristocratic...

...Contracting out under these conditions will not reduce the sickness of government but merely spread the contagion, as it has already done among defense contractors who have fed too long at the federal trough...

...As a result what had seemed to be absolute limits to music suddenly disappeared...

...In organ music, as a Buxtehudc or Bach practiced it, one instrument with one performer expressed the total range of music...

...These have done more to reduce hospital occupancy and increase functioning of the patients than breakthroughs in drugs and equipment...

...But as a result it required almost superhuman virtuosity to be a musician...

...The results must appear to be directly caused by the conscious exercise of moral leadership...

...7-allowing people to opt out of the social security system for privately administered, government-approved insurance schemes...

...But many of them will be politically impossible unless government is first able to drill into the heads of its citizens a new conception of its role in society that goes counter to the interventionist prejudices accumulated over the past generation...

...Hence, government agencies are inevitably more rule-oriented, more “bureaucratic” than corresponding private organizations which do not have to be as responsive to Congress and the press...

...its leaders are so preoccupied with personnel, production, and accounting procedures that they become ill-suited to providing vision and political direction...

...4-contracting out to private industry the building of new towns, the designing of new educational and hospital systems, the provision of neighborhood information and day-care centers in poor communities...

...It demands much closer study by government of the incentives of outside bodies: it demands much franker relations between government and its contractors and grant swingers than our present procedures require: and, most important, reprivatization demands a change in the kinds of things most Americans expect from the federal governmentan emphasis on government as a system manager for society rather than a solver of problems by direct bureaucratic means...

...Moreover, public scrutiny gives government agencies an obsessive fear of scandal and makes them less risk-oriented than private businesses...

...If government agencies are not under budgetary pressure to orient themselves toward results, we should not expect them to get results from their contractors...

...The important thing is that they Josiah Lee Auspitz is president of the Ripon Society...

...What happens when such a man, reared to participate in public affairs and convinced of his elite status, becomes a “proletarian” in a large organization...

...Drucker uses reprivatization simply to mean the contracting out and de volution of governmental activities to non-governmental bodies, and he doesn’t care whether these outside institutions are business, universities, foundations cooperatives, or semi-public corporations...

...But a society which rears a mass aristocracya whole class of citizens with the leisure, the education, the desire to participate in public affairs-will be compelled to adopt a decentralizing and libertarian strategy of government or to suffer from apathy and unrest...

...Devices which work, which are progressive, and which are improvements over existing programs ought to be good politics because they are good for the country...

...Reprivatization enables the knowledge worker to do work that he believes to be in the public interest while he is employed by a non-governmental institution...

...If he sticks with the old ones he will preside over a bankrupt treasury and continuing deterioration of public confidence in our institutions...

...Just as the diverse elements of the Democratic coalition have been able to agree mainly on a notion of government which presupposes an expanding base of federal patronage,,so Republicans, slighted by federal largesse for more than a generation, have rallied to the rhetoric of self-help, federalism, voluntarism, and reliance on the private sector...

...His views on management are now common sense among heads of large corporations, but they no doubt undermined the virile sense of “leadership” cherished by his own colleagues, who liked the hurly-burly of swooping down to chew out a foreman, to tighten a bolt, or to take personal responsibility for line operations...

...be autonomous-that their internal operations be no worry to government policy makers...

...For Washington simply does not have enough niches to go around...

...Nixon does not try to change them, he will go down in domestic affairs as a much more clever, much less handsome and corrupt equal to Warren G. Harding...

...He says: “Something as radical as the Bureau of the Budget seemed when it was introduced 50 years ago is needed in order to ask agency heads: ‘What results can the American republic expect from you during the next five years...

...A full orientation toward results involves several steps: setting objectives, choosing the means for achieving them, defining necessary tasks, organizing and coordinating people to do them, evaluating the results, and feeding evaluative judgments back into earlier stages of the managerial cycle...

...that, whenever they hear about a “gap” or “shortage ,” government will spend money to fill it...

...Political leaders are doomed to live in a crisis atmosphere that forces them to direct all their attention to 10 percent of government programs, while the other 90 per cent are allowed to drift out of control...

...This cannot happen if meaningful labor is concentrated in the federal government...

...It is that government, instead of governing, is trying to do things for which it is not suited...

...Drucker himself, then, does not see reprivatization as something to be quickly imposed...

...What a pity that the major opposition to new concepts is likely to come from the very liberal intelligentsia whose ultimate interests are best served by a decentralizing and libertarian strategy of government...

...I have remarked earlier that Drucker’s is but one of a family of decentralizing ideas that includes federalism, voluntarism, selfhelp, local initiative, and increased reliance on market mechanisms...

...The impatient atmosphere of a “war on poverty” or an “urban crisis” tends to preserve this air of improvisation and to keep us from thinking through what our private institutions can do effectively...

...But the real intellectual antecedent of Drucker is Chester Barnard, a New Jersey telephone company executive, who in 1938 published The Functions of the Executive, a landmark in the theory of management...

...But government has insisted on not paying for them because they are based on an unfamiliar concept - that of a hospital as the center of a community health system...

...Now, though Drucker puts a novel turn on the notion of government as a manipulator of the incentives of outside bodies, the concept itself is not blindingly original...

...A review by Josiah Lee Auspitz The Age of Discontinuity: Guidelines to Our Changing Society by Peter Drucker Harper & Row, 394 pages...

...By the end of the century the organ virtuoso had disappeared...

...But not one page of the 1,100 says: ‘These are our objectives, these are the results that the American people can expect from their $80 million in five years.’ Certainly there are general aims, but nothing that can be cited five years from now to learn whether the grant-and the program behind it-was a success or a failure...

...He has a rich repertiore of examples to show how government can actually reduce the ability of non-governmental bodies to accomplish socially desirable goals...

...But it is a second virtue of Drucker’s concept that it is politically viable for Mr...

...Such attitudes need to be changed...

...The role of the political leader should be like that of the orchestra conductor who “need not even know how to play an instrument...

...Yet he increasingly finds himself on an assembly-line producing specialized paperwork-in a law firm, a university, a consulting firm, a publishing house, a research lab, or a financial or advertising institution...

...Nixon’s only chance to be creative in domestic policy, at a time when he will become increasingly identified with the overseas commitments and economic malaise left him by his predecessor...

...It specifies in minute detail all the conceivable legal provisions: the exact numbers of people who will be employed, the number of minority-group employees, the kinds of facilities to be used, the kinds of accounting and administrative procedures...

...What should not be done is exemplified in a recent $80 million federal contract to a leading institution for a fiveyear program...

...As a concept about means not ends, it does not require massive new spending, nor does it demand a repudiation of high-minded goals for social programs...

...A primitive country with a scarcity of educated talent does well to hoard this precious resource in the capital city and to centralize control in the hands of a small governing class...

...It goes hand in hand with a reinvigoration of local government, which enables him to assume important public responsibilities outside his workplace...

...2 -consolidation of government credit programs into a semi-private Domestic Development Bank...

...His job is to know the capacity of each instrument and to evoke optimal performance from each...

...But since he has entered office, the President has not found the symbolic means to present such reforms as part of a coherent program...

...Now the popularity of an idea within the GOP is scant guarantee that it will win acceptance in the nation at large, where fewer than 30 per cent of the voters are willing to describe themselves as Republicans...

...6-allowing parents to opt out of public schools and transfer their tax dollars to licensed private schools and to industry-run vocational programs...

...Yet the greatest strides in hospitals are in such fields as community medicine, preventive medicine, and psychological casework...

...One already before Congress is the proposed reform of the post office into a semiprivate corporation under independent management...

...American government already makes use of non-governmental institutions on a massive scale, and its experience with them suggests what should be done-and what should not be done- to make Drucker’s concept work...

...The only ones which have been allowed to talk about health systems in a direct way are military hospitals, which are accordingly much more effective than the paper qualifications of their personnel would lead one to expect...

...Peter Drucker, who certainly did not write with a Republican administration in mind, happens to fill the President’s needs for three reasons: his concept is good for the Republican Party, it is good for the country, and it is workable in the bureaucracy...

...Should they attempt to abolish an outdated bureau, or even to reform it, they will soon find that it has in the course of its lifetime developed a consistuency that will rush to its defense...

...The dominant musical figure of the early eighteenth century was the great organ virtuoso, especially in the Protestant north...

...And it costs little money besides...

...They are under constant pressure to come up with "new" programs and dramatic legislation, while the once-bold initiatives of yesteryear become, as Drucker says, "tired, overextended, flabby, and impotent...

...The tenth chapter is notable for its sketch of the concept of “reprivatiza tion,” a misleading term if it is taken to imply exclusive reliance on the private sector...

...Nixon in a full national sense because it can generate programs that are measurable improvements over those we now have...

...8-separating defense procurement from defense policy, as the British and Canadians do, merging it with civilian procurement now performed by the General Services Administration and spinning the combined organization off under independent management...

...But it can be part of his answer...

...And both the conservative and liberal bards of the Republican Administration, William F. Buckley, Jr., and Daniel Patrick Moynihan, have sung Drucker’s praises...

...Why is your function necessary...

...Peter Drucker, once a philosophy teacher, now a management consultant and a professor at the NYU Graduate School of Business, has considerably deepened Barnard’s perceptions in his own books on management theory...

...His contribution is especially timely for Richard M. Nixon, who has come to office at the head of a squabbling minority party in a period when the budget is tight and when swing segments of the voting public doubt the efficacy of government spending, both in defense and in social programs...

...For the past four decades American government has responded to problems by setting up massive bureaucracies to wage war on them...

...He may do one of three things: rebel, attach importance to his work, or find satisfaction in his hobbies...

...These responses have taught many Americans to expect that,whenever they read about a “problem” at home or abroad, government will hire people or pass laws to “solve” it directly...

...It simply has the wrong “culture” to act as a conscious manager of federal programs...

...and he has an “aristocratic” sense of public obligation...

...They involve not only judgments about cost-effectiveness but about results...

...There each instrument played only one part, and a conductor up front pulled together all these diverse and divergent instruments into one score and one performance...

...The knowledge worker considers himself a “professional’’ because he may have an advanced degree...

...government agencies, when they fail to deliver results, blame it on insufficient funding...

...he probably also considers himself an “intellectual,” thanks to his having had a liberal education and a hi-fi set at a formative age...

...And dangerous besides...

...Instead of turning back the hands of the clock, it puts Republicans in the politically more advantageous position of providing the mechanisms that can make the thing tick...

...Its anti-bureaucratic observations will appeal to old-line conservatives, its concern for managerial efficiency will appeal to pragmatic moderates, and its strong image of government as an “orchestra conductor” will have the support of Republican pro-gressives...

...If, on the other hand, he is able to dramatize new concepts of government, he can expect a better verdict, perhaps a comparison to the progressive Toryism of Benjamin Disraeli...

...Nixon’s answer...

...Businesses, when they cease to perform, lose money and disappear...

...These are not strictly quantitative questions, Drucker emphasizes...

...Other diverse applications of the concept are possible: 1-government funding of a university voluntary-action program in American cities...

...Government screams about rising health costs but it has been providing a disincentive to reducing them...

...In it he showed why major executives should not involve themselves in day-to-day operations but should sit back asking questions, laying plans, setting long-range goals, and trapping other people into the doing of things...

...There are innumerable instances in which the federal government has been conned by its contractors- and innumerable others in which it has no way of knowing whether it has been conned or not...

...Some of Drucker’s other chapters suggest what these social changes are...

...Nixon’s major proposals for domestic reform- revenue-sharing with the states, movement toward a negative income tax in welfare, commitment to a volunteer army, emphasis on administrative decentralization of federal programs, and the plan for a reprivatization of the post office-do in fact tend toward a less statist, less interventionist federal government...

...The New Deal, though it saved America for capitalism, was unable to win acceptance in much of the business community...

...The bureaucracy, with its bias against taking risks, has no reason to discourage these popular attitudes...

...3-transferring certain Peace Corps and foreign aid programs to multi-national and privately administered institutions...

...Nor is this an isolated case...

...Reprivatization is, after all, not entirely new...

...He sees two causes for this perversity of government rules...

...To be sure, there are nooks in the bureaucracy where these elementary managerial functions are carried out, but there is in the federal establishment no institutionalized means to make sure they are carried out on a governmentwide basis...