The Streets Were Paved with Gold (29 page)

We don’t always see it because our attention focuses on how government looks rather than how it works. Because management is a cold abstraction, and the people who run government are too often judged by how well they run for office—by what they say, not what they do. Because we live in a self-indulgent society. And also because many of us retain vivid memories of the class conflict and abuse of an earlier era when all workers—like today’s migrant workers and coal miners—were victims of callous indifference. We remember the sweat shops, the union-busting goons, the conscripted children slaving fourteen hours a day. We remember Upton Sinclair’s poignant portrait of assembly line cruelty; John Steinbeck’s
Grapes of Wrath.
If you grew up in a working-class home, as I did, your natural instinct is to side with the worker against the boss and robber barons, to draw lines between
the people
and the privileged few. Government was a friend, labor unions represented the people against management.

Today, government is not always a friend; is often wasteful, rigid, a tax-eating bureaucracy as immune to competition as any business monopoly. Today, public unions don’t necessarily represent the public. Our world is turned upside down. What happens when management (i.e., government) and the public are one? When public unions become powerful special interests, demanding
more
when taxpayers want to pay less? Why is a falsely labeled budget or union contract not as much a consumer issue as the contents of a jar of baby food? Does the public get what it pays for? Is a union ripoff different from a landlord’s? What happens when ordinary workers become a privileged class—what Milovan Djilas, referring to Communist Party officials, called the “new class”?

New York suffers an advanced case of self-indulgence. But the disease is contagious. Burton W. Johnson, former fire chief in the nation’s capital, sprained his back at home lifting a carton of CocaCola. He filed for—and won—a $33,250 disability pension. In Washington, D.C., there are four “disabled” for every one regular retirement. In New York City, there are thirteen regular retirements for every one disabled. The Congress of the United States, which enjoys lecturing New York, created D.C.’s tax-free, two-thirds pay
disability pension system, which Senator Thomas Eagleton calls “far and away the premier ripoff system in the United States, second to none.” Congress also approved twenty-year military retirement plans, allowing 141,000 retirees to collect pensions and fat federal civilian salaries as well. Of these double-dippers, 161 earn more than the $66,000 paid members of the President’s Cabinet. The head of the Social Security Administration, James B. Cardwell, “retired” in November 1977 to take a $53,000 post in private industry. At the age of fifty-five, this former guardian of the people is also drawing a $24,000 government pension; in ten years, his Social Security checks will come too, though since he was a federal employee only now does Cardwell begin contributing to this system. In 1978, eighteen members of Congress were collecting monthly disability pay from the military, and another fourteen were cashing monthly military pensions or Veterans Administration benefits.

Nassau County cops are not only better paid than New York’s but receive fatter longevity bonuses—$450 after six years, $1,400 after twenty. Actors Equity members collect a $25 “meal penalty” if an afternoon’s shooting exceeds six hours, even by one minute. Members of the New York Newspaper Guild receive triple pay for working holidays. Members of Congress receive free medical treatment, free prescriptions, free annual physical exams, free parking, free books, free plants, free telephone service, free use of members-only swimming pools, gyms, and steam rooms with masseurs; they enjoy bargain basement prices on haircuts and beauty shop care, eat tax-free and inexpensive meals in special dining rooms, pay no Social Security taxes and only $46.14 a month for a $60,000 life insurance policy. Newspaper and railroad union contracts provide for featherbedding—the publishers of New York’s three daily newspapers precipitated a strike in 1978, complaining that their pressman union’s contract forced them to employ 50 percent more workers than are needed.

Big business inevitably comes to think that big government will always protect them. Lockheed seeks and wins a government bailout. The airlines prefer the security of government regulation and a guaranteed market to competition. Naturally, the public pays through cost overruns and steeper fares. Just as they pay steeper consumer bills to artificially support crop prices and subsidize farmers not to farm land. Each year, Congressman Charles A. Vanik of Ohio compiles figures on the tax payments of major corporations.
In 1976, seventeen major American corporations, with combined earnings of $2.6 billion, paid no U.S. income taxes. Admittedly, many of these corporations paid taxes abroad. But of the 168 companies surveyed, 41 paid to the U.S. government less than 10 percent of their worldwide earnings. The corporate tax rate prescribed by law is 48 percent—yet the average effective U.S. tax rate for all 168 companies was 13.04 percent. American Airlines, U.S. Steel, General Dynamics and Chase Manhattan Corp. paid no taxes; Exxon, just 8 percent on earnings of $7.5 billion. To pay less than 13 percent of their income in taxes, the average American family would have to earn less than $20,500. Not that beating the government on taxes is alien to John Q. Citizen. The government estimates, for example, that it loses billions in uncollected taxes from people who work off the books and comprise what they call a “subterranean economy.” The state reports 5,000 New Yorkers are illegally drawing unemployment insurance—$400,000 a week—while basking in Florida’s sunshine. Ten percent of all National Student Loans to New York State residents—$55 million—have not been repaid.

In March 1978, coal miners received a three-year 39 percent wage and benefit hike. The Teamsters Union reflexively demanded the same. According to the White House Council on Wage and Price Stability, since 1950 doctors’ fees multiplied 80 percent faster than inflation, and in 1977 zoomed 9.3 percent, or 50 percent more than consumer prices. The pay of Edgar Griffiths, head of RCA, jumped 26 percent in 1977, to $475,000. Chairman David Rockefeller, according to a 1976 Chase prospectus, was compensated $279,168 annually (exclusive of his dividend payments) and was eligible for a $125,904 annual pension upon retirement. When he was chairman of Bendix Corporation, Treasury Secretary Michael Blumenthal received a free box at Forest Hills tennis stadium and 200 free tickets for all Notre Dame games. Johnny Carson, in addition to an annual salary of $2.5 million, receives fifteen weeks’ vacation, works only three afternoons for twenty-five weeks a year, owns free RCA stock and reportedly snares a free $1 million life insurance policy. Professional sports, which is supposed to be competitive, features athletes demanding no-cut contracts. No-cut contracts already exist for most civil servants. Also for members of the New York Newspaper Guild, who, except in extreme cases, cannot be fired after fifteen years’ service; or for the nation’s 500,000 postal workers who have a no-layoff clause in their contract.
Also for longshoremen, who last year muscled guarantees for 2,080 hours of work a year, even if there was no work. In New York, there was no work in 1977 for 3,000 longshoremen. But shipping companies were compelled to pay them up to $16,640 anyway. Of course, the cost is passed along to the consumer. Demands for lifetime job security are becoming more common. “Why should steelworkers have lifetime security?” a union official said to the
Times.
“I’ll answer with another question. Why should a teacher have lifetime tenure? Why should government workers be protected for life by the Civil Service?”
Me
too.

Featherbedding and bloated benefits are taken in stride not just because they are more common or workers are more insecure, but because the benefactors are usually so big that it is assumed cost is of no consequence. Unlike members of a family, a small community or a small business, people feel little responsibility toward strangers. As government, businesses, assembly lines, unions, cities and suburbs get bigger, a sense of responsibility breaks down. The work ethic erodes. People clamor for and get what they can.

We come to produce what the Washington
Post
aptly calls “the Gross Nothing Product.” George Plimpton, a talented writer and raconteur, is paid $2,000 simply to attend a Washington cocktail party. The Commission on Federal Paperwork found that the federal government pours over $100 billion annually into paperwork, much of it make-work. Chic Parisian fashion houses merchandize their name rather than their own products. “Saint-Laurent recently drew the line at putting its label on automobile tires,” deadpanned the
Post.

Lagging productivity and mismanagement—a kind of Gross Nothing Product—knows no borders. Try talking, simultaneously, to four duplicate hotel managers when the air conditioning breaks down in Dubrovnik, Yugoslavia. Or visit downtown, where stores close all afternoon for five-hour siesta breaks.

“We still have many, too many, cases of absenteeism, latecomings and forced idleness. This is a great evil entailing the loss of millions of man-days.” The speaker? Soviet party Chief Leonid Brezhnev, complaining to the 1976 Central Committee Plenum about their failure to meet the goals of the five-year plan. Communist and Socialist nations—where work is guaranteed, but often at slave pay and with strikes prohibited—have difficulty motivating workers with the promise of a line in the plant newspapers or snappy new titles such as
Shock Worker of Communist Labor.
Chinese workers in 1977 received their first pay increase since the late fifties—one reason for their factory slowdowns and productivity woes. They, too, suffer from government monopoly. Sensing that their nonincentive system offered insufficient rewards—ours tend to offer insufficient punishment—China’s post-Mao leadership is less a slave to ideology. “It doesn’t matter whether a cat is black or white as long as it catches mice and is a good cat,” party Vice Chairman and Deputy Prime Minister Teng Hsiao-ping has said.

As government becomes more important in our lives—directly employing 15 million people, consuming one-quarter of America’s GNP—its management and work practices command attention. No, require it. Members of the Senate Appropriations Committee were shocked, for instance, when Joseph Califano, Secretary of Health, Education and Welfare, revealed that his agency employed an additional 980,217 people the Senators did not know about. The Senators were just counting the agency’s 144,256 regular employees. Califano was counting, as well, all those who receive government contracts, research grants and federal salaries while working for state or local governments. “My God, we are over one million!” exclaimed Senator Ernest F. Hollings of South Carolina. Yep, and that’s just for HEW. A survey by the Washington
Post
found that the federal civilian work force, alleged to be 2.9 million, is actually more than twice that when you include those supported by federal dollars. The Defense Department, as another example, has 1 million civilian employees—and another 2,050,000 “outside the walls” who receive their paychecks from Defense. Another 50 million Americans are supported by welfare, Social Security, pensions or public service job programs. Government pervades our lives. At some point, when costs are rising faster than tax receipts and productivity, the economy is retarded. Inflation runs out of control. And everyone pays.

Times have changed. During more perilous crises, the Depression and World War II, New York City policemen suffered fourteen years without a pay raise; city workers, led by fiery Fiorello LaGuardia, accepted an extension of the work week from forty to forty-eight hours. Labor Commissioner Anthony Russo well remembers the Depression. He began working for the city as a $840 a year clerk in 1935. In 1977, at the age of fifty-nine, he was eligible to retire on a pension exceeding his $47,093 salary. But this man who had risen to the top of the civil service to become the city’s chief labor negotiator, who lives in a nice house in Flushing,
Queens, who was honored as Vice President of the National Public Employee Labor Relations Association, was unhappy. Gazing out the dirty windows of a cluttered downtown office overlooking the Brooklyn Bridge, Russo recalled the old days: “Working for the city has totally deteriorated. When I came in, there was a great deal of respect for authority. There were no unions. People worked hard because they felt good. It was a steady job, an opportunity for advancement. There was respect for commissioners. Everyone worked as hard as they could. Everyone was afraid of getting fired. We were residents of the city. This was our town.… Today, to some degree, city employees are mercenaries. They work for a wage. They fear their surroundings, for their safety.… Today, workers want uniformed guards and petitions. They don’t want to go into the field. People spend the day here and go home to the suburbs. There’s no identification with the city, no sense of mission.”

This affliction, and others, are not unique to New York. But New York helps crystallize many of the questions confronting America. Can we inspire worker job satisfaction for routine jobs? How do we win consent for long-term decisions which violate the short-term interests of constituent groups? Do we know how to cope with economic decline? With resources that expand more slowly than our expectations? Will waste and inefficiency rob government of its public support? Do we know how to manage a sprawling government octopus? In this sense, the New York fiscal crisis places democracy on trial.

How do you satisfy constituent groups when there is no
more
to offer, when the money well is dry? Private industry covers higher costs by passing them on to consumers. New York, already the most heavily taxed city in the nation, cannot pass on taxes without losing more of its tax base. It cannot freely borrow. It can no longer offer
more
by hiding deficits. Like Israel, it can seek help from the U.S. government but, ultimately, it can only rely on itself. If there is an escape, it can only come from different and better management of scarce resources. To accomplish this task, four broad subjects require attention:
management, productivity, civil service, and collective bargaining.