Garett Jones  

Fictional Hillary Clinton and the Real Cost of Political Egalitarianism

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Can Expectations Save Communis... James Buchanan on Writing...

In fiction politicians can say what they really think of voters. Two examples:

1. The Onion reports Hillary Clinton's thoughts on whether she should run for President (questionable language):

...while I can't definitively say what my plans are one way or another, I can say that, at this point in my life, I'm strongly weighing whether or not I want to endure the absolute hell of appealing to you mindless, dumb-as-dirt simpletons again.

2. In Shakespeare's Coriolanus, a military hero pushed into running for office can't bring himself to pretend to be one of the people--his well-deserved pride gets in the way. He launches into a tirade in front of the voters; his words are more eloquent that that of the typical U.S. senator, but I imagine more than one senator has felt the same way:

You common cry of curs! whose breath I hate/As reek o' the rotten fens, whose loves I prize/As the dead carcasses of unburied men....

Then he complains to the voters, criticizing

Your ignorance, which finds not till it feels...

Coriolanus apparently thought there were lots of intuitionists out there among the voters.

The fictionalized HRC and Coriolanus both think that voters aren't all that rational, all that informed. And both think that it is beneath their dignity to act like commoners just to get elected. HRC doesn't want to drink beer with the guys; Coriolanus didn't want to (as another Shakespeare character put it)...

strip his sleeves and show his scars. And say 'these wounds I had'

...defending Rome's freedom. The candidate's quest for dignity, the candidate's rejection of egalitarianism, raises the cost of running for office.

And in modern politics, the demands for public egalitarianism are incessant. France's gauche caviar scandal is the latest: Hollande's former budget minister turned out to have a hidden Swiss bank account. Part of the scandal is the tax avoidance, part of it is that it shows he's not one of us, he's a rich guy.

All of these demands for equality get in the way of good government. That's a theme in Coriolanus, and it's a theme in economic theory. Economists usually think people should be paid in some kind of proportion to the value they create. But how much extra value does a great finance minister create compared to a mediocre alternative? France is a two trillion dollar economy, so if she raises economic growth per year by a mere one thousandth of one percent (0.001%), she would create $20 million in value each year she stays in office. And I don't think it's outlandish to believe that the best possible finance minister could raise France's GDP by two or three times that amount.

While you and I might disagree on who's a good choice for finance minister and who isn't, we can all agree that it would be easier to get a better shortlist for the job of finance minister if the job paid $20 million a year and it didn't require you to drive a Citroen while you were in office.

Crazy, you might say, no nation with a modicum of democracy could pay top officials like that, you might say, and if they did it would lead to corruption, you might say. In some cases you'd be right, but one nation with a modicum of democracy (I make no claims beyond the modicum) pays its top officials just under a million dollars a year and seems to get good results with relatively low corruption: Singapore. Quoting Bloomberg, though Wikipedia has more:

New ministers will make about S$1.1 million [$0.9 million US], down from S$1.58 million...

And note this embrace of elitism with just a dash of egalitarianism:

The salary of a new minister will now be benchmarked to the median income of the top 1,000 earners who are Singapore citizens and with a 40 percent discount "to signify the ethos and sacrifice that comes with political service..."

There's some evidence that when it comes to politician quality, you get what you pay for; Besley finds that higher pay for U.S. governors predicts governors with more experience in politics, and Ferraz and Finan look at Brazilian data and find a slower revolving door and better educated politicians in regions where politicians get better pay. But alas the egalitarian ethos in democracies makes it difficult to raise the pay of politicians.

The voters' love of egalitarianism is expensive.

Coda: This is my last full week guest blogging here at EconLog; I'm here through the end of April. It's been a wonderful experience, and I want to thank my readers and my co-bloggers for making it so rewarding, and to thank the excellent Arnold Kling and the good people of Liberty Fund for creating EconLog and making it such a vibrant place for candidly discussing free market economics.

My big project over the next year is finishing my book Hive Mind: How Your Nation's IQ Matters So Much More Than Your Own. It's under contract with Stanford University Press with tentative plans for release in Fall 2014; I discuss some of the big ideas behind the book in this article (PDF). Stanford has published two other books by my GMU colleague Chris Coyne, do take a look.


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COMMENTS (12 to date)
hutch writes:

i've always thought of the book deals and public speaking engagements after someone leaves office as the compensation for "public service". taxpayers aren't paying for that (so they feel better), but politicians only get the benefits of books and lectures after they've left office.

Shane L writes:

Ireland was another country that paid its politicians particularly well during the 2000s, as they gracefully guided the country off an economic cliff. Since the crisis became clear politicians took wage cuts; the taoiseach (prime minister) took two salary cuts from €214,187 down to €185,350 (down 13.5%).

Lots to debate about in the economic data, but it seems clear that this government - worse paid than the last - has nudged us away from the edge. Unemployment is trending down, GDP up, deficit down, etc. Worse pay and better performance? It seems so.

That's just anecdotal of course and maybe Ireland could be an exception for some reason, but that experience makes me bristle at high salaries for politicians. Especially now when salaries are being cut for other, poorer groups in society, it seems a sensible and helpful gesture for politicians to also accept significant wage cuts. I'm skeptical that this would result in poorer performance by the government.

Finally, I'd thought that the French case was particularly galling because the French minister was supposed to be a socialist! So it was political ammunition for the Opposition.

John Thacker writes:

The French minister's case has become big news because it coincides with the French government attempting to raise marginal tax rates on the high end (and vowing to crack down on tax evaders, like people using Swiss bank accounts.)

Bostonian writes:

A writer for a blog which has open borders as a major theme writes a book about "How Your Nation's IQ Matters So Much More Than Your Own". Large-scale Hispanic (average IQ about 90) immigration is reducing the average IQ of the U.S.. Wouldn't it make sense to select immigrants partly based on IQ?

MingoV writes:

Many voters are focused on short-term issues, focused on single issues, and/or ignorant about the candidates and proposals on the ballot. Their choices often are bad for the polity. Informed voters are more likely to pick candidates and support proposals that will be best for the polity. I propose a simple solution to improve elections: Impose a poll test. Potential voters who know too little about candidates or proposals could not vote. Example: Someone who knows nothing about mayoral candidates but has adequate knowledge of presidential candidates could vote only for the latter.

If a poll test is enacted, the probability that fewer people will try to vote is high. I consider that a benefit.

Carl writes:
But how much extra value does a great finance minister create compared to a mediocre alternative?

Finance ministers do not create value, they merely destroy more or less of the value created by real people.

"Huzzah! This minister fleeces us slightly less than the last one!"

Garett Jones writes:

Carl:

If you're right, a rational person would still pay $99 to avoid being shaken down for $100....

Another way to put it: 'Less bad' means the same thing as 'better'.

Carl writes:

Agreed, "less bad" means "better".

But my quibble is with the idea that a finance minister "creates" value, that's all.

Glen Smith writes:

Thing is the guy who his a better thief tends to be the guy who can shake you down for more. You pay less to the less competent thief. When you are involved with the selection of the thief, it is probably best to select the least competent one.

John Strong writes:

Merit pay for finance ministers might work if tied to an objective measure like increases in GDP.

If it is just a reward for serving a group of corporatist kingmakers, then it won't produce good government.

Garett Jones writes:

John, between the two extremes of objective performance measures (which I like: e.g., average GDP growth over the next 10 years) and pure rent extraction there's the middle ground I mention in the article: The shortlist.

When you pay people more you get better applicants.

This happens everywhere in life, must happen in government as well. Even if the person making the hiring decision chooses entirely at random, if the list of applicants is better you usually get a better outcome when you start with a better list.

And I suspect politicians, who know that real economic growth is a predictor of election victories, try to do better than random....

Arthur_500 writes:

Throughout my adult life I periodically see the idea that professional politicians would be as asset to government just like professional managers would be an asset to business. It is hard to fault the logic.
However, professional businessmen can get fired. Professional politicians seem to amass ever more power and become ever less quality managers and even less interested in good governance.
It seems to me that the best leaders come from those who run scared. Maybe we should pay our legislators $75,000 per year and if, after five years, their policies are deemed to be successful they can get paid $1 million for each of those years on a running tally. If they are deemed to have been destructive then they forfeit everything.
Maybe we would get a government that governs less and better?

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