Building a Competitive Education Industry
A Weekly Column by Myron Lieberman

When we sell our services, we like to be monopolists; when we buy services, we want our vendors to compete to give us the best possible deal. It is, therefore, understandable why unions of school district employees, such as AFSCME, NEA and AFT, should do everything they can to prevent competition in education. Whether the issue is education vouchers or contracting out, the unions are adamantly opposed to competition from companies providing services that are currently provided by union members. Of course, the unions realize that union member self interest is not a persuasive reason for school boards to oppose competition; instead, the unions allege that competition and contracting out would be harmful to students and taxpayers. The reason really doesn't matter; when all else fails, the reason is that "we'll beat you in the next election if you end our monopoly."

In trying to protect their monopoly, unions of school district employees devote most of their resources to lobbying and collective bargaining (which is really a form of lobbying). At the same time, they devote practically none to providing better service at a lower cost. The parties to be criticized here are the state officials and local school boards who support the monopoly. When it comes to education, the states are dumb buyers; they buy educational services from a monopoly they have created. Unfortunately, government monopolies are just as harmful as private ones. Public school teachers who teach about the evils of monopoly conveniently ignore the fact that public education is perhaps the most dramatic example of these evils in our nation today.

Generally speaking, union effectiveness depends on union power to monopolize the labor markets for the services of union members. To tell it like it is, therefore, union effectiveness depends on union ability to establish an inherently inefficient system for delivering services. NEA/AFT opposition to contracting out also has its roots in the stagnant growth of teacher union membership.

Together, the NEA/AFT enroll about 2.5 million teachers. Roughly another million have remained nonmembers. Nevertheless, NEA/AFT have been unable to achieve a significant increase in teacher membership in recent years. NEA/AFT membership has increased, but the increases are mainly from the ranks of retired teachers, support personnel, and non-educational government employees. Because NEA/AFT found it increasingly difficult to organize the non-union teachers, they devoted more of their resources to organizing educational support personnel. The union pitch was - "Join us and we will make sure that your jobs are not contracted out."

Interestingly enough, the leading companies providing support services to school districts are ServiceMaster (custodial and maintenance), ARA (food services), and Laidlaw (transportation). These companies do not necessarily or even preferably replace incumbent employees; essentially, they are management companies. Needless to say, the unions conveniently ignore all such considerations; their strategy is to demonize privatization, regardless of its justification in specific situations.

Initially, the NEA and AFT were not concerned about the possibility that instruction would be contracted out. With the growing support for school choice however, the NEA/AFT try to convince teachers that their teaching jobs or pensions will be in jeopardy if school choice legislation is enacted. In reality, the only jobs that are threatened are the plush jobs of union representatives; normal attrition would usually absorb any decline in public school teaching positions.

From a public policy point of view, the union position is ludicrous. The "make or buy" decision is one that all of us make every day. When we eat in a restaurant or take our clothes to the cleaners, we are contracting out a service we could perform in-house, so to speak. Our economic system rests upon the advantages of conducting our affairs this way; individuals and companies focus on what they do most efficiently, thereby raising levels of productivity and real incomes for everyone. Significantly, the AFL-CIO itself supported "privatization" in the 1950s. At that time, the construction unions were afraid that the federal highway program would be built by government employees; consequently, the AFL-CIO supported privatization of highway construction. For that matter, the NEA/AFT themselves contract out services on a regular basis; for example, when I attended an NEA sponsored meeting in the NEA building, the food service was contracted out! And when the NEA/AFT initiate member benefit programs, they frequently disseminate a. request for proposals (REP) in order to have the potential vendors compete to submit the best bid from the union's point of view. One does not see the unions protesting when school boards request vendors to bid on school supplies or food for school cafeterias; their objections to competition emerge only when the services of actual or potential union members are involved.

If contracting out becomes an issue in your district, you can count on NEA/AFT/AFSCME to emphasize the alleged evil of putting "profits ahead of kids." This economic absurdity illustrates the abysmal intellectual level of union attacks on privatization; perhaps union leaders would prefer to live in countries like the former Soviet Union, which officially denigrated the profit motive and the economic system based upon it.

Notwithstanding the self serving nature of union objections to privatization, the point is not that privatization is always right or that the companies involved will always perform well. The unions will never agree that privatization is preferable to unionized public employees, but this does not mean that privatization is always the best solution, regardless of circumstances. However, let us not forget that at one time, there were more than a dozen companies in the carmaking business. Some were inefficient and deservedly fell by the wayside. Nobody in his or her right mind argues that these failures justified abandonment of market competition in the automobile industry. Likewise, the failure or alleged failure of any particular company providing services to school district do not justify the argument against contracting out services provided by union members.

Everyone who reads this, and every union member and every union official, has at one time or another contracted for a service which turned out to be unsatisfactory for one reason or another. This does not justify the conclusion that contracting for services is bad; on the contrary, we are thankful, as we should be, that our political and economic system allows us to hire other vendors whenever we wish to do so. School boards should enjoy the same right as unions to choose the most worthy suppliers of the services they need.