Bad Ideas: Put Politicians on a Workers’ Wage

The Victorian Socialists and the folly of short-term thinking

During Victoria’s recent State election, Melbourne’s suburbs were swamped with flyers from the upstart Victorian Socialists party.

The flyers bore idealistic but not well-considered policies — tax billionaires, free education/healthcare/childcare for everyone, increase the minimum wage, and perhaps the most ill-considered of the lot, “put politicians on a worker’s wage”.

What’s the problem with this, you might ask?

Politicians represent the people. Therefore, they should be on a worker’s wage. They should be able to relate to the common man.

People shouldn’t be attracted to politics for the money, but for the impact they can create in society.

Plausible.

But like many socialist arguments, they typically fall over once you think through the downstream consequences and interactions with human psychology.

For context, the average Victorian MP makes AUD$192,000; little more than double the average Victorian wage of AU$90,000.

So, what would happen if we put MPs on a so-called worker’s wage?

1. Pay peanuts, get monkeys

The quality and caliber of folks we have in the House of Representatives is questionable enough as is, but you get what you pay for.

Smart, educated, and capable people gravitate towards fields where they can make the most money and provide themselves and their families with a better quality of life, enjoy autonomy, and avoid constant public scrutiny; this usually drives them to seek out careers in private enterprise.

Successful business leaders are often asked whether they’d thought about entering politics. The usually retort is “you wouldn’t be able to pay me enough”.

Victorian Socialists elected to parliament vow to take an average wage.

And here’s what that buys you.

Victorian Socialists Upper House candidates

• Jerome Small — a career laborer who has spent most of his life on construction sites and in factories
• Nahui Jimenez — a radical socialist and activist from Mexico with no publicly available education or career credentials
• Daniel Nair Dadich — another radical left-wing activist and social worker
• Kelly Cvetkova — a retail worker and student
• Roz Ward — an activist for gender diversity in schools

It’s no surprise that none of these folks have or use LinkedIn. They have few credentials to populate their profiles with, and likely don’t see the value of a platform that is essentially about taking ownership for your personal advancement.

Not only that, but a $90,000 wage would be a significant pay rise for most, if not all of them.

2. Incentive to do bad

When you have everything to gain, and nothing to lose, you are more incentivized to lie, cheat, and steal.

When you put the commoner into positions of power, that power usually reveals. Countless examples of this have and do play out in developing economies around the world.

Whether it be the Balkans and Eastern Europe, Latin America, or Africa, where average Joes find their way into Parliament, they do everything in their power to extract as much value and personal gain as they can during their term.

They have nothing to lose, and no reputation to protect, but everything to gain.

Its no wonder such countries find themselves at the bottom of both the Transparency International’s Government Corruption Perceptions index, as well as the global GPD per capita rankings.

Pay Politicians More

If anything, we should be looking to pay politicians more in order to attract higher caliber operators to the fold.

60 years ago, Singapore was but a swamp with a small population, no natural resources, and no prospects. Abandoned by the British and the Malaysians, it was effectively left to its devices to perish.

But Singapore’s leader, the charismatic Lee Kuan Yew, had other plans.

Chief amongst them was building a fiercely meritocratic society where the best of the best were elevated to the highest ranks of Government and the private sector. He guessed that this made up about 5% of the population, and often half-joked that if aggressors wanted to bring down Singapore, all they needed to do was eliminate 190 or so if its best people.

The rational was that the best people would be incentivized to chase the most rewarding positions, and that these people would make the best decisions, be the best operators, and ultimately help to unleash the tiny island nation’s potential.

And unleash it they did, today Singapore is the world’s 4th leading financial center, behind only Hong Kong, London, and New York City.

Singaporeans enjoy world-beating quality of life, with an average GDP per capita of over US$79,000, ahead of the United States, Australia, and Canada.

And how much do their MPs make? On average, $900,000 a year.

If we want to attract the best people to Government, then we could do much worse than improve their incentives.

And once we’ve done that, there’s the issue of bureaucracy to work on, so that the best people can actually, you know, get stuff done.

Steve Glaveski is the founder of innovation accelerator Collective Campus, and author of Time Rich: Do Your , host of the Future Squared podcast, and frequently contributes to Harvard Business Review. Find him on Twitter at @steveglaveski.