The Meaning of “Hamas” to Isrealis

Learnt this week that “hamas” in biblical hebrew is “violence”.

 

Perhaps the Government could send Alistair Campbell & Lord Mandleson over to Gaza to advise on presentation. I am sure any tips would be gratefully received.

Politician’s Remuneration – From Brazil to Blighty

Yesterday I blogged about a paper that claimed that higher salaries for politicians resulted in more educated, experienced and hard working politicians. From my own experience of Brazil, I tried to show that that the results could be interpreted as encouraging political dynasties and patronage.

 

In the UK, there have been two aspects of politician’s remuneration that have been in the news recently.

 

The Home Secretary’s 2nd Home Allowance

 

It is alleged by Guido Fawkes, Iain Dale  (and back up by the Sunday Times & The Mail on Sunday) that Ms Jacqui Smith MP is incorrectly claiming which of her two places of residence is her 2nd home. It would appear that the Home Secretary’s primary residence is with her sister in London, and the 2nd home is with her husband and two children in the Redditch constituency. Furthermore, Jacqui Smith’s website biography states

 

            Jacqui grew up in Malvern, Worcestershire before moving to Redditch in 1986.  She still lives in Redditch with husband, Richard and sons James (13) and Michael (8).

 

The Daily Mail is making similar allegations about the Chancellor of the Exchequer, Alistair Darling.

Allegation of sleaze (covert corruption) undermined the last Conservative Government, contributing to suffering, in 1997, the biggest defeat of any government since 1832. Yet, the sleaze did not extend to the Home Secretary (in charge of the nation’s police forces) or allegations of financial impropriety extend to the Custodian of the State’s finances.

 

Pensions for Failure

 

The Sunday Times (Hat-tip Iain Dale) reports that MPs are pushing for a substantial increase in the “Parachute Payments” when that they receive when they fail at a general election to get re-elected. Furthermore, this is to be extended to those who resign or retire mid-term. I can understand and sympathize with someone who has to step down through ill-health. But to compensate those who resign due to incompetence or worse is not in the public interest. Furthermore, to make politician’s terms and conditions better when unemployment is forecast to rise by a million in the current year, is not exactly showing solidarity with the working classes.

I admit that MPs are not paid as much in relative terms as their counterparts in Brazil. A British MP has a basic salary of just 6.5 times of a full-time worker on the minimum wage. In 2004, their equivalent earned over 38 times the minimum salary. However, in neither country to they have any shortage of applicants for the posts, which tends to suggest they are a might overpaid.

Higher Salaries for Politicians? Not likely

 

An economics paper suggesting that higher salaries for politicians leads to better politicians is based on a highly subjective of the evidence. Using evidence of municipal election in Brazil it tries to show that higher salaries for Politicians. If you like more government expenditure & increased power to the incumbents, then you will concur.

 

The Adam Smith Institute Blog referred (via Chris Blattman’s Blog) to an Economics Paper on Motivating Politicians by Claudio Ferraz (PUC-Rio) & Frederico Finan (UCLA). This paper tries to “estimate the effects of monetary rewards on political selection and legislative performance”

 

The conclusion drawn from this study (Pages 27 & 28) are:-

  1. “We find that higher wages increases political competition and improves the quality of legislators, as measured by education, type of previous profession, and political experience in office.”
  2. “In addition to this positive selection, we find that wages also affect politicians’ performance, which is consistent with a behavioral response to a higher value of holding office”
  3. “we find an increase in a number of visible public goods (e.g. number of schools, computer labs, health clinics, and doctors) in municipalities that offer higher salaries.
  4. “(T) here is no improvement on others (e.g. water and sanitation).”

 

Now consider this comment on local elections by the Economist on 9th Oct 2008

  Transparência, an NGO, has examined the last set of races in three state capitals (São Paulo, Rio de Janeiro and Belo Horizonte), which took place in 2004. Of 55 vereadores elected in São Paulo, 40 declared that they had spent more than 100,000 reais (then $35,000) on their races. One candidate spent over five times that amount. In Rio de Janeiro, some campaigns were even more expensive in terms of votes gathered per real spent. Certain successful candidates in the city spent more than $15 for each vote they won. (In comparison, George Bush spent $5.60 per vote he garnered in the American presidential election that year, and John Kerry, the Democratic candidate, $5.20 for each of his.) If undeclared spending were added, the sums would be even greater.

My own experience of local elections in Brazil, particularly during a visit in 2004 were of the following

-         Small towns controlled by single families, who also happen to be the most affluent in the town.

-         Sitting a restaurant in a small time, with a vehicle going past every few minutes playing the same jingle. It alternated between a motorbike, a Fusca (VW Beetle) and a Combi (VW van – like the 1960s camper-vans)

-         In major city centres the shopping streets being full of campaigners for their candidates.

 

Other factors to consider

  1. The paper uses the monthly salaries from 2004. For a small town of 10,000 to 50,000, salaries were restricted to 30% of he state legislature, equating to R$2900 (c. GBP560) per month. At the same time the minimum salary (which maybe a third of the population survive on) was R$245. In other words, a small town councillor can receive more than eleven times the minimum wage. In the UK, it is around 1.5 times (although in the UK, the expectation is to work at least 20 hours per week, whereas in Brazil, the Vereador is full-time.
  2. In Brazil, vereadores have the power to award contracts. In many municipalities there is not the necessity to put contracts out to tendor. There is, with the role, considerable patronage opportunities.
  3. Vereadores can receive a pension of 50% of salary after just one term. Therefore, it is possible to become a vereador, a member of the state house of representatives, the state senate, the national house of representatives, and the national senate, all collecting a 50% pension on the way.
  4. Government expenditure in Brazil, accounts for about 40% of GBP, much higher than is the for middle income countries.

 

 

I do not find the conclusions incorrect, just the normative interpretation of those conclusions. In other words

  1. Higher salaries lead to increased political competition, which leads to increased expenditure to get elected. Having high levels of qualifications makes one stand out when there are lots of candidates.
  2. If politics is the family business, sending ones children to university (funded by the high salaries from holding government office) will perpetuate the family. It therefore becomes a barrier to entry for the poor.
  3. Due to the high number of candidates, populist politics abound. Politicians need to spread largesse. It is visible public works that get votes, more than drains, or quality of the local police service.
  4. Populist politics lead to larger and more intrusive government.
  5. Higher salaries, along with powers of patronage, favour those with money and access to a local political machine. Incumbents have the advantage, and getting elected to high office becomes an investment.
  6. The powers of patronage also lead to a local political business cycle. Local roads get fixed in election year.

 

In other words, higher salaries in Brazil have lead to increased corruption, increased power to the incumbents and more government expenditure. This is consistent with the findings of the paper.

 

 

 

 

 

 

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