Ethics@Work: The best and the brightest

Ethics@Work The best an

After a number of recent columns discussing the astronomical salaries of some financial-market traders, I want to turn now to the comparatively sublunary salaries of our elected representatives in the Knesset. Our elected representatives get about NIS 33,000 per month - certainly a respectable salary, but not particularly impressive when compared with the pay of senior executives or leading lawyers in the private sector. There is a certain logic to paying our legislators a much higher salary. The argument goes something like this: • We would like to have capable legislators - those with qualifications that would help them excel in many lines of work - and we want them to function well. • This requires a pool of qualified people from whom to choose, and that they have the appropriate incentives to serve the public. • In order to attract and incentivize talented individuals, we need to offer competitive pay. Against these arguments we could make one of two objections: • One of the above arguments is wrong. • The arguments are correct, but the anticipated benefit is not worth the cost. I consider the second argument lacking in merit. Even if we were to double the salary of all Knesset members, the entire cost would be about NIS 50 million - a little over 1 percent of 1% of Israel's budget. If the improvement in function would be even quite slight, it would be worth the price. In the public discourse, the main objection is made to assumption No. 3: that high salaries are needed to attract qualified people. The counterargument is that we want public servants who are attracted by the desire to serve the public, not those attracted by money. Of course, a decent salary is necessary to avoid repelling people or making corruption a necessity for a good living, but NIS 33,000 a month is certainly adequate for this. I think this claim is valid, but against it stand two other considerations: • The current system discourages candidates drawn to honest money, but it doesn't do anything to discourage those drawn to dishonest money. Converting political power into money can be done in a variety of ways. The coarsest accept bribes or merely steal from the public purse, as former finance minister Avraham Hirschson was caught doing. A more subtle and totally legal way is to kowtow to moneyed interests in office and in return to obtain cushy jobs working for these same interests after leaving the Knesset. • In addition, the current system attracts those interested in public service, but also those interested in power and influence per se. The desire for power, like the urge for material enrichment, is not bad in itself; in small doses it encourages people to productive deeds. But in the megadoses that characterize some of our elected leaders it becomes destructive, leading them to seek personal power at the expense of the public interest. In the current system, instead of financing a money-hungry person via a salary of a few million shekels, we are forced to finance a power-hungry person via a superfluous government office at the cost of tens of millions of shekels. I don't think these people are wicked; every person has his unique source of drive, and for some people it is power. But I don't believe the system has to excessively encourage this trait. So if we were to attract more talented money-seeking individuals by raising salaries, it would likely crowd out some of the public-service-seeking candidates, but it would do even more to crowd out candidates who are crooks or megalomaniacs. I am inclined to think the upside outweighs the downside. However, recent research does not seem to support my hunch. An extensive study carried out by the London School of Economics on behalf of the World Bank studied legislator pay and governance outcomes for dozens of countries and could not find a consistent connection between pay and performance. Of course, this is not an actual disproof of my theory, which only says a country that increases salaries for legislators will do better than it did before, not that it will do better than some other country. And governance is notoriously hard to quantify. But the study does seem to show that any effect is not dramatic, as I would have predicted. So which of my assumptions is wrong? The accepted wisdom, as I stated, is assumption No. 3: that high salaries are needed to attract qualified people. I am inclined to believe that as a corollary, assumption No. 1 is also violated. While some say the kind of motivation that makes a good legislator is not the same as the kind that motivates a good private-sector employee, I would add that the kind of talent is also different. We don't necessarily need to attract people who would make outstanding managers or outstanding lawyers; what we need is people who are well-connected to their constituencies and well-capable of representing them. Another possibility is that we really prefer that the legislature not do too much, and the less talented and aggressive lawmakers are, the less damage they can do. Much is made of the high salaries paid by Singapore to its ministers. But regarding legislators, Singapore presents the opposite example. Its ministers are paid much more than those in the US and Europe, but its legislators are paid, on average, much less. I still think it would be beneficial to increase MK pay a bit, to attract more candidates and to improve the public image, which tends to be correlated with pay. But I acknowledge that it is hard to prove this would create a revolution in Israel's governance. Asher Meir is research director at the Business Ethics Center of Jerusalem, an independent institute in the Jerusalem College of Technology (Machon Lev).