Thursday, December 22, 2005

Building Credibility Through Battling Public Sector Unions: The Case of NYC’s Mayor

It appears to me that the NYC public transit union has lost this strike. How does this outcome affect other NYC public sector unions such as teachers, cops, firemen, and sanitation? Has the Mayor of NYC gained a reputation for playing "hardball" and will this help lower New York City's taxes per dollar of public services?

There is an old Seinfeld episode where George loses the "Upper Hand" in a relationship with some girlfriend. In a similar spirit, the Mayor of NYC now has the "Upper Hand". How will he use this power? Earlier this year, the sanitation crews implemented new "productivity" tactics of reducing the number of guys who ride on the back of garbage trucks. This raised their average product of labor by reducing L in the fraction Y/L.

Clearly, there are other examples of public sector inefficiencies that lead to big city tax payers paying too much in taxes relative to the quality of services they receive. It will be interesting to see if this Mayor who made billions in the private sector is successful in "re-inventing" the public sector into being a lean mean fighting machine. I will also be interested to see if the elite newsmedia such as the New York Times supports such attempts.