Easy Road for Government Misdeeds : Why Do We Do a Rotten Job of Policing the Public Sector?

It is too early to speculate whether “error in judgment” will prove too charitable a label to paste over the scandal now playing at Los Angeles’ City Hall. But while we are waiting for the verdict, let’s ask why, when it comes to enforcement of law, standards of decency and plain good sense, we do such a rotten job policing our public sector?

This may sound strange coming from someone who has long urged tightening up the laws we wield against business corporations. But in choosing a legal environment in which to play, the corporate polluter and the inside trader would pick the public bureaucrat’s ballpark any day. The bucks may be bigger in the private sector, but the law is cushier in the public.

The indications of this dual standard are pervasive. The management of any major business corporation has a team of independent accountants poking around under foot. We know that they can be fooled and even co-opted. But no private-sector auditor ever missed a mess of the magnitude unraveling at the Department of Housing and Urban Development. Could a business corporation get away with telling its shareholders their losses in the obscure dribs and drabs we taxpayers are getting about our expected liabilities from the savings-and-loans muddle?

When governments legislate worker safety and health rules, they commonly exempt themselves. Ditto with selected environmental, labor-relations and securities law provisions. Under the doctrine of sovereign immunity, municipalities and other units of government can be sued only with the government’s consent and subject to the limits that the government imposes. As individuals, government officials are barricaded behind a wall of legal doctrines that those in the board room can only envy.

When it is all put together, the public- sector employee or the tenant of a public- housing project has fewer legal protections than his neighbor whose employer or landlord is a private firm. The Environmental Protection Agency has had a far harder time bringing city governments to heel than it has business corporations. Politically and in the courts, it is easier to beat up on the firms.

There are several explanations why this imbalance persists. Many people assume both that the private sector overshadows the rest of the society, and that there is less to fear from the generally well-intentioned public sector than from their greedy corporate counterparts. Wrong on both counts. Statistically, governments (and nonprofit corporations) are growing faster than the for-profit corporations--as employers, consumers and wealth distributors. And government has done things in the name of science, national defense and the public interest that the greediest corporation would shrink from.

In the 1930s and ‘4Os, the U.S. Public Health Service studied the “natural” course of syphilis in 400 poor black males, even after penicillin had become available and might have cured them. But curing them would have ruined the study. And 107 of the “subjects” proceeded to die from the disease.

In the 1950s, the Army allegedly exposed soldiers to nuclear-weapons tests in order to determine how humans would function “in the shadow of a . . . nuclear cloud.” Veterans trying to prove that leukemia was the price they paid for the military’s curiosity have been barred a hearing on the charges: the federal Torts Claims Act does not permit veterans to bring suit for injuries suffered in uniform against the government they fought for.

More recently, it was disclosed that for decades our nuclear-weapons plants have been disposing of nuclear and chemical wastes with methods that the private sector was told were criminal. When asked why the dumpings were so long kept secret, the Department of Energy intoned “national security.”

The suggestion is that corporate executives, leery of their own motivations, may be more prudent with risks than their public-sector counterparts, who can quiet their consciences with glib rationalizations about “public necessity.”

There is something else to consider. The people who run major business corporations are not only under the gaze of myriad federal and state regulators, so that their financial dealings, for example, are subject to continuous disclosure. The whole system enjoys supplemental policing by shareholders and, more realistically, a bar of “shareholders’ attorneys” that earns its livelihood raking over the corporate filings and jumping into situations that look fishy.

When we turn to the public sector, what takes the place of the shareholders’ bar? The theoretical retort is that we don’t need extra legal accountability because we get our accountability at the ballot box. But that is just theory. By the time the HUD and S&L; fiascoes broke, our national CEO had served out his time in Washington and was back on the ranch.

There is no one cure for the many facets of public sector mischief. But there is a clear starting point. We have to reexamine the dual standard point by point. In what ways are the laws and procedures more permissive in the public sector, and with what justification?

Such a quest would turn up many control techniques commonly accepted in the private sector that merit copying and applying to governments. But without some pushing from the public, it is an idea that will move with all the vigor of a self-investigation at City Hall.