27 July 2017 14:06:51 IST

Fat cats and lame ducks: economics of legislators’ pay

Tamil Nadu MLAs have doubled their pay and perks amidst a drought

That’s quite a menagerie, but what’s on your mind?

Arguably the most self-serving bunch of individuals on Planet Earth: namely, the Tamil Nadu MLAs.

What have they done now?

They’ve doubled their pay and perks, in the middle of one of the worst droughts in the State, at a time when allegations of corruption involving legislators, and perceptions of them as freeloaders, are swirling. It’s an optically obtuse decision from a lame-duck Assembly that’s merely marking time till it’s dissolved.

But won’t better pay draw better people into politics?

That argument has been made in other countries, and there is a body of research that advances that claim. Robert J Barro at the University of Chicago noted in a 1973 paper that designing institutions that promote talented people to run for office is a central issue in political economy. Gary S Becker and George J Stigler, also at the University of Chicago, argued in a 1974 paper that higher salaries for legislators may reduce moral hazard by incentivising effort due to fear of losing one’s job. Other economists make the point that better pay draws in people with higher ability. But the jury is still out on that claim.

How so?

A 2014 research by Mitchell Hoffman at the University of Toronto and Elizabeth Lyons at the University of California, titled ‘ Do Higher Salaries Lead to Higher Performance? Evidence from State Politicians ’, lends caution to claims that increasing politicians’ salary would significantly increase the quality of government.

What’s the history of paying MLAs and MPs?

According to a 2009 fact-sheet from the UK House of Commons Information Office, the history of paying MPs goes back to the 13th century, when local shires and boroughs allowed their representatives certain wages for attending Parliament. Knights received four shillings a day, and so-called burgesses two shillings a day. But there were curious local variants as well.

How curious?

In 1463, the Borough of Weymouth paid its burgesses with a wage of 500 mackerel!

I knew there’s something fishy about legislators’ pay!

In those days, MPs were paid by their own electors. That ended in the 17th century, when MPs began to be paid out of the exchequer. In 1668, administrator Samuel Pepys recorded constituents’ agony that since they were no longer directly paying their MPs, they had lost their ‘hold’ on them.

What’s the rationale of paying for public service?

In 1909, the Chancellor of the Exchequer, David Lloyd George, noted that the payment was “not a remuneration, not a recompense, not even a salary. It is just an allowance” intended to “open the door” to men “who would render incalculable service to the State… but who cannot be here because their means do not allow it.”

And do our MLAs and MPs meet that high bar?

It’s unfair to tarnish everyone with the same brush, but it’s worth recalling German sociologist Max Weber’s observations in a 1918 lecture on ‘Politics as a Vocation’. There are, he said, two ways of making politics one’s vocation: either one lives ‘for’ politics or one lives ‘off’ it. Those who live ‘for’ politics enjoy power or treasure the consciousness that their lives have meaning in the service of a ‘cause’. However, “he who strives to make politics a permanent source of income lives ‘off’ politics as a vocation,” he noted.

And our MPs and MLAs…

… appear, for the most part, to be living off politics.