Unions and Indiana Cities

December 2, 2010

For release noon Nov. 30 and thereafter (551 words)

In Indiana, persons on the staff of a city or county are also allowed by state law to sit on the fiscal body of that same entity. Think about that for a moment.

It is difficult to imagine a more blatant conflict of interest. It is a direct and proximate cause of the union political machines and the destructive political “rent-seeking” or self-dealing that economists advise us to avoid.

In my second term on an Indiana common council, four of my nine fellow council members served with this conflict of interest. Two were active firefighters and union members, one a retired police officer and another a city bureaucrat. Similar situations are found on city and county councils across Indiana.

It was discouraging to watch a city employee vote directly on wages and benefits for himself while saying — with a straight face — that he was capable of representing both sides of the transaction. Such claims were made during all eight years of my time on council. They occur regularly throughout the state.

That, of course, defies what most of us understand to be human nature. In any transaction involving taxpayers and government employees, the goals of each side are the same as when you go to buy a product or service from a private company. That is, the taxpayers want to get the most for the least compensation and the government employee wants to do the least for the most compensation.

This doesn’t mean that taxpayers are cheapskates or that government employees are lazy. It means they have differing incentives and goals in a given transaction.

It helps to turn to the private sector for our standard. Few of us would agree to be bound by a settlement negotiated by an attorney presuming to represent both sides of a dispute. Nor would we accept a real estate agent who tried to represent the interests of both buyer and seller. In fact, such situations are often prohibited.

Candidates from any party when running for government office often use the cliché, “common-sense Hoosier values.” Well, for most Hoosiers, preventing blatant conflicts of interest is as common-sensible as it gets.

In sum, there is no reason that protections against conflicting interests that work in the private sector should not be applied to the government.

Dr. Charles Rice, former dean of the Notre Dame School of Law, made several prescient observations in The Indiana Policy Review way back in February of 1990:

“The power of public-sector bargaining to cause directly an increase in taxes is sufficient reason to treat public employment differently from the private.”

He went on to predict that the result of forced collective bargaining, even with no-strike provisions, would be “the ongoing politicization of public employment.”

Those higher taxes and that politicization have come to pass in Indiana along with the prospect of mass layoffs and pay cuts for even the best public employees.

The solution is voluntary labor associations. Wendy McElroy, writing in The Freeman, sums up the choice before us: “Freedom of association . . . fuels the goodwill that civil society depends on; forced association destroys it.”

This shines a different light on our current system of forced representation by unions and forced collective bargaining. It shines a different light on that emotionalism that charactizes our budget sessions.

For an end to forced unionization and forced public-sector collective bargaining would not only be good for taxpayers and elected officials but for the employees themselves.

The author, an adjunct scholar of the Indiana Policy Review Foundation, served two terms on the common council of Terre Haute, including several years as chairman of its finance committee. This is excerpted from the cover article of the foundation’s quarterly journal.


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