Strengthening Constitutional Self-Government

No Left Turns

Peter Drucker

Yesterday Lucas noted that Peter Drucker died at the age of 95. Drucker and I got to Claremont in 1971; he was a prof in the business school, and I was a grad student in government. I didn’t formally study with him. I studied with Jaffa. One great man was enough. But, I did attend many of his classes and got to know him a bit. He was a tremendous character. Very wise, amazingly learned, witty, tough, but never mean. He would chastize students (publicly) for being narrow, for misunderstanding the nature of education, for not understanding the difference between training (as in what schools of business normally do) and a liberal education, for not working hard enough, for not taking advantage of the opportunity they had. The first time I met him was over dinner, with two others (I think it was my second year in grad school). In preparation I read many of his books, and found them surprsingly interesting, but, of course, wasn’t yet persuaded that this was a serious person. And, being young and imprudent, over dinner I hastened to point out to him (you know, in that supercilious tone that grad students are prone to) that his books (especially something called, as I recollect, The Effective Executive) were nothing more than watered down Machiavelli. He was surprised that I was surprised, and readily admitted the fact and then quickly revealed that he knew a lot about Machievlli. Well, still in my arrogant mode, I pushed on and started pontificating about Frederick the Great’s book on Machiavelli (which I had just discovered and was sure no one else in the whole world ever heard of, never mind read), and to my surprise he had not only read it but had some very interesting thoughts about the book and Frederick. It was after this that I started to sit in on his classes. He was asked a question about the Vietnam War and its significance for America and the world; in a class that had nothing to do with the war, of course. He responded with a thirty minute discourse on the history (not excluding the art) of South East Asia, emphasizing China and Japan in the 17th and 18th centuries, never mentioned Vietnam, yet answered the question. It was wonderful. The student didn’t get it. But by then I did. Rest in Peace, good teacher.

Addition: Matt Peterson reminded me of this interview
that me, Arnn, and Masugi conducted with Drucker back in 1984. It’s pretty good.

Discussions - 14 Comments

I loved Drucker’s ideas about "the sickness of government," (they were especially on target during the Clinton years, weren’t they?) but I questioned his intellectual integrity when he suggested that senior management should not be paid more than 20 times as much as a company’s lowest paid employees. That was always a big sticking point with me when it came to Drucker.

Check out the interview you may remember we posted here.

Why would anyone (Mr. Sterling) be upset about a criticism of CEO salaries?

Would we say that Ronald Reagan lacked "intellectual integrity" because he wasn’t a pure free-trader? God, I hope not.

If we must criticize this brilliant man, let’s come up with something better than CEO salaries -- which most people, commonsensically, do think are out of control.

Mr. Gerling, rather.

And let us not forget the famous Oakdale Street house, which a procession of us graduate students rented from the Druckers in the 1970s and 1980s.

Any good anecdotes from that?

Oh my God, there are tons of anecdotes from the Oakdale House years. Let’s just say it was a graduate school version of Animal House. On the final party, which we held when the Druckers sold the house in 1988, one of the long-time residents of the house came back for the basj and swung from the chandellier at midnight, tearing it from the ceiling. This person is now a distinguished lawyer.

Thanks for the post on Drucker; never heard of him but he seems very interesting. I did a post on my blog, including your link to the 1984 interview.

http://www.englishandwhite.com/rattler_gator_blog/2005.11.01_arch.html#1131974105550

I’ll definitely be reading more about him in the future.

Haha that sounds like you had some very crazy times there Mr. Hayward! I bet that chandolier hanging guy doesnt’ tell THAt story to his clients and the Judges these days! I can tell you that me and my football buddies had soem very similar times to those that you were talking of.

Mr. Frisk, what exactly is "commonsensical" about describing CEO salaries as "out of control"? If "most people" think it’s so, is it then necessarily true? Perhaps it is considered true amongst limousine liberals, but that’s as far ast that goes. It’s Communism Lite, and I’m not buying it. Why should any serious conservative?

Such talk is just mindless class warfare, the other end of the "We must have a minimum wage" or "We must raise the minimum wage" nonsense. Why? Markets will determine with an amazing degree of fairness who contributes what to the economy, and what that is exactly worth. I recommend you read Friedrich Hayek’s The Fatal Conceit (1988) and see what he has to say about the persecution of the businessman by the (envious) scribe, and why this can, and has, made business executives "almost a class of untouchables."

I would also remind you of the cautionary words of George Gilder, who said "Hatred of producers of wealth still flourishes, and has become, in fact, the racism of the intellgientsia." I couldn’t put it better myself.

Brad Gerling:

I would completely agree with you if the market were efficient concerning corporate officer salaries, but it is not. Corporations are inefficient (in terms of spending) because the people who control the money, and the people who invest the money are not the same people. This is the same argument conservatives use for showing why government spending is necessarily inefficient (there is no incentive to control spending).

Perhaps the most famous case concerning corporate officer spending was just decided last August. Disney hired a guy, and gave him a generous severance package: the lawsuit arose because the guy worked for 14 months, did other things while he worked, was terminated, and was paid $140 million dollars for his 14 months of work. The shareholders sued the board of directors for wasting corporate assets, but under current law the salary was considered lawful. I would like to see you defend the $140 million for 14 months; it will be hard. This happens because the people making the decision do not spend their own money, and the law favors these people. Obviously, the law needs to change.

This is all entirely in line with conservative/founding thought. The founders/conservatives believe that once people lose self-control, discpline, and morals, that the law must serve as a substitute for these things. I think it is clear that the American business class has lost some self-control, etc. and the law needs to reign them in. When morals do not control the market, the law must.

If you were refering to proprieterships or partnerships then you are right. The market will efficently control that because people are hesitant to waste their own money.

Indeed, the modern corporation is itself a product of government intervention in the form of limited liability. Arguably it was a good intervention--after all, it’s hard to imagine how a modern industrialized economy could have emerged otherwise--but the notion that corporations are the natural product of individual liberty and the entrepreneurial ethic is misleading at best.

If criticizing the excesses of capitalism is "communism lite," then America is already a communist country and we might just as well join the John Birch Society. Drucker had enormous faith in freedom, but he also understood that the market in itself isn’t enough. Which is to say, he understood freedom. He certainly did not casually throw around ridiculous slurs like "communism lite."

"all entirely in line with conservative/founding thought"? Really? Well, it’s certainly not in line with the traditional views of my conservative, consistently Republican-voting friends and colleagues, National Review lifetime subscribers one and all. Nor is it in line with a wide range of conservative thinkers that I’ve read over the years. Your Disney example is weak. The exception does not make the rule. If Disney continues to make blunders like that, the market will expunge them in short order. Haven’t you ever heard about how the USSR/Communist nations sap the individual’s desire to achieve by setting artificial limits on the maximum and minimum amounts a person could earn, or has this lesson been forgotten so quickly?

Also, to demonstrate that it is really my view regarding government intervention on minimum wages and artificial limits placed on wages and income that is more within the conservative tradition, let’s remember this no-nonsense idea from former Senator Malcolm Wallop, a man who Vice-President Cheney just honored only a few days ago at the Ronald Reagan Gala at the Wallop-founded Frontiers of Freedom Institute. Wallop said:

"The concept of minimum wage is crazy, if you really stop to think about it. If $8 an hour seems right, why not $20 an hour? If it’s coming by order of the government, why stop at any level? Why not just say everyone should get what Gates gets?"

Now THAT is what’s in line with the conservative school of thought that I - and many, many others - subscribe to. Having the government command what the maximum and minimum incomes can be is just asinine and the very antithesis of freedom and the thoughts of our eminently respectable Founders.

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