Money and Politics - Getting the best for the job.

10:57 AM / Posted by David Hartery /

It probably isn’t too controversial to complain about politicians wages. In these times of economic uncertainty it probably isn’t controversial to say that they should definitely be reduced. I’m going to talk firstly about why we shouldn’t pay them expenses (or at least reform the system). Then to the controversial bit, I’m going to talk about why we should consider not paying them at all. I’m going to use mostly an examination of incentive structures to examine that thesis.

So firstly, to expenses. In no other job do you receive an allowance to go to work. Extraordinary expenses, yes. Mundane expenses are expected to be covered by your salary. That’s why you’re paid one. The furor about Ivor Callely is made all the more ridiculous when you think, why exactly was he allowed to claim these expenses at all? They receive a handsome salary in the first instance; do they really need to have this topped up further? Not going to put a lot of analysis into this, just thought that it needs to be said.

Secondly then, what is it we desire in politicians? Intelligence, charm, wit, local issues at heart, ideologue, polite and goes to lots of funerals? I’m going to qualify my examination of what kind of politician is good by stating that I am in favour of a strong local government and I believe that many of the current “parish pump politics” carried out could easily be transferred to a strengthened local government. My conception of what makes a good politician is someone with ideals, cares about their locality but has an understanding of national concerns, who is representative of their electorate and flexible enough to do what is best for them. I would submit that most of the politicians operating today do not fit this description. We have on one extreme, Jackie Healy Rae who displays a frightening ignorance of elocution and matters out of Kerry. Let’s take him as the paragon of the regionalist. On the other hand, we have many senators who are completely out of touch with everyone. The talking shop of failed politicians all drawing salary from the public purse. Both of these are problems are due in part to the fact that politics is seen as a career and not a vocation. This will be the main crux of my third point.

As anyone who has read Freakonomics will know, incentives are strange and wonderful things. With the correct incentive structure you persuade people to conform, to jump through hoops or to brave untold perils. The arguments for the current wages of politicians are – 1. High wages attract the best, we would lose the smartest people to the private sector without them. 2. High wages prevent against corruption by making sure they have a high enough salary that any bribes will be less attractive. 3. It acts as a balance to enable poor people to enter politics and not be bankrupt by it. I will deal with each of those in turn.

Firstly, this “brain drain to the private sector argument”. I’m going to argue that money is not the correct incentive to use to attract the smartest people. Lets look at exactly what a politician receives now – a salary, expenses but more importantly power and influence. A pre-school in Tel Aviv brought in a charge for parents who picked up their kids late. Instead of dissuading latecomers, it allowed parents to rationalize their lateness, leading to a worsening of the problem. Even when the charges were removed this shift in social mores lead to the problem persisting. What this shows is that the standard model of how humans respond to incentives is not immediately obvious. People think in interesting and devious ways. MP wages in the UK are low and yet they have a plethora of talent that Ireland could only dream of. Why is this? The problem with the current conception of politics over here is that it is an alternative career move in many areas of Ireland.

With TD wages starting at €130,000 it’s also a quite lucrative career choice. Just like the parents in Tel Aviv, this view of it as a job has enabled politicians to rationalize their existence as one that is fundamentally self-serving, forgetting their primary duty as an elected public representative. Just like the parents thought, “$5 for an extra 15 minutes childminding, great!”, Irish politicians have become consumed with getting more for themselves. If everyone is trying to get as much as possible for themselves, does that mindset then easily transfer to doing the best for everyone? So what would be the effect of removing TD wages, or at least sharply reducing them?

We might see a mass exodus of the current political cadre. (That’s not necessarily a bad thing.) But who would take their place? A group of malcontents, cranks and morons? I doubt it. They wouldn’t get elected. The disincentive of public embarrassment and the incentive for better candidates, which I will explain shortly, would remove their ability to get votes or even to run. More than likely it would be a mixture between highly paid people with free time (so non-executive directors, academics and trust fund kids) mixed with people from lower socio-economic backgrounds that are legitimate activists – trade unionists, civil rights activists and outspoken local people. So not a massive difference from today.

One of the reasons for this is one of the reasons why capitalism has been such a resounding success – the backward bending supply of labour. Despite the disagreement of Environmentalists, Socialists and Anarchists, capitalism has enabled unprecedented environmental protection, living standards and activism. This is due to the ability of people to devote their free time to things they love, as well as the generation of tax revenue that can be spent on them.

Why is this the case? Well at low incomes, work is the most pressing priority. Each marginal addition of labour earns a high proportion more living standards. However as income levels rise, the marginal addition of labour has an opportunity cost of fun, which at this point increases living standard more than earning money (you have to have some time to spend all the piles of cash you earn). So as people earn more, they start to take free time. And what do they spend their free time on? Things they are passionate about. This isn’t a new idea (read Maslow’s Hierarchy of Needs) but this is what has allowed capitalism to let people devote time and energy campaigning for causes like environmentalism; which lead to the establishment of the EPA and other watchdogs. This kind of action is politics at its most desirable and we need to gear the conception of politics as a public service once again. Because throwing money is an incentive at its most infantile; conceptions, duty and social conditioning create the best incentives.

Secondly, this idea of cognitive surplus. People in the Developed World have so much free time and communication ability that increasingly they are not just passive consumers of information, news and policy – they create it. It turns out that if you give someone a lot of free time and an ability to reach people they immediately start to churn out original matter. Whether it be a LOLcat, this blog or crowdsourcing information like Ushahidi – people like to help other people, they like to create and they like to do it for free when given the chance. The modern world is often bemoaned for its loss of the local. By making politics more like the internet, ironically, we can recapture the essence of what politics should be.

Ok so, quickly to round up the other two – Bribe and Poor people.

Bribes – no matter how much you pay someone there will always be someone with resources that will pay more. Politicians have something that people will always be willing to pay for – hands on the wheel of power. This isn’t an argument to pay them more, it is an argument for more checks and balances on them.

Poor people – politicians as we have them today are mostly lawyers, academics and teachers. Hardly the poorest of people. Those who aren’t predominantly come from political dynasties or the middle class anyway. There is an endemic problem in Irish politics as it stands regarding the involvement of people from lower socio-economic backgrounds. This doesn’t solve that, but since the status quo doesn’t solve it either, I’m ok with that. Perhaps a grant to politicians below a certain income threshold would help them. I might be ok with that.

One last thought – I may have dismissed the constituency clinic and local issues concern a little lightly earlier. I think that it is possible to do these well and yet not receive pay for them. But I honestly believe that a lot of the constituency work can and should be left to local politicians. A politician in the Dail should not be interfering to get a Council to fix a broken window in a council house.

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Jive on July 27, 2010 at 12:57 PM

I like it. However, I don't know if you are using the word dearth correctly... you mean to say that they have a plethora of political talent?

Comment by Andrew Linn on July 27, 2010 at 5:17 PM

Another reason we pay them a lot is because of the lack of job security; I can't think of many other jobs in which your position hangs in the balance every 5 years. People need extra income to cope with this uncertainty.

Comment by David Hartery on July 27, 2010 at 11:17 PM

@Jive - yes you are correct. Had originally phrased it in the negative, redrafted it and didnt pay enough attention obviously. I will fix that.

@Andrew - i suppose that is true. don't know how much that would influence what i was saying, but it is interesting. i'll think about it

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