This whole “labor” thing is a socialist relic that needs to be excised from our way of thinking. How much longer can we sustain this? Not long, not long.

The Coming Showdown with Public Labor

“Touching the third rail of politics” used to mean any attempt to reform the cost of entitlements, especially Social Security. Despite the fact that all realistic estimates show all levels of government — federal, state, and local — barreling toward insolvency, there is still little or no effort to solve that problem. And while that one goes unsolved, another has arisen.

While one political taboo remains, another — one that may prove equally damaging — has grown. What no legislator dares say outright is that the only pot of money big enough to solve the problem is the one that can be wrung from the waste and inefficiency in America’s public sector at both state and federal levels. And that requires taking on a powerful and expanding special interest group: the public employee unions.

In 2005, a New York Times investigation found that as much as 40 percent of the Empire state’s $45 billion annual Medicaid budget was frittered away through fraud, mismanagement, abuse, and the indifference of Albany lawmakers. Two years earlier the Yankee Institute for Public Policy did a study for the October/November issue of the American Enterprise, which showed that if all 47.6 million U.S. public school children were educated with the same efficiency as private and parochial schools, the cumulative savings annually would be greater than all the state budget deficits combined.

Tantalizing examples of what can be extracted from reorganizing government abound. Public universities, which have already suffered declining taxpayer support over the last two decades, have actually improved their productivity to around 2.5 percent annually — approximately the same rate as private American industry. Declining government support led to the elimination of needless bureaucratic overhead, the substitution of adjunct and part-time instructors for tenure-track faculty, and the redesign of courses to make better use of online technology.

New Zealand, which in 1984 initiated a sweeping privatization of national and regional services to forestall national bankruptcy, provides endless examples of how streamlining government to bring expenses in line with revenues actually improves the overall quality of services. Employees in transportation were reduced from 5,600 to 53, in forest services from 17,000 to 17, and in the national Ministry of Works from 28,000 to 1 — all with no loss of service or safety to the public.

The problem, of course, is that importing such savings to America will not go down well with public employee unions, which have grown accustomed to extracting generous benefits from politicians. August, 2006, data from the U.S. Bureau of Economic Analysis shows that the average federal civilian worker earns $106,579 a year in total compensation, or twice the $53,289 in wages and benefits for the typical private employee. Since 2000, federal pay has risen 38 percent, or double the pay increases for workers in manufacturing, retail, finance, private health care, and construction.

At the state level, according to the Employee Benefit Research Institute, government workers have been collecting nearly 50 percent more in total compensation than the average private sector employee, with taxpayers subsidizing 128 percent more than private employers to fund health care benefits and 162 percent more on retirement benefits.

When budget pressures have occasionally forced politicians to make modest demands for increased productivity, the response from public employees has been less than generous — witness the 2005 holiday transit strike in New York City and repeated threats of illegal walkouts by nurses throughout the University of California system.

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