The View From 1776

In a Wall Street Journal op-ed essay, Stephen Goldsmith, New York City’s Deputy Mayor, lays it on the line.

Progressive Government Is Obsolete
The rule-based civil service was a step forward from Tammany Hall. But today’s regulations stifle government workers at a time when getting value for tax dollars is more important than ever.

By STEPHEN GOLDSMITH

Across the country, the interests of organized labor, elected officials and taxpayers are colliding over wages, work rules and the astronomical costs of retiree pensions and health care. As important as these specific issues are to resolve, there is another, more fundamental problem causing so many Americans to lose faith in their government: It is not government unions per se but progressive government itself—long celebrated in Wisconsin, New York and elsewhere—that no longer produces progressive results.

In the early 20th century, the progressives championed a rule-based approach to public-sector management that was a big step forward from the cronyism and corruption of Tammany Hall. Today, however, the very rules that once enhanced accountability, transparency and efficiency now stifle the creativity of public-sector workers and reduce the ability of public investments to create opportunities for citizens—outcomes precisely the opposite of those intended by Progressive Era reformers.

New York City has more than 300,000 employees who work under more than 100 collective-bargaining agreements, along with layers of bureaucratic state civil-service laws. State law mandates that over 1,500 job titles must be filled through competitive written exams, specifically ignoring an employee’s actual performance or qualifications. We are even required to administer a civil-service test for the head of our Police Department’s counterterrorism unit! (We found a way around it.)

Seniority rules require that layoffs are based on date of hire, not merit. These rules also prevent any significant rewards for outstanding performance and make dismissing bad apples in the Big Apple all but impossible. Even asking employees for their ideas can be against the rules.

No one wants a return to the bad old days when public employees feared arbitrary dismissals. Today, however, the pendulum has swung too far in the opposite direction. Rather than too few rules governing public employees, there are far too many, and they hurt the very people progressive reformers cared most about: the least fortunate members of society who depend the most on effective support services.

A hundred years ago, progressives envisioned a highly professional public-sector work force reining in exploitative corporate interests. They saw those on the margin being victimized both by corrupt government and business interests. They believed that the worst abuses of capitalism—think Upton Sinclair’s “The Jungle"—would be reined in by government regulation.

Ironically, today we find that in many cases special interests are working in the bureaucracy, using Progressive Era rules to protect the status quo and themselves.

Recent efforts to trim approximately 150 laborers, carpenters and electricians from city hospitals, for example, were halted by a lawsuit brought by the unions. In a city facing a multibillion-dollar deficit, every nonessential dollar spent is a dollar less available for hospital care—or shelter for the homeless, or police for troubled neighborhoods. In a word, these special- interest interventions ultimately lead to socially regressive results.

For cities to survive, we need a post-progressive approach in which the efficient creation of the common good is the shared goal of labor, management and citizens alike. This means rethinking the rules of the early 20th century in light of the realities of the 21st century. A system that hires without discretion, promotes without considering performance, and lays off teachers without regard to merit cannot truly serve its citizens.

Progressive Era reformers rightly targeted corruption among Boss Tweed-type contracts for city work. Today, however, excruciating contracting rules produce unintended results.

Antiquated and overly complex procurement rules lead to year-long delays and waste millions of taxpayer dollars. These complex bureaucratic processes lock out small businesses and lock in existing contractors. Simpler, less prescriptive processes with greater transparency would produce better, faster and cheaper results, minimize political favoritism, increase competition among contractors, and improve the quality of work done on the taxpayer’s dime.

The current systems punish taxpayers in other ways too. Unaffordable pensions imposed by state legislators on unsuspecting citizens have created an unsustainable burden. In fiscal year 2012, New York City will pay $8.4 billion from its operating budget to fill a hole in its unfunded pension obligations. An expense of this magnitude leads directly to budget cuts for social programs and education, and to higher taxes that squeeze working families’ budgets and kill jobs.

Would an increase in the “progressivity” of the tax system be the way out of our budget woes? More and more, urban mayors understand the futility of trying to tax their cities into prosperity. Few would dispute the fairness of a progressive tax system—but there are limits. In New York City, the highest-earning 1% of tax filers pay approximately 50% of the city’s income taxes. Those paying the most are also best-positioned to relocate.

We need a new approach to governance that includes more respect not only for students in need of high-quality education but also for taxpayers, that has less job-killing red tape, and that fosters a more productive work force. The first rule of city government should be an unwavering commitment to delivering real value to the public with every tax dollar. That would be real progress.

Mr. Goldsmith is the deputy mayor of New York City.