ABSTRACT
The most extreme opponent of government programmes, government controls, and government activism in the late nineteenth century was the English philosopher Herbert Spencer, the last of the great liberals. Privatization has become the official policy of communist China. And it has been pushed furthest by a Labour government; New Zealand is even privatizing the postal service. Most government activities of the nineteenth century worked beautifully: the postal services, for instance; the nationalized railways of Europe; the health insurance programmes of imperial Germany; or workmen's compensation, first developed in imperial Austria around 1900. There are also activities which government cannot do well, and perhaps cannot do at all, even though they seem to meet all conditions for governmental effectiveness. Government will malperform if an activity is under pressure to satisfy different constituencies with different values and different demands. Only one governmental policy seems to be capable of changing the distribution of incomes and wealth: inflation.
