Bureaucratic Reform

Bureaucratic Reform

Bureaucratic reform in the U.S. was a major issue in the late 19th century and the early 20th century.

Learning Objectives

Describe the key moments in the history of bureaucratic reform, including the Tenure of Office Acts, the Pendleton Act, the Hatch Acts, and the Civil Service Reform Acts.

Key Takeaways

Key Points

  • The five important civil service reforms were the two Tenure of Office Acts of 1820 and 1867, the Pendleton Act of 1883, the Hatch Acts (1939 and 1940) and the CSRA of 1978.
  • The Civil Service Reform Act (the Pendleton Act) is an 1883 federal law that established the United States Civil Service Commission, placing most federal employees on the merit system and marking the end of the so-called “spoils system”.
  • The CSRA was an attempt to reconcile the need for improved performance within bureaucratic organizations with the need for protection of employees.

Key Terms

  • merit: Something deserving good recognition.
  • merit system: the process of promoting and hiring government employees based on their ability to perform a job, rather than on their political connections
  • spoils system: The systematic replacement of office holders every time the government changed party hands.
  • patronage: granting favours, giving contracts or making appointments to office in return for political support

Bureaucratic reform in the United States was a major issue in the late nineteenth century at the national level and in the early twentieth century at the state level. Proponents denounced the distribution of office by the winners of elections to their supporters as corrupt and inefficient. They demanded nonpartisan scientific methods and credentials be used to select civil servants. The five important civil service reforms were the two Tenure of Office Acts of 1820 and 1867, the Pendleton Act of 1883, the Hatch Acts (1939 and 1940), and the Civil Service Reform Act (CSRA) of 1978.

In 1801, President Thomas Jefferson, alarmed that Federalists dominated the civil service and the army, identified the party affiliation of office holders, and systematically appointed Republicans. President Andrew Jackson in 1829 began the systematic rotation of office holders after four years, replacing them with his own partisans. By the 1830s, the “spoils system” referred to the systematic replacement of office holders every time the government changed party hands.

The Civil Service Reform Act (the Pendleton Act) is an 1883 federal law that established the United States Civil Service Commission. It eventually placed most federal employees on the merit system and marked the end of the so-called “spoils system. ” Drafted during the Chester A. Arthur administration, the Pendleton Act served as a response to President James Garfield’s assassination by a disappointed office seeker.

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Chester A. Arthur: The Pendleton Act was passed under Chester A. Arthur’s administration.

The new law prohibited mandatory campaign contributions, or “assessments,” which amounted to 50-75% of party financing during the Gilded Age. Second, the Pendleton Act required entrance exams for aspiring bureaucrats. One result of this reform was more expertise and less politics among members of the civil service. An unintended result was political parties ‘ increasing reliance on funding from business, since they could no longer depend on patronage hopefuls.

The CSRA became law in 1978. Civil service laws have consistently protected federal employees from political influence, and critics of the system complained that it was impossible for managers to improve performance and implement changes recommended by political leaders. The CSRA was an attempt to reconcile the need for improved performance with the need for protection of employees.

Termination

Bureaucratic reform includes the history of civil service reform and efforts to curb or eliminate excessive bureaucratic red tape.

Learning Objectives

Describe the efforts undertaken to reform the civil service

Key Takeaways

Key Points

  • A bureaucracy is a group of specifically non-elected officials within a government or other institution that implements the rules, laws, ideas, and functions of their institution. A bureaucrat is a member of a bureaucracy and can comprise the administration of any organization of any size.
  • Civil service reform is a deliberate action to improve the efficiency, effectiveness, professionalism, representation and democratic character of a bureaucracy, with a view to promoting better delivery of public goods and services, with increased accountability.
  • Red tape is excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents action or decision-making.
  • The “cutting of red tape” is a popular electoral and policy promise. In the United States, a number of committees have discussed and debated Red Tape Reduction Acts.

Key Terms

  • civil service reform: Civil service reform is a deliberate action to improve the efficiency, effectiveness, professionalism, representation and democratic character of a bureaucracy, with a view to promoting better delivery of public goods and services, with increased accountability.
  • bureaucracy: Structure and regulations in place to control activity. Usually in large organizations and government operations.
  • red tape: A derisive term for regulations or bureaucratic procedures that are considered excessive or excessively time- and effort-consuming.

Introduction

A bureaucracy is a group of specifically non-elected officials within a government or other institution that implements the rules, laws, ideas, and functions of their institution. In other words, a government administrative unit that carries out the decisions of the legislature or democratically-elected representation of a state. Bureaucracy may also be defined as a form of government: “government by many bureaus, administrators, and petty officials. A government is defined as: “the political direction and control exercised over the actions of the members, citizens, or inhabitants of communities, societies, and states; direction of the affairs of a state, community, etc.” On the other hand democracy is defined as: “government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system”, thus not by non-elected bureaucrats.

A bureaucrat is a member of a bureaucracy and can comprise the administration of any organization of any size, though the term usually connotes someone within an institution of government. Bureaucrat jobs were often “desk jobs” (the French for “desk” being bureau, though bureau can also be translated as “office”), though the modern bureaucrat may be found “in the field” as well as in an office.

Civil Service Reform

A civil servant is a person in the public sector employed for a government department or agency. The term explicitly excludes the armed services, although civilian officials can work at “Defence Ministry” headquarters. Civil service reform is a deliberate action to improve the efficiency, effectiveness, professionalism, representation and democratic character of a bureaucracy, with a view to promoting better delivery of public goods and services, with increased accountability. Such actions can include data gathering and analysis, organizational restructuring, improving human resource management and training, enhancing pay and benefits while assuring sustainability under overall fiscal constraints, and strengthening measures for public participation, transparency, and combating corruption. Important differences between developing countries and developed countries require that civil service and other reforms first rolled out in developed countries be carefully adapted to local conditions in developing countries.

The Problem of Bureaucratic Red Tape

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Bureaucratic Red Tape: Bundle of U.S. pension documents from 1906 bound in red tape.

Red tape is excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents action or decision-making. It is usually applied to governments, corporations and other large organizations.Red tape generally includes filling out paperwork, obtaining licenses, having multiple people or committees approve a decision and various low-level rules that make conducting one’s affairs slower, more difficult, or both. Red tape can also include “filing and certification requirements, reporting, investigation, inspection and enforcement practices, and procedures. ” The “cutting of red tape” is a popular electoral and policy promise. In the United States, a number of committees have discussed and debated Red Tape Reduction Acts.

The Pendleton Civil Service Reform of United States is a federal law established in 1883 that stipulated that government jobs should be awarded on the basis of merit. The act provided selection of government employees competitive exams, rather than ties to politicians or political affiliation. It also made it illegal to fire or demote government employees for political reasons and prohibits soliciting campaign donations on Federal government property. To enforce the merit system and the judicial system, the law also created the United States Civil Service Commission. A crucial result was the shift of the parties to reliance on funding from business, since they could no longer depend on patronage hopefuls.Examples of Bureaucratic Reform in the United States

The Paperwork Reduction Act of 1980 is a United States federal law enacted in 1980 that gave authority over the collection of certain information to the Office of Management and Budget (OMB). Within the OMB, the Office of Information and Regulatory Affairs (OIRA) was established with specific authority to regulate matters regarding federal information and to establish information policies. These information policies were intended to reduce the total amount of paperwork handled by the United States government and the general public. A byproduct is that it has become harder to track internal transfers to tax havens in Consolidated Corporate Income Tax returns.

Devolution

Devolution is the statutory granting of powers from central government to government at a regional, local, or state level.

Learning Objectives

Describe the relationship between a central government and a subordinate entity in possession of certain “devolved” powers

Key Takeaways

Key Points

  • Devolution differs from federalism in that the devolved powers of the subnational authority may be temporary and ultimately reside in central government.
  • In the United States, the District of Columbia is a devolved government. The District is separate from any state and has its own elected government.
  • Local governments like municipalities, counties, parishes, boroughs and school districts are devolved. They are established and regulated by the constitutions or laws of the state in which they reside.

Key Terms

  • statutory: Of, relating to, enacted or regulated by a statute.

Devolution is the statutory granting of powers from central government to government at a regional, local, or state level. The power to make legislation relevant to the area may also be granted. Devolution differs from federalism in that the devolved powers of the subnational authority may be temporary and ultimately reside in central government. Legislation creating devolved parliaments or assemblies can be repealed or amended by central government in the same way as any statute. Federal systems differ in that state or provincial government is guaranteed in the constitution.

The District of Columbia in the Unites States offers an illustration of devolved government. The District is separate from any state and has its own elected government, which operates much like other state with its own laws and court system. However, the broad range of powers reserved for the 50 states cannot be voided by any act of U.S. federal government. The District of Columbia is constitutionally under the control of the United States Congress, which created the current District government. Any law passed by District legislature can be nullified by Congressional action. Indeed, the District government itself could be significantly altered by a simple majority vote in Congress.

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District of Colmbia: The District of Columbia is an example of devolved government.

In the United States, local governments are subdivisions of states, while the federal government, state governments and federally recognized American Indian tribal nations are recognized by the United States Constitution. Theoretically, a state could abolish all local governments within its borders.

Local governmental entities like municipalities, counties, parishes, boroughs and school districts are devolved. This is because they are established and regulated by the constitutions or laws of the state in which they reside. In most cases, U.S. state legislatures have the power to change laws that affect local government. The governor of some states may also have power over local government affairs.

Privatization

Privatization is the process of transferring ownership of a business from the public sector to the private sector.

Learning Objectives

Differentiate between two different senses of privatization

Key Takeaways

Key Points

  • Privatization can also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management.
  • Privatization has also been used to describe two unrelated transactions: the buying of all outstanding shares of a publicly traded company by a single entity, making the company private, or the demutualization of a mutual organization or cooperative to form a joint stock company.
  • Outsourcing is the contracting out of a business process, which an organization may have previously performed internally or has a new need for, to an independent organization from which the process is purchased back as a service.
  • Though the practice of purchasing a business function—instead of providing it internally—is a common feature of any modern economy, the term outsourcing became popular in America near the turn of the 21st century.

Key Terms

  • outsourcing: The transfer of a business function to an external service provider
  • privatization: The transfer of a company or organization from government to private ownership and control.

Introduction

Privatization can have several meanings. Primarily, it is the process of transferring ownership of a business, enterprise, agency, public service, or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization. The term can also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management. Privatization has also been used to describe two unrelated transactions. The first is the buying of all outstanding shares of a publicly traded company by a single entity, making the company private. This is often described as private equity. The second is a demutualization of a mutual organization or cooperative to form a joint stock company.

Outsourcing is the contracting out of a business process, which an organization may have previously performed internally or has a new need for, to an independent organization from which the process is purchased back as a service. Though the practice of purchasing a business function—instead of providing it internally—is a common feature of any modern economy, the term outsourcing became popular in America near the turn of the 21st century. An outsourcing deal may also involve transfer of the employees and assets involved to the outsourcing business partner. The definition of outsourcing includes both foreign or domestic contracting, which may include offshoring, described as “a company taking a function out of their business and relocating it to another country.”

Some privatization transactions can be interpreted as a form of a secured loan and are criticized as a “particularly noxious form of governmental debt. ” In this interpretation, the upfront payment from the privatization sale corresponds to the principal amount of the loan, while the proceeds from the underlying asset correspond to secured interest payments – the transaction can be considered substantively the same as a secured loan, though it is structured as a sale. This interpretation is particularly argued to apply to recent municipal transactions in the United States, particularly for fixed term, such as the 2008 sale of the proceeds from Chicago parking meters for 75 years. It is argued that this is motivated by “politicians’ desires to borrow money surreptitiously,” due to legal restrictions on and political resistance to alternative sources of revenue, namely raising taxes or issuing debt.

Outsourcing in the United States

“Outsourcing” became a popular political issue in the United States, having been confounded with offshoring, during the 2004 U.S. presidential election. The political debate centered on outsourcing’s consequences for the domestic U.S. workforce. Democratic U.S. presidential candidate John Kerry criticized U.S. firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their “fair share” of U.S. taxes during his 2004 campaign, calling such firms “Benedict Arnold corporations. ”

Criticism of outsourcing, from the perspective of U.S. citizens, generally revolves around the costs associated with transferring control of the labor process to an external entity in another country. A Zogby International poll conducted in August 2004 found that 71% of American voters believed that “outsourcing jobs overseas” hurt the economy while another 62% believed that the U.S. government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource.

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Union Busting: Pinkerton guards escort strikebreakers in Buchtel, Ohio, 1884

Union busting is one possible cause of outsourcing. As unions are disadvantaged by union busting legislation, workers lose bargaining power and it becomes easier for corporations to fire them and ship their job overseas. Another given rationale is the high corporate income tax rate in the U.S. relative to other OECD nations, and the uncommonness of taxing revenues earned outside of U.S. jurisdiction. However, outsourcing is not solely a U.S. phenomenon as corporations in various nations with low tax rates outsource as well, which means that high taxation can only partially, if at all, explain US outsourcing. For example, the amount of corporate outsourcing in 1950 would be considerably lower than today, yet the tax rate was actually higher in 1950.

It is argued that lowering the corporate income tax and ending the double-taxation of foreign-derived revenue (taxed once in the nation where the revenue was raised, and once from the U.S.) will alleviate corporate outsourcing and make the U.S. more attractive to foreign companies. However, while the US has a high official tax rate, the actual taxes paid by US corporations may be considerably lower due to the use of tax loopholes, tax havens, and “gaming the system. ” Rather than avoiding taxes, outsourcing may be mostly driven by the desire to lower labor costs (see standpoint of labor above). Sarbanes-Oxley has also been cited as a factor for corporate flight from U.S. jurisdiction.

Sunshine Laws

The Sunshine Laws enforce the principle of liberal democracy that governments are typically bound by a duty to publish and promote openness.

Learning Objectives

Summarize the obligations that the Freedom of Information Act places on executive branch government agencies

Key Takeaways

Key Points

  • They establish a right-to-know legal process by which requests may be made for government -held information to be received freely or at minimal cost, barring standard exceptions.
  • In the United States the Freedom of Information Act was signed into law by President Lyndon B. Johnson on July 4, 1966. It went into effect the following year.
  • The Freedom of Information Act (FOIA) is a federal freedom of information law that allows for the full or partial disclosure of previously unreleased information and documents controlled by the United States government.
  • The Act applies only to federal agencies. However, all of the states, as well as the District of Columbia and some territories, have enacted similar statutes to require disclosures by agencies of the state and of local governments, although some are significantly broader than others.
  • The Electronic Freedom of Information Act Amendments of 1996 (E-FOIA) stated that all agencies are required by statute to make certain types of records, created by the agency on or after November 1, 1996, available electronically.
  • A major issue in released documentation is government ” redaction ” of certain passages deemed applicable to the Exemption section of the FOIA. The extensive practice by the FBI has been considered highly controversial, given that it prevents further research and inquiry.

Key Terms

  • redaction: The process of editing or censoring.

Introduction

Freedom of information laws by country detail legislation that gives access by the general public to data held by national governments. They establish a “right-to-know” legal process by which requests may be made for government-held information, to be received freely or at minimal cost, barring standard exceptions. Also variously referred to as open records, or sunshine laws in the United States, governments are also typically bound by a duty to publish and promote openness. In many countries there are constitutional guarantees for the right of access to information, but usually these are unused if specific support legislation does not exist.

Freedom of Information Act

In the United States the Freedom of Information Act was signed into law by President Lyndon B. Johnson on July 4, 1966 and went into effect the following year. In essence, The Freedom of Information Act (FOIA) is a federal freedom of information law that allows for the full or partial disclosure of previously unreleased information and documents controlled by the United States government. The Act defines agency records subject to disclosure, outlines mandatory disclosure procedures and grants nine exemptions to the statute.

The act explicitly applies only to executive branch government agencies. These agencies are under several mandates to comply with public solicitation of information. Along with making public and accessible all bureaucratic and technical procedures for applying for documents from that agency, agencies are also subject to penalties for hindering the process of a petition for information. If “agency personnel acted arbitrarily or capriciously with respect to the withholding, [a] Special Counsel shall promptly initiate a proceeding to determine whether disciplinary action is warranted against the officer or employee who was primarily responsible for the withholding.” In this way, there is recourse for one seeking information to go to a federal court if suspicion of illegal tampering or delayed sending of records exists. However, there are nine exemptions, ranging from a withholding “specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy” and “trade secrets” to “clearly unwarranted invasion of personal privacy.”

The Electronic Freedom of Information Act Amendments were signed by President Bill Clinton on October 2, 1996. The Electronic Freedom of Information Act Amendments of 1996 (E-FOIA) stated that all agencies are required by statute to make certain types of records, created by the agency on or after November 1, 1996, available electronically. Agencies must also provide electronic reading rooms for citizens to use to have access to records. Given the large volume of records and limited resources, the amendment also extended the agencies’ required response time to FOIA requests. Formerly, the response time was ten days and the amendment extended it to twenty days.

Notable Cases

A major issue in released documentation is government “redaction” of certain passages deemed applicable to the Exemption section of the FOIA. Federal Bureau of Investigation (FBI) officers in charge of responding to FOIA requests have prevented further research by using extensive use of redaction of documents in print or electronic form. This has also brought into question just how one can verify that they have been given complete records in response to a request.

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FBI Redaction: In the early 1970s, the US government conducted surveillance on ex-Beatle John Lennon. This is a letter from FBI director J. Edgar Hoover to the Attorney General. After a 25-year Freedom of Information Act Request battle initiated by historian Jon Wiener, the files were released. Here is one page from the file. This first release received by Wiener had some information missing — it had been blacked out presumably with magic marker — or what is termed “redacted”. A subsequent version was released which showed almost all of the previously blacked-out text.

This trend of unwillingness to release records was especially evident in the process of making public the FBI files on J. Edgar Hoover. Of the 164 files and about eighteen thousand pages collected by the FBI, two-thirds were withheld from Athan G. Theoharis and plaintiff, most notably one entire folder entitled the “White House Security Survey. ”

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J. Edgar Hoover: John Edgar Hoover (January 1, 1895 – May 2, 1972) was the first Director of the Federal Bureau of Investigation (FBI) of the United States. Appointed director of the Bureau of Investigation—predecessor to the FBI—in 1924, he was instrumental in founding the FBI in 1935, where he remained director until his death in 1972 at age 77. Hoover is credited with building the FBI into a large and efficient crime-fighting agency, and with instituting a number of modernizations to police technology, such as a centralized fingerprint file and forensic laboratories.

In the case of Scott Armstrong, v. Executive Office of the President, et al., the White House used the PROFS computer communications software. With encryption designed for secure messaging, PROFS notes concerning the Iran-Contra affair (arms-for-hostages) under the Reagan Administration were insulated. However, they were also backed up and transferred to paper memos. The National Security Council, on the eve of President George H.W. Bush’s inauguration, planned to destroy these records.

Sunset Laws

A sunset provision is a measure within a statute that provides that a law shall cease to be in effect after a specific date.

Learning Objectives

Describe sunset clauses and several prominent examples of their use

Key Takeaways

Key Points

  • In American federal law parlance, legislation that is meant to renew an expired mandate is known as a reauthorization act or extension act. Reauthorizations of controversial laws or agencies may be preceded by extensive political wrangling before final votes.
  • The Sedition Act of 1798 was a political tool used by John Adams and the Federalist Party to suppress opposition. It contained a sunset provision ensuring that the law would cease at the end of Adams’ term so it could not be used against the Federalists.
  • Several surveillance portions of the USA Patriot Act were set to originally expire on December 31, 2005. These were later renewed but expired again on March 10, 2006, and was renewed once more in 2010.
  • The Congressional Budget Act governs the role of Congress in the budget process. Among other provisions, it affects Senate rules of debate during the budget reconciliation, not least by preventing the use of the filibuster against the budget resolutions.
  • In the Economic Growth and Tax Relief Reconciliation Act of 2001 the US Congress enacted a phase-out of the federal estate tax over the following 10 years, so that the tax would be completely repealed in 2010.

Key Terms

  • warrant: Authorization or certification; sanction, as given by a superior.
  • mandate: An official or authoritative command; a judicial precept.
  • sedition: the organized incitement of rebellion or civil disorder against authority or the state

Sunset Laws

A sunset provision or clause in public policy is a measure within a statute, regulation, or other law that provides for the law to cease to have effect after a specific date, unless further legislative action is taken to extend the law. Most laws do not have sunset clauses and therefore remain in force indefinitely.

In American federal law parlance, legislation that is meant to renew an expired mandate is known as a reauthorization act or extension act. Extensive political wrangling before final votes may precede reauthorizations of controversial laws or agencies.

The Sedition Act of 1798 was a political tool used by John Adams and the Federalist Party to suppress opposition that contained a sunset provision. The authors ensured the act would terminate at the end of Adams’s term (the date the law would cease) so that Democratic Republicans against the Federalist Party could not use it.

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John Adams: John Adams and his Federalist Party used a sunset provision in the Sedition Act of 1798 to ensure that the Sedition Act would cease once Adams was out of office.

Several surveillance portions of the USA Patriot Act were originally set to expire on December 31, 2005. These were later renewed, but expired again on March 10, 2006, and was renewed once more in 2010. The Patriot Act is a sunset law on wiretapping for terrorism cases, wiretapping for computer fraud and abuse, sharing of wiretap and foreign intelligence information, warranted seizure of voicemail messages, computer trespasser communications, nationwide service or warrants for electronic evidence, and privacy violation of civil liability.

The Congressional Budget Act governs the role of Congress in the budget process. Among other provisions, it affects Senate rules of debate during the budget reconciliation, not least by preventing the use of the filibuster against the budget resolutions. The Byrd rule was adopted in 1985 and amended in 1990 to modify the Budget Act and is contained in section 313. The rule allows Senators to raise a point of order against any provision held to be extraneous, where extraneous is defined according to one of several criteria. The definition of extraneous includes provisions that are outside the jurisdiction of the committee or that do not affect revenues or outlays.

In the Economic Growth and Tax Relief Reconciliation Act of 2001, the US Congress enacted a phase-out of the federal estate tax over the following 10 years, so that the tax would be completely repealed in 2010. However, while a majority of the Senate favored the repeal, there was not a three-fifths supermajority in favor. Therefore, a sunset provision in the Act reinstated the tax to its original levels on January 1, 2011 in order to comply with the Byrd Rule. As of April 2011, Republicans in Congress have tried to repeal the sunset provision, but their efforts have been unsuccessful. Uncertainty over the prolonged existence of the sunset provision has made estate planning more complicated.

Incentives for Efficiency and Productivity

Efficiency is the extent to which effort is used for a task and productivity is the measure of the efficiency of production.

Learning Objectives

Summarize the Efficiency Movement and the institutions it, in part, bequeathed

Key Takeaways

Key Points

  • The Efficiency Movement played a central role in the Progressive Era (1890-1932) in the United States.
  • The result was strong support for building research universities and schools of business and engineering, municipal research agencies, as well as reform of hospitals and medical schools and the practice of farming.
  • At the national level, productivity growth raises living standards because more real income improves people’s ability to purchase goods and services, enjoy leisure, improve housing and education and contribute to social environment programs.

Key Terms

  • operationalization: The act or process of operationalizing.
  • manifold: Exhibited at diverse times or in various ways.

Efficiency describes the extent to which time or effort is well used for the intended task or purpose for relaying the capability of a specific application of effort to produce a specific outcome effectively with a minimum amount or quantity of waste, expense or unnecessary effort.

The Efficiency Movement was a major movement in the United States, Britain and other industrial nations in the early 20th century that sought to identify and eliminate waste in all areas of the economy and society and to develop and implement best practices. The concept covered mechanical, economic, social and personal improvement. The quest for efficiency promised effective, dynamic management rewarded by growth.

The movement played a central role in the Progressive Era in the US, where it flourished 1890-1932. Adherents argued that all aspects of the economy, society and government were riddled with waste and inefficiency. Everything would be better if experts identified the problems and fixed them. The result was strong support for building research universities and schools of business and engineering, municipal research agencies, as well as reform of hospitals and medical schools and the practice of farming. Perhaps the best known leaders were engineers Frederick Taylor (1856–1915, ), who used a stopwatch to identify the smallest inefficiencies, and Frank Gilbreth (1868–1924) who proclaimed there was always one best way to fix a problem.

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Frederick Winslow Taylor: Frederick Winslow Taylor, a mechanical engineer by training, is often credited with inventing scientific management and improving industrial efficiency.

Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it. The measure of productivity is defined as a total output per one unit of a total input. In order to obtain a measurable form of productivity, operationalization of the concept is necessary. A production model is a numerical expression of the production process that is based on production data.

The benefits of high productivity are manifold. At the national level, productivity growth raises living standards because more real income improves people’s ability to purchase goods and services, enjoy leisure, improve housing and education and contribute to social and environmental programs. Productivity growth is important to the firm because more real income means that the firm can meet its obligations to customers, suppliers, workers, shareholders and governments and still remain competitive or even improve its competitiveness in the market place.

Protecting Whistleblowers

There exist several U.S. laws protecting whistleblowers, people who inform authorities of alleged dishonest or illegal activities.

Learning Objectives

Describe whistleblowers and the protections afforded them under various laws

Key Takeaways

Key Points

  • Alleged misconduct may be classified as a violation of a law, rule, regulation or a direct threat to public interest in the realms of fraud, health/safety violations and corruption.
  • The 1863 United States False Claim Act encourages whistleblowers by promising them a percentage of damages won by the government. It also protects them from wrongful dismissal.
  • Investigation of retaliation against whistleblowers falls under the jurisdiction of the Office of the Whistleblower Protection Program (OWPP) of the Department of Labor’s Occupational Safety and Health Administration (OSHA).
  • Whistleblowers frequently face reprisal at the hands of the accused organization, related organizations, or under law.

Key Terms

  • qui tam: A writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed.

A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, private company or organization. The misconduct may be classified as a violation of a law, rule, regulation or a direct threat to public interest in the realms of fraud, health/safety violations and corruption. Whistleblowers may make their allegations internally or externally to regulators, law enforcement agencies or the media.

One of the first laws that protected whistleblowers was the 1863 United States False Claim Act, which tried to combat fraud by suppliers of the United States government during the Civil War. The act promises whistleblowers a percentage of damages won by the government and protects them from wrongful dismissal.

The Lloyd-La Follette Act of 1912 guaranteed the right of federal employees to furnish information to Congress. The first US environmental law to include employee protection was the Clean Water Act of 1972. Similar protections were included in subsequent federal environmental laws including the Safe Drinking water Act (1974), Energy Reorganization Act of 1974, and the Clean Air Act (1990). In passing the 2002 Sarbanes-Oxley Act, the Senate Judiciary Committee found that whistleblower protections were dependent on the vagaries of varying state statutes.

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Clean Air Act: The signing of the Clean Air Act, the first U.S. environmental law offering employee protection as a result of whistleblower action.

Whistleblowers frequently face reprisal at the hands of the accused organization, related organizations, or under law. Investigation of retaliation against whistleblowers falls under jurisdiction of the Office of the Whistleblower Protection Program (OWPP) of the Department of Labor’s Occupational Safety and Health Administration (OSHA). The patchwork of laws means that victims of retaliation must determine the deadlines and means for making proper complaints.

Those who report a false claim against the federal government and as a result suffer adverse employment actions may have up to six years to file a civil suit for remedies under the US False Claims Act. Under a qui tam provision, the original source for the report may be entitled to a percentage of what the government recovers from the offenders. The original source must be the first to file a federal civil complaint for recovery of the funds fraudulently obtained, while also avoiding publicizing the fraud claim until the Justice Department decides whether to prosecute the claim.

Federal employees could benefit from the Whistleblower Protection Act as well as the No-Fear Act, which made individual agencies directly responsible for the economic sanctions of unlawful retaliation.