Is Public Sector Reform About Who’s to Blame?

by Reihan Salam

Many of my friends have seen the Organizing for America protests in Madison as part of a cosmic moral battle, pitting good against evil. Some point out that the financial crisis — caused by greedy speculators — is truly to blame for the dire state of Wisconsin’s public finances, or tax cuts for the rich, etc. Public workers are blameless, yet, according to this worldview, they are being punished with the threat of being subject to work rules that are common in the private sector and making contributions to health and pension benefits somewhat more comparable to what we see in the private sector. 

Others believe that we need to slash public compensation across the board because above-market total compensation is driving the growth of government to burdensome and unsustainable levels, and that the power of public unions is the big barrier to reform. This might be wishful thinking: as the number of public employees grows, they will have a growing influence over the political system, regardless of CBR. 

My view is far more prosaic: once we’ve embraced best practices, increasing productivity is fundamentally a process of search and experimentation. Rigid work rules make search and experimentation really hard, which is why I’m skeptical about the virtues of organized labor in most domains, including the public sector. The issue of public sector reform and flexibility isn’t about who to blame. Rather, it is about trying to make government work better for everyone, including taxpayers.

I can’t imagine this will change anyone’s mind, but it is one way of looking at the issue. This conflict arises during a budget crisis because hard fiscal constraints have a way of forcing institutions to make hard choices, and to zero in on what is essential and what’s not. But the truth is that making work rules less rigid, benchmarking compensation more closely to the private sector, etc., would have been a good thing to do at any point.