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Stephan Fantauzzo, head of Indiana's public-employee union, has seen a lot over the years, but nothing beats the day his auto mechanics came to him and said they didn't want their raises. Indianapolis had just put out to competitive bidding the business of repairing city vehicles, and that meant his workers had to bid against private companies to keep their jobs. Fantauzzo's workers were worried that they would be underbid. So they gave up their pay raises--and narrowly won the contract. The competition has brought a new efficiency to the operation: costs are down 29%, turn-around time on repairs has improved...

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