new blog dead horse

I've found an interesting new political blog. It was actually recommended by my technologically-challenged auntie and mother, so I assume that most people already know about it. Nevertheless, Gayle Goh is a JC student with a sharp mind and strong opinions. She blogs at i-speak.

The first post brought to my attention was on ministerial salaries. A dead horse, perhaps, yet Gayle brought up an interesting rebuttal to one of the PAP's oft-quoted justifications for the high pay, namely the need to prevent corruption. She writes:

According to the aforementioned CPI, there are four countries in the world which are even less corrupt than ours. As Singaporean ministers are paid the highest in the world, it obviously goes to follow that all these countries' ministers are paid less than ours. I did a bit of research and found out, via this article, that New Zealand PM Helen Clark's salary is NZD 305 000 per annum, or USD 189 440 - less than George Bush, and six and a half times less than PM Lee... New Zealand is ranked 3 places above Singapore in the CPI, as the 2nd least corrupt government in the world. Why is it that New Zealand ministers can be even less corrupt than our ministers, and yet are paid so many times less?

It will be interesting to hear if there is an official reply to that. Nevertheless, there is still one other argument for high salaries that was not addressed as adequately. This is the justification that our civil servants, usually drawn from the cream of each academic cohort, need to be compensated for the opportunity cost of joing the civil service over the private sector. Gayle's stand on this can probably be inferred from this excerpt:

There is a basic principle to keeping ministerial salaries from skyrocketing, and it is one that is often overlooked in Singapore. Politicians in our government exist not to further their own interests, but to subordinate their personal advancement to the needs of the nation. They serve the nation, and not the other way round. As a child, I used to wonder why they were called civil servants - the word 'servant' always had insulting connotations of someone that's second-class, servile and unworthy of much note. But as I grew, I came to realise that there is great dignity, perhaps even the greatest dignity, in being a servant of others; in placing their needs above your own, and in committing yourself to serve and protect them. That is the sacred vow, the tacit contract that politicians undertake by entering this service. Lower salaries make it clear that they are fundamentally different from those in the private sector who seek to profit from their positions, making the frequent comparison between public workers and private ones like corporation directors or media stars totally redundant. The nature and purpose of their work are as different as night and day. Managing ministerial salaries ensures, too, that people do not enter politics simply to gain from the high pay and benefits, but that they do so because they genuinely want to put their talents to the good use of representing the country. Else, people would work towards entering the government simply because of the dangling carrot that is a fat pay cheque - which would clearly have disastrous consequences for us all.

It is refreshing to see such idealism in the youth. Yet this is a common view I often see expressed that I have been very wary of. From a political-economist standpoint, this does not gel with my view of basic human nature as rational, utility-maximising actors. I use the word utility-maximising rather than selfish because I do believe that people can derive real pleasure from helping others at the expense of self. This explains why people may leave high-flying corporate jobs to do volunteer work, or serve in government. The real question is how much utility can one derive from working in the Singapore government. This is impossible to quantify, so I will try to shed some light on it using anecdotal evidence, based on decisions made by people in these positions.

Siphoning The Cream
It is common knowledge that the government offers scholarships to the cream of the education system. (Whether this is a good thing is another debate.) After going to Ivy League or OxBridge universities, they come back to the civil service with a starting pay of $2000-3000 a year, with 1.5-2 months bonus. Meanwhile their counterparts in consulting or banking are earning $6000-10000 with obscene bonuses. And they work just as hard. It would be interesting to see how many of these people eventually leave the civil service or stat boards after their terms expire, or how many feel that service to the country is sufficiently fulfilling in itself.

Keeping The Cream (From Going Sour)
There is a lot of talk in the comments on Gayle's blog on how to make a meaningful salary comparison. Jame says:

I think comparing ministerial pay with what ministers could earn if they were in the private sector as, say top lawyers or doctors, is in principle wrong. If you are a top lawyer or top surgeon, you earn millions of dollars yearly, because the clients who engage you are invariably rich people or big corporations in the former case, and rich individuals in the latter case. Lawyers or doctors who serve the men in the street or small corporations are unlikely (in fact they dont) to earn millions or dollars a year. Ministers should be compared, if at all, to lawyers or doctors who serve the men in the street, because they make up the overwhelming majority of the population. Hence ministerial incomes should be pegged to the incomes of the average professional, rather than the TOP few professionals in every TOP profession.

I think this is a fallacy in interpreting the classical principle of supply and demand. Why do GPs earn less? Because they have a commodity skill; but also because they are subject to price controls to maintain the cost of medical care within an affordable range for the poor. Specialists like plastic surgeons face no such moral constraint to keep costs low. The top dog of Jurassic Park once said he could get his scientists to develop cures for diseases instead of resurrecting dinosaurs, but theme parks are much more profitable than pharmaceuticals. The question then is why a person would choose to be a GP. (Remember, they do have a choice in this.) The answer is probably A) he doesn't have the ability to be a specialist or B) he actually wants to help the general populace because it gives him pleasure to do so.

So in conclusion, I think the comparison should be made with other jobs the person could have held, top of private sector or otherwise. It is silly to compare it with the national average, or what other professionals serving the same constituents receive.

Pay Peanuts, Get Monkeys
I think the central argument so far is you get what you pay for. The monetary payout is somewhat offset by the patriotic satisfaction of serving country. But this value is not quantifiable, and seems to be dminishing over time. So we can approach the question from a different angle: do we need really good people in government? Let's also remember that the Singapore model is unique in that we have a very high proportion or our top brains starting out in the civil service and stat boards, driving the economy from without through economic policy, direct investment (GIC, Temasek, A*STAR, etc) and whatever perks EDB cooks up. In most other countries, these people would be making their waves in the private sector and driving the economy from the coporate side. The successful ones would be making big bucks. So if we feel that it is in the country's best interest to have the best people in government, shouldn't we be willing to pay them?

Money Isn't Everything
Draw on results from HBS survey and Hertzberg's theory of motivators and hygiene factors to illustrate that salary should not be everything. Maybe Gayle is right. Maybe there is a flaw in our government. Maybe there is a flaw with $ingaporeans.

Case Studies
All the speculating is great, but why not hear what the ministers have to say? And actions speak louder than words. It would be instructive to do a case study to see how long each minister stays in parliament, and their reasons, if stated. One case that comes to mind is Mr Tony Tan, who has finally retired after being recalled to parliament from OCBC in 1995 after he first quit in 1991. Clearly he felt a strong passion for country. But clearly it was also a great personal sacrifice.

Power Brings Wealth
In the U.S. (with whom most comparisons are drawn), power begets money. We all know Dick Cheney's ties with Halliburton. The company benefited much from U.S. oil exploitation and Cheney benefited much from the company. (Maybe they should have paid him more.) In his first year out of office, Clinton earned $25m in speaking fees and book deals. It would be interesting to know how much our ex-Ministers and Presidents make, but I think it likely pales in comparison. (See this article for more interesting insights.)

This entry is a work in progress. Given my notriously slow updates lately, it may take a while. Comments are still welcome in the meantime. The general points I hope to discuss are that 1) it is wrong to assume that people would happily forgo income for the joy of serving the country and 2) there are many dimensions to consider when comparing ministerial salaries and returns across countries and industries 3) if people do not derive sufficent utility from serving the country, as evidenced by high salaries required to keep them, then is there something wrong with the government or the people?