All the King’s Monies (For all the King’s Men)

The lazy civil servant has often served as a boogeyman for the right, after all every election we claim that we will lower taxes and restrain spending by reducing waste i.e. improving efficiency. We almost require that there be a bloated civil service so that we can get elected. When we do, we inevitably hack and slash, in what I am sure is a genuine attempt at fiscal responsibility. I will however argue for the opposite approach, that we should increase the pay of many of the top public officials and reform the payment structure.

Firstly, we should deal with the amount. Standard analysis of the labour market tells us that supply is dictated by pay, and the net of the non-monetary benefits. In the case of government, you could see the prestige as a positive, but having your personal life displayed for all to see as a negative. Since the number of positions is fixed, what we do by increasing the benefits of being a public servant, is increase the pool of potential applicants and hence the chances that there are a couple good ones in there...somewhere. Look at the current situation; half the country is going to hate you, your life will be on display, you work long hours with few vacation days, and you constantly have the weight of having to take care of a country’s worth of people on your shoulders. The non-monetary benefits are abysmal. To top it all of the Prime Minister earns £150,000, which is a decent sum, but truly not that impressive if you widen your scope to other key management positions. Partners at McKinsey can expect £500,000, at Goldman double; and if any of them make it to CEO, they would expect anywhere from multiple millions, to tens of millions whilst retaining substantially more privacy and carrying a lesser burden.

So, suppose I’m someone qualified and ambitious, I have whatever you think makes a good PM: smart, charismatic and I know how to build and manage good teams. Why would I run? I can expect my life to be a living hell, will earn anywhere from a fifth to a tenth of what I would otherwise, and if history is anything to go by, I will leave office in disgrace. Our own economic models - that we claim to believe in - show that this system will produce sub-par candidates. It is simply not in the best interest of anyone to become a public official. We currently expect to get our candidates from the kindness of the butcher and the baker.

The job of PM isn’t going to get any easier, and we don’t necessarily want there to be any less media scrutiny. Perhaps being more understanding of PMs past would help, but that kind of societal shift takes a lot of time and is not guaranteed. The one thing we can do is to bring up pay to a level that is on par with what these professionals expect.

There are counter arguments against this. Mainly that it would be a drag on the budget, that we want civil servants to do this for love of country, and that we don’t want politicians disconnected from the lives of most people.

The drag on the budget argument is being penny wise but pound foolish. Increasing all cabinet minister salaries by 10x would increase the budget by an additional £25M, or 0.0003% of the national budget. Double this figure to include the shadow cabinet, or key civil servants. Clearly this is not substantial enough compared to the budget, or what we could potentially gain.

The argument that officials should do it for the country I find not only ridiculous, but antithetical to everything we stand for as conservatives. I think this is best shown by an example. Could you imagine if Apple were to say that Tim Cook does it for the money, proceed to fire the entire board of directors, and replace them with people willing to work for minimum wage, because “we only want true Apple believers on the board”? It is likely that you can’t, as no company has done this. The natural experiment that is our modern economy shows that it must be worth it, as I’m sure the shareholders would rather receive those millions of pounds themselves. The corporate world understands that it’s advantageous to pay key individuals’ large salaries for the good of the organisation, and it is what the economic theories we espouse predict, so perhaps we should take our own advice.

Finally, for it stopping the PM from being an everyman: in some ways we already separate key government officials from the median person in the UK who doesn’t drive around in a bullet-proof car, meet with other world leaders and has constant bodyguard protection. But still, if any person considers it immoral to be earning a disproportionate salary as the PM, they should feel free to not take it, or donate it away (much the same like taxes are a legal minimum and HMRC won’t complain if you give them extra). Of course, people should feel free to vote for a candidate that promises this, though as far as I have found all heads of government that have taken no salary were previously extremely wealthy: Trump, Kennedy, Hoover and Washington. With this last one eventually taking his salary so that it didn’t become taboo, and ensure that future presidents didn’t have to come from a privileged class, as well as to avoid “conflicts of interest” [Read: Corruption].

Though I think increasing the amount would go some way to addressing the critical shortfall in the quality of leaders the world sees what is perhaps even more important is the way this amount is given out. Again, our theory and the corporate world are in accordance that results based payment is the way to get the most out of people.

Most executives receive a base salary, but then a large proportion that is dependent on company performance, usually this is tied up in stock price but not always. For example, Tesla’s plan for Elon musk has a series of thresholds each harder to reach with increasing compensation. Each threshold is composed of market cap and several operational milestones (things like: number of cars built, number of factories, cost per car...). Furthermore the market cap threshold must hold for six years or he won’t see a penny which discourages a last minute stock buyback, or artificial inflation in stock price.

Plans like this could be designed for our leaders. Averaging 2% growth per year over your mandate, (and no recessions that can be reasonably traced back to your policy for a decade later) £100 000 bonus, balancing the budget £50 000, decreasing Gini by 0.05 – £75 000. This government could be delivering Brexit by the end of 2020 as a condition to earn any money at all. Ultimately what the goals are, and their relative importance will be a matter of much debate. Surely, we can expect a new segment in party manifestos. There already is debate about what things are important, this new form of compensation forces the politicians’ hands, and will finally get them to put their money where their mouth is, so we should not be deterred by disagreement in specifics. It will show the priorities of the government clearly, and stopes us having to guess if they will stick to electoral promises (or at least punishes them for not doing so).

It is crazy that every large institution has teams of people that work on compensation, trying to get the best out of their workers, but when it comes to government we through our own theories out the window, and just sort of pray that they are the best and will behave appropriately. It is time for the government to look at how it has applied marketisation to every sector of the economy. Thatcher privatised all she could, and subsequent governments have gotten closer to privatising all she couldn’t. We force companies to bid for public projects, hospitals and schools are ranked. Still government, this institution that forever resists change stands defiant. It is time that as conservatives, believers in market forces, and mistrustful of the state we tell them to look in the mirror and face competition as everyone else does.

 Juan Dávila (Social Secretary) is a first year reading Engineering Science at St. John’s College