The binding arbitration rules in, for example, Connecticut are quite clear about what are the proper reasons an arbitrator can use to rule one way or the other in a dispute. It's possible to draw those rules to favor unions, and it's possible to draw them to favor management. We should adopt binding arbitration, and then argue about what are the proper grounds for a ruling, but that's a far smarter course than just throwing the whole idea out the window.
So, right now we've got an overall impasse over teacher contracts in Rhode Island -- there is no process for resolving disputes (e.g., no strikes). The teachers' unions have finally started pushing for binding arbitration. Municipalities and the state are trying out unilaterally imposing new terms after contracts expire, or simply asserting that the state can order contractual changes based on NCLB and their interpretation of the new Basic Education Program. Burning contract law is a one-way trip though, which leaves no basis for compromise over mutual agreement going forward. The long-term implications may be grave.
Also, all of the above is currently in the courts, so who knows who will win.
But as Tom says, there is no reason the terms of arbitration can't be written out however we want. There is, in particular, no reason to think that compliance with the Basic Education Program would not and should not be considered as a basic principle of arbitration. There is no reason, thus, that binding arbitration cannot serve both consistent, steady school reform and preserve contract law as its basis going forward.
By the way, Tom Geoghegan's See You in Court: How the Right Made America a Lawsuit Nation does a good job of explaining business's assault on not just unions and collective bargaining, but contract law in any form.
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