Government by the Unions, of the Unions, for the Unions
Philip K. Howard on the Unaccountability & Unconstitutionality of Public Sector Unions
Philip K. Howard is the founder of Common Good, a nonpartisan organization devoted to streamlining laws so that Americans can use sound judgment in their everyday decisions. Philip is the author of Not Accountable, which persuasively contends that public employee unions weaken our democracy and should be (and I will contend already are) unconstitutional. We'll spend the next hour making that argument.
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Transcript has been edited for conciseness and clarity
Bob Zadek (1:59): Philip, what caught my attention at the start of the course was the preface to your book, written by Mitch Daniels. To me, Mitch Daniels personifies the ideal leader of our country, and I was disappointed when he decided not to enter the Republican primary in 2008.
How did you persuade him to write the preface to your book?
Philip K. Howard (02:53): I did a number of reforms with Mitch when he was Governor of Indiana. Then, when he became president of Purdue, he asked me to give a talk to his senior staff about why they should focus on making sensible decisions day to day instead of just following a rulebook.
Mitch Daniels is an extraordinary leader who focuses on how things work, such as improving the Department of Motor Vehicles in Indiana or managing public personnel. This is much more important to most Americans than abstract debates about immigration or other issues.
What makes public service unions different?
Bob Zadek (03:50): Now we're going to be spending most of this hour talking about a special type of organization: public sector unions.
That is the focus of your book, Not Accountable. We will learn what you mean by associating the phrase not accountable with public sector unions.
What makes public sector unions different than private unions.?
Philip K. Howard: Everybody said, "Well, it's a union. It's always a union." In fact, the collective bargaining power of public employee unions, which only came about really in the late 1960s, was done not because there was any scandal or abuse, but because union leaders wanted more power.
Whereas private unions, which were prevalent during the Progressive Era, had their origin story in factories abusing child labor and having endless work hours and horrible safety records, there was never a need for public employee unions. People thought they should just be treated fairly. But in fact, it's the difference between fish and mammals.
The incentives are completely different in a trade union context like the Auto Workers Union. Both sides have a vested interest in the viability of the enterprise. If they have inefficient work rules or demand too much, the company may move out of town or go out of business, resulting in the loss of their jobs. In contrast, with public unions, you can demand anything and the government cannot move.
In a private context, the private trade union, the argument is about the split between capital and labor. It's all about how to divide the profits. In the public union context, it's very limited. This is because the government can't move and officials don't pay for it. So, taxpayers have to foot the bill. Public unions can demand anything they can get away with and taxpayers must pay.
This is why FDR opposed public unions. He said collective bargaining cannot be transferred to the public sector because public employees have a sworn duty of loyalty to serve the public, not to negotiate against the public interest with inefficient work rules. There is an ethical difference here.
“It is impossible to bargain collectively with the government.” – Franklin Delano Roosevelt
Most importantly, trade union negotiations are an honest adversarial process, where it would be unlawful for management and labor to collude and come up with something that is not in the interest of either side.
Public unions negotiations are nothing but collusion. They amass a great deal of power: they get people elected, staff campaigns, and send people in buses to knock on doors. Once the official is elected, they don't sit on the opposite side of the table; they sit on the same side. This isn't a negotiation; it's a payoff.
Bad Math: How Fund Accounting Robs Future Generations
Bob Zadek (08:14): You used the word "collusion," which has a criminal connotation. You didn't mean that what they were doing was illegal; it was cynical, they work together. However, neither party is breaking any laws, due to the system itself.
Philip K. Howard (08:47): It would be illegal if it were done in the private sector.
Bob Zadek (08:48): That's correct. But it's not collusion in the public sector.
Philip K. Howard (08:52): It's not illegal, but it's dishonest.
Bob Zadek (08:56): Because I'm an accountant and I love spreadsheets, I have this embarrassing personality flaw: I just love when things balance.
In the private sector, financial statements—the reports to shareholders, the "voters," if you will—are published according to rules that record expenses when they are incurred and income when it is earned, not paid. This makes it harder for a private employer to spend future dollars, as the creation of that obligation will impact the current employer's performance.
In the public sector, however, there is a different approach to accounting, often referred to as "fund accounting," which means expenses are only recorded when they are paid, not when they are incurred. This means an elected official can support, for example, high union pension costs that are paid in the future without incurring a deficit in their budget.
I have always maintained that so much would change if municipalities and states had to use accrual basis accounting. Political officials negotiating with the union are spending a future elected official's money, which means the present political official doesn't get dinged with a deficit in their budget.
Philip K. Howard (11:32): I think they did improve those accounting rules somewhat in the last decade or so. But the process is exactly as you described, which is that they come to the negotiating table and say, "What can we get?"
They can’t get away with paying people hundreds of thousands of dollars in current income. So, how do they squeeze their pound of flesh out of the government?
One way is by making future promises that only come due after the politician leaves office, so they won’t have to pay it. It isn’t accounted for honestly.
The other way was through restrictive work rules that made the government virtually unmanageable. For example, if you wanted to move a desk, you had to negotiate it. If there was a pandemic, there was nothing in the contract about working in a pandemic or doing remote learning or teaching. It was like the spokes were disconnected from the hub—you couldn't move forward until you got union approval.
A Brief History of Public Sector Unions
Bob Zadek (12:37): Public service unions have been around for a while, and most people listening to this podcast were born into a world where they already existed. Examples include teachers unions, SEIU, and other public service workers unions.
However, this is a relatively recent phenomenon. If our listeners are older, they may remember a time before public service unions. So, let's take a brief look at the history of how we got to where we are now, with the teachers union playing a major role in the Covid recovery and pandemic recovery efforts.
Philip K. Howard (13:30): Prior to the 1960s, public unions had no collective bargaining power. They were like any other interest group, such as the National Education Association, a professional group with ideas in their self-interest, but without power over politicians.
Then, Kennedy was elected and, as payback for union support, he issued an executive order authorizing collective bargaining in the federal government. A report chaired by Arthur Goldberg had looked into this beforehand, but it was largely vacuous and substance-less.
In the late 1960s, unions kept agitating with state governors and parties. The civil service system, created in the late 19th century, allowed public employees to organize, and as government grew, they became more influential.
New York state agreed to consider collective bargaining, and a report by labor law professor George Taylor outlined how it should work. He said that you could not give up management control and that disagreements should not be decided by arbitrators, as this would be unconstitutional.
However, the law passed in exactly the opposite way, and other states, including California, followed suit. The Taylor Report also said that managers must maintain their power and that elected officials must make decisions, but the law did exactly what the report said not to do.
What Makes Public Sector Unions Special?
Bob Zadek (16:34): Let’s return to the question we started our show with: why are public sector unions a separate topic, not lumped in with private sector?
Think back to Covid: one would think that the decision to close schools would be the result of the democratic process, if one were naive and idealistic. That's the way it's supposed to work. But, in reality, the teachers unions called all the shots.
Philip K. Howard (18:04): For a long time, people have known that public employee unions are a headache and make managing government difficult. However, few understand how wasteful the system is. Approximately $2 out of every three dollars spent on personnel and related costs is wasted. This leads to a lack of accountability and a failure to fix any issues. As a result, we keep electing new people, yet nothing ever changes. Toxic police cultures persist, and the reason is because democracy is a process of accountability.
When you elect someone, you expect them to do a good job. If they don't, you elect someone else or the other party. But this assumes that the people you elect have the authority to manage the operations of government. Unfortunately, this is not the case.
For example, when COVID-19 happened, they did not have the authority to require people to come to school or do distance teaching. This has had disastrous results for students, particularly those from underprivileged backgrounds. Experts say that these students have lost 17 percentile points in learning compared to the cohort in 2019, and this gap will never be recovered.
The Fruits of Collective Bargaining: Wasted Money, Civil Unrest, and Lost Learning
Bob Zadek (19:29): We have a direct compromise of a core governing principle in our country: the answerability, or accountability, of elected officials for our lives as citizens. However, there is no accountability because the elected officials themselves are powerless. Watching CSPAN hearings demonstrates this imbalance of power between the elected officials and the public service unions.
We have also experienced profound civil unrest in this country, with George Floyd being the most recent example. This is not the only example; there are many more.
Philip K. Howard (20:58): Tyre Nichols.
Bob Zadek (20:59): And now in Tennessee with the shooting of the innocent woman in Tennessee. There have been numerous instances of nationwide unrest, and the police are often blamed. However, this is a broad statement that overlooks the influence of unions. In your book, you discuss the accountability of police unions and their impact on our civic life. Could you tell us more about this?
Philip K. Howard (21:36): Democracies are nothing but a process of accountability. People are supposed to have authority to run the government and be held accountable if they do a bad job. However, in American public employment, 99% of public employees get a fully successful rating. Dismissal rates for performance across all sectors are between zero and 0.2%. Two or three teachers out of 300,000 in California get dismissed every year.
Derek Chauvin was the cop who killed George Floyd by putting his knee on him for nine minutes. He was known to be a tightly wound, weird guy, yet the police chief had no authority to terminate him or even reassign him. In the Minneapolis Police Department, there had been 2,600 complaints in the prior decade, of which only 12 resulted in any kind of discipline, the most severe being a 40-hour suspension. This shows that the system of public service is so rigged that no one can be held accountable.
Most people in government, including cops, probably want to do a good job. However, when everyone knows that performance doesn't matter, it destroys the culture. Why work hard or go the extra mile when you see someone else not doing anything? This leads to a public culture without pride, accomplishment, or excitement.
In the case of the Memphis killing of Tyre Nichols, young, untrained officers were assigned to the nighttime duty in the bad neighborhoods. This resulted in the officers becoming their own kind of gang.
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Police Abuse & Dysfunctional Public Sector Work Culture
Bob Zadek (25:12): Notice the dynamic Phil has explained: the title of his book, Not Accountable, says it all. Let's take a closer look at police abuses.
This isn't a show about being anti-police. We're taking a more sophisticated approach to the problem. Union leaders want to get elected, so they promise to protect jobs. This is appealing to police officers, but it also protects the worst performers at the expense of the good ones.
Public service unions lack accountability to the public, which creates the problem. This dynamic is also seen in powerful teacher unions, which protect teachers in "rubber rooms".
Philip K. Howard (27:24): Yeah, so you can end up with bad or discouraging cultures. Paul Volcker did a bunch of reports, and he talked about how discouraging it is for civil servants who work hard to have to tolerate those who don't work hard and don't do their best. Studies of good schools also say the same thing: nothing is more discouraging.
If you go to a good school, including a good public school, you can feel the culture of excellence. People are trying hard and everyone feels a mutual obligation to do their best. In contrast, if you go to a lousy public school, you experience the exact opposite. And you can't fix the lousy public schools because you can't manage them differently.
Thomas Sowell, the economist from Stanford, did a book where he compared the performance of public schools with charter schools that shared the same buildings in inner cities like New York. The performance was radically different, even though the students were chosen by lottery from the same cohort and neighborhoods. For example, there was one school in Harlem where the charter school was ranked 37th in the state of New York out of 2,400 elementary schools in academic achievement, while the public school sharing the same building in the same year was ranked 1,694th.
Bob Zadek (29:35): So everything was the same building: the same supply of students from the same demographic. There's only one element that's different. What is that element?
Philip K. Howard (29:52): Accountability and management are key. For example, in a charter school, which spends less money per student than a public school, class sizes are larger. However, they redirect money to provide art classes, music classes, and other activities to broaden the interests of students, instead of just focusing on reading, writing, and arithmetic. Human innovation and initiative are at work in the charter school, doing whatever it takes to help the struggling student focus better than in the public school. In contrast, in the public school, everyone is just going through the motions, with no control or management, and no way to get rid of those teachers who are not trying.
“It's a scandal. We are ruining the lives of underprivileged children by putting them in an institution run for the benefit of the public teachers union, instead of for the students.”
Bob Zadek (31:06): How many of the issues we have discussed are caused by collective bargaining? Would a civil service system without collective bargaining be enough to satisfy you?
Philip K. Howard (32:03): Well, first of all, civil service in general is a good idea. It has to be a merit system. The merit system was meant to ensure accountability. The history of civil service shows that it was not supposed to be a process of tenure or lifetime employment, but rather a process of neutral hiring. This was in contrast to the spoils system, where people were hired because they gave money to a politician.
Ironically, a hundred years later, public employees are now subject to the spoils system again, except it's permanent. There is no accountability, no matter how bad an employee is.
You can have a system that protects against arbitrary firings by having someone else review it and make a judgment about whether the official was fair or not. This system should honor human judgment and responsibility, not just be a set of rigid legal rules that make people feel invincible.
To achieve this, collective bargaining should be eliminated. Elected officials are meant to serve the public, but then they negotiate with people whose job is to serve themselves, leaving the public out. This leads to bankrupt states, like California, poor schools, toxic police cultures, and transit systems that cost three times what they should. This is due to work rules that serve no legitimate purpose other than wasting money.
People reading this should be outraged. The genius behind these rules is that they are designed to be inefficient.
Why Due Process Doesn’t Apply to Firing Decisions
Bob Zadek (34:23): The genius of the public service unions is the marketing savvy of coining the phrase "public service" – oh my God, kudos to whoever invented that! The public service unions, to be accurate, are union service organizations – they hardly serve the public. I couldn't resist that hint of cynicism – apologies to my audience.
The unions want due process, but due process is a very specific concept which deals only with, for the most part, governmental behavior in a criminal context – being convicted without due process of law. People often apply the First Amendment to employment relationships, but there is no free speech – Susan Sarandon is not deprived of free speech if people don't attend her movies.
Due process has nothing to do with the conversation. Your ideal system would be one with rules designed to protect workers from arbitrary treatment by their, ultimately political, bosses. We have workers who are apolitical – they just want to show up for work and do their highly specialized job, and they don't want to be fired unfairly by the political process when there's a change in administration. All of that makes sense – it's good for everybody.
But the system now deals with work rules – rules governing the quality of life of the workers – and the unions perform a disservice in that regard. That's the part of the process where we start to lose accountability, isn't it?
Philip K. Howard (37:10): Well, there are two things here. Firstly, for any successful organization to be built, everyone needs to trust that everyone will be held accountable for their performance. This foundation of trust is undermined if people can keep their job by sleeping all day. There are stories of teachers who sleep during class and still don't get fired. Steve Brill once heard a case of a teacher who never graded papers and her defense was that the city didn't provide her with instructions to do so. This is absurd.
The same goes for police departments. If someone misbehaves, there are so many rules that make it hard to hold them accountable. For example, the officer can't be interviewed until every other witness statement is taken. And the arbitrators who decide the case are chosen by the police union.
Most work rules have nothing to do with the quality of life. A hundred years ago, unions were great for protecting workers in dangerous jobs like meatpacking or railroads. But now, these rules are just used for feather bedding. For example, if a work crew needs to remove a branch from the transit line, they can't do it because it's not in their job description. They need a whole new crew.
The same goes for cleaning subway cars. When they thought that Covid could spread through touching the bars and railings, they didn't have enough workers. So they subcontracted it out. The private contractor did three times as much work for the same price. This shows how much waste there is in the system.
Bob Zadek (39:58): Abuses in work rules are nothing more than a wealth transfer from those who cannot protect themselves to those with power. What is almost always the case with such abuses is that monopolies, such as railroads and public service workers, have absurd and abusive work rules. This is because the customers don't have a choice; the government cannot move out of town.
Philip K. Howard (41:04): And secondly, the public supervisors don't have a choice. So, it's not just the risk of a government monopoly. The people in positions of responsibility can't do anything either. This adds another layer of inefficiency. Government always has a problem running due to lack of market competition and other factors. Now, add to that the fact that the people in charge of government have no authority to act. They are like the Lilliputians, all tied down.
Public Sector Unions are Unconstitutional
Bob Zadek (41:50): I want to give the audience an insight into an important part of this discussion, which you do a beautiful job on in your book - the economics. The Janus Case, which you mentioned in your book explains how unions collect money through forced contributions. I did a show on Janus and on Rebecca Friedrichs and her fight against teachers unions in California. The government protects this money and the unions overwhelmingly use it for political contributions to reward those who supported the unions.
In effect, the public is forced to provide economic support to the unions so they can work against the public's interest. Can you explain the flow of funds in this process?
Philip K. Howard (43:01): Collective bargaining has allowed public employee unions to mobilize the mass of modern government against reform. There are 7 million members of these unions, including teachers, police, and others, who pay around $5 billion in dues annually. Most of this money goes to political activity. They elect their own bosses and remove state legislators who don't comply with their demands.
It's like dealing with a giant, fire-breathing dragon. Even Republicans are reluctant to take them on, as the unions can mobilize national money to get rid of them.
I suggest that the point of constitutional governance is for people to elect those in charge. The Guarantee Clause of the United States Constitution (Article IV) enshrines this principle and applies to states and local governments. It states that the United States will guarantee to every state a government of a republican form. James Madison discussed this in the constitutional debates, explaining that elected officials must retain the authority to manage the government. They cannot give it away to any set of nobles or any favored class.
In the last 50 years, however, this has happened almost without people noticing. Politicians have been bought off, giving away the power to govern, run schools, and manage police forces to public employee unions through collective bargaining powers and other rights.
This is unconstitutional, and this book provides a legal mechanism to undo it.
Bob Zadek (46:23): The non-delegation principle is profoundly important. It is part of the well-known system of checks and balances, where one group's ambition is offset by another group's ambition, resulting in a benefit to the public.
The non-delegation principle also applies, as my audience will remember or know, to prohibit Congress from giving too much authority to the executive branch. The courts will decide what "too much" means. The executive branch cannot be allowed to legislate, which is another example of the same principle.
Philip K. Howard (47:12): Two things: Congress cannot take away the executive power to run personnel. Therefore, the collective bargaining powers are unconstitutional. Five years ago, I wrote a paper that served as the basis for Trump's decision to hold all senior employees accountable, as Congress lacks the power to take away the president's executive power.
You are talking about the doctrine of intergovernmental transfer, which is when Congress gives too much power to an agency. However, what we're discussing with public employee unions is far worse. It's like a rich company coming along and saying they want to run the police force and decide how everything is run in the government. This is not allowed, as whoever is doing the work must be accountable to people appointed or elected by the voters. This has not happened, and there is a permanent spoils system.
Making the Case in the Court of Public Opinion
Bob Zadek (48:41): Phil, in the few minutes we have, let's empower the audience. As they leave this podcast, they should be motivated and determined to make a difference. What actions should they take to bring about change? Although the changes may be complex politically, conceptually they are straightforward.
Philip K. Howard (49:23): In making the legal case, or even the constitutional case, it is essential for the public to care about it and agitate politically. This shows that it is important. So, when listeners are frustrated with another tax raise or a failing school, they should ask why these things can't be managed more effectively. What do the union contracts look like? Why does it cost more than the private sector would? People should tell their friends that it is crazy. Elected officials must have the authority to manage these things, and this should be a centerpiece of the 2024 presidential election. I’ve spoken to several potential Republican candidates already, but the Democrats may not pick it up due to their union funding. For it to be important in the 2024 election, voters must make their voices heard.
Bob Zadek (50:55): Phil, I'd hoped to make headlines by having you use this podcast to declare your candidacy in the primary, but I was mistaken.
We've been speaking with Philip K. Howard, author of the recently published Not Accountable. Philip has also written The Death of Common Sense, The Collapse of the Common Good, and Life Without Lawyers. In addition, he has authored The Rule of Nobody, and Try Common Sense.
Philip, we appreciate you taking the time to share your wisdom with us and our audience. We also want to thank the audience for giving us an hour of their time and allowing us into their hearts and minds. Thank you so much, my friends out there. And thank you again for your book.
Philip K. Howard (52:09): Great to be with you, Bob.