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12/7/2006
Can capitalism drive the public sector?
Harley Steelworkers did what they had to do, agreeing recently to cuts in health benefits, pensions and COLA’s. They did it to save their jobs, and to ensure, as well, the addition of 100 more jobs in Milwaukee.
Why did they settle? A powerful reason – the bottom line. It’s powerful because, as everywhere, it drives decision-making – and there are pressures galore on that decision-making and that bottom line today. Global competition, “The World is Flat” and all that.
Jim Wheeland, United Steelworkers Local 2-209 president, earned his keep by putting his own bottom line on the line this time around. Robert Simonson, an analyst at William Blair & Co., labeled the struggle “classic capitalism.”
No Bottom Line in public sector
But the bottom line – and any hint of capitalism or competition – is just plain missing in dealings with public unions. Indeed, discussions of privatization and competitive bidding can stop any discussion with public union folks dead in its tracks.
Let it be known - first and foremost - that I know, regard highly, and respect, many many public employees. Many are my friends. A few are even my relatives! Talented teachers, electricians, firefighters, police officers, planners, crossing guards, engineers, managers.
All of these folks are paid with public dollars – your taxes and mine. Your city taxes, your school taxes, your county taxes, your state taxes, your federal taxes – and any other tax there is out there, as well as water fees, wastewater fees, garbage fees, stormwater fees and any other kind of fees that now exist.
And that’s the rub. Public dollars. And no bottom line driving the business. Never a situation like Jim Wheeland and his fellow workers faced at Harley. Never a situation where an employer can say “I’d love to stay here folks, I love you all, you are wonderful people, but the cost pressures are just too great.”
Many who study this kind of thing say “overwhelming evidence exists” that indeed, competition lowers costs. In this light, we already see many public services provided by the private sector in some states and municipalities. School lunch programs, tutoring, cleaning services, garbage pickup, street sweeping, snowplowing, welfare programs and vouchered education. Yes, some of these programs work, some don’t. Competitive bidding is thriving in Indianapolis, where hundreds of competitive bidding opportunities have been identified. When city employees have prepared competitive bids, they’ve won about 40% of them. Philadelphia too, is using competitive bidding successfully. Where these are success stories, the states of California and Massachusetts have both tried to move to competitive bidding, but failed in their efforts. (Evergreen Freedom Foundation)
Here’s the point. Competitive bidding can work in a public employee setting. Yes, it has to be done right. Per AFSCME, (via the Evergreen Freedom Foundation report) “…public employees and unions [must be treated] as resources and partners in service delivery.” Bureaucracies must be flattened. Contracts must be managed doggedly.
Competitive bidding is an option. Though progress is very slow, it’s an option that has controlled expenses in cities large and small. So think… “classic capitalism.” Think…. lower taxes?
For additional information, see also work by the Reason Foundation.
COMMENTS
Are we talking about outsourcing the way they did in Indiana I believe where they outsourced Unemployment Benifits call center to India.....and the employees that were downsized had to call India for help
Great Idea
Jeff (Thu Dec 07 11:43:58 2006)
Jeff,
Yours is exactly the point. The world is flat; we're operating within a global economy, competition to supply goods and services is great. You make a good argument about the quality of service provided - and that's important. In the case you mention, can the operators be understood well and do they do their job with accuracy and timeliness? But as to who does the jobs - ultimately competition will determine that.
Jo Egelhoff, FoxPolitics.net (Thu Dec 07 11:59:28 2006)
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