Philip K. Howard’s Start-Over Movement

by Reihan Salam

Appropriately, Philip K. Howard of the Common Good Foundation has an op-ed in today’s Wall Street Journal on public sector reform that puts the repeal of SB 5 in perspective:

“I’ve never seen anyone terminated for incompetence,” observed a long-time human relations official in New York City. In Cincinnati, police personnel records must be expunged every few years—making periodic misconduct essentially unaccountable. Over the past decade, Los Angeles succeeded in firing five teachers (out of 33,000), at a cost of $3.5 million.

Collective-bargaining rights have made government virtually unmanageable. Promotions, reassignments and layoffs are dictated by rigid rules, without any opportunity for managerial judgment. In 2010, shortly after receiving an award as best first-year teacher in Wisconsin, Megan Sampson had to be let go under “last in, first out” provisions of the union contract.

Even what task someone should do on a given day is subject to detailed rules. Last year, when a virus disabled two computers in a shared federal office in Washington, D.C., the IT technician fixed one but said he was unable to fix the other because it wasn’t listed on his form.

Making things work better is an affront to union prerogatives. The refuse-collection union in Toledo sued when the city proposed consolidating garbage collection with the surrounding county. (Toledo ended up making a cash settlement.) In Wisconsin, when budget cuts eliminated funding to mow the grass along the roads, the union sued to stop the county executive from giving the job to inmates.

No decision is too small for union micromanagement. Under the New York City union contract, when new equipment is installed the city must reopen collective bargaining “for the sole purpose of negotiating with the union on the practical impact, if any, such equipment has on the affected employees.” Trying to get ideas from public employees can be illegal. A deputy mayor of New York City was “warned not to talk with employees in order to get suggestions” because it might violate the “direct dealing law.”

As Howard goes on to observe, the total compensation bill for the 20 million U.S. residents who work for federal, state, and local governments amounts to $1.5 trillion (or 10% of GDP). Government spends an additional $2 trillion. A 30% gain in efficiency would save taxpayers an extraordinary $1 trillion. 

This brings to mind a brief passage from Walter Isaacson’s biography of Steve Jobs:

[Tim] Cook reduced the number of Apple’s key suppliers from a hundred to twenty-four, forced them to cut betters deals to keep the business, convinced many to locate next to Apple’s plants, and closed ten of the company’s nineteen warehouses. By reducing the places where inventory could pile up, he reduced inventory. Jobs had cut inventory from two months’ worth or product down to one by early 1998. By September of that year, Cook had gotten it down to six days. By the following September, it was down to an amazing two days’ worth. In addition, he cut the production process for making an Apple computer from four months to two. [A new Bloomberg BusinessWeek article has more on the continuing evolution of Apple's supply-chain.]

The inevitable rejoinder is that government is not a business, which is true. A smarter rejoinder, however, is that much of what government does — like cutting Social Security checks — can’t really be made much more “efficient” than it is, as the overhead involved is actually fairly straightforward. There are, however, many domains, particularly at the state and local level, in which public sector organizations deliver services that involve combining technology and labor in various different ways, not unlike a private firm. We know, for example, that private organizations can deliver things like instruction, medical care, etc. Many on the left believe that deeper integration of, say, the delivery of health services would yield considerable efficiency gains, which may well be true in some cases. But the real question is how well integrated are the services — i.e., how well are the public sector firms in question combining capital and labor? 

And a key issue, as Howard suggests, is whether public sector firms have the flexibility to organize production in new, more effective ways — or if they must bribe, cajole, and fight every inch of the way to make even the slightest change. Students of organizational capital can see why this resistance to organizational innovation is absolutely crippling. 

Howard is absolutely right:

America must bulldoze the current system and start over. Only then can we balance budgets and restore competence, dignity and purpose to public service.

But time is short, and conservatives don’t seem to fully appreciate the gravity of the challenge. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.