Government Salaries

Republicans have been complaining again this year that federal employees make more money that those in the private sector. This is true only if you ignore what kind of work people are actually doing. Federal employees make more, on average, because more of them are executives or managers. Maybe there are too many middle managers in the government, but that is a completely separate problem. At the higher levels, the pay disparity is very much the other way; the Treasury Secretary makes a small fraction of what a senior partner of Goldman Sachs makes. This creates, I think, a very bad problem of semi-corrupt behavior, because senior government executives can, if they cultivate friends in industry, leave for much higher paying jobs in the private sector.

By comparison, consider the situation in Singapore, which has a famously competent (if weirdly authoritarian) government:

Top students are offered full rides to places such as Oxford, MIT and Stanford, and then “bonded” to do, say, six years of government service thereafter. Twenty years ago this culture was bolstered by the introduction of the world’s highest public-sector salaries, so that government could compete for the best and brightest. I’m talking roughly $2.5 million for the prime minister and $1.3 million for cabinet ministers (with bonuses tied to GDP growth). Pay became an issue in the last election and was recently scaled back for top officials by roughly a third in response. But whatever the right balance, pause and think how smart it is to pay for the talent a country needs to govern — and how differently we’d view, say, Treasury Secretary Tim Geithner’s approach to Wall Street reform if everyone wasn’t expecting him to cash in when he leaves.

If the Treasury Secretary made $10 million a year, we would know that he was working for us instead of preparing for his transition back to Wall Street.

Alas, in the U.S. there are all kinds of problems with paying high salaries to top civil servants. No doubt many bureaucrats without salable skills would work the system to have their jobs declared very valuable, so they could be paid "competitive" salaries (working the system is, after all, what bureaucrats do for a living). And it would change the quality of government life, making it more like life in a corporation where most of the money goes to a small group of elite people at the top, instead of the comparatively egalitarian ethos that prevails now in an agency like the EPA or the FDA. And maybe, given that income inequality is a growing issue in America, the government shouldn't contribute more to it.

But the real reason it can't happen is shown by the results of Singapore's recent election, the most democratic in its history. As soon as the voters of Singapore got some real clout, they demanded pay cuts for their leaders. The people, whether in Singapore or here, just don't want to hear about how they ought to be paying their governors millions while they have to scrimp.

I think that America has real problems and many added costs because we generally respect government bureaucrats less, and pay them much less, than top people in the private sector. I think this is a big reason why it costs us more to build infrastructure than in German in Japan, why our government health care and job training programs don't work better, and so on. But I don't know what we can do about it.