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💰 Why politicians should be paid more

If you’re not as internet-addicted as me, then you probably didn’t hear about this TikTok that went viral: this YouTuber from Cyprus was elected as a Minister to the European Parliament, so he decided to make a TikTok “exposing” how much he gets paid to be a politician, like it were a bad thing…

But I agree with @levelsio - here’s why 👇

“I want politicians to be so rich they don’t have to care about bribes.”

I agree with this argument, and it looks like there’s even data to back it up, like this study done by the International Monetary Fund (IMF) in 1997. The IMF demonstrated that increasing civil service wages does appear to lower corruption and is correlated with higher quality of rule of law and bureaucracy.

Then there’s this one that concludes basically the same.

Beyond studies, there are actually a few countries that are known for their low levels of corruption, high transparency, and meritocratic governance: the Nordic countries (Sweden, Denmark, Norway — shocker!! I feel like they’ve got everything put together 😩), New Zealand, the United Arab Emirates, Estonia, and Singapore.

Let’s quickly look at Singapore’s model:

• Competitive Salaries for Politicians: Singapore pays its politicians and civil servants competitive salaries that are benchmarked against top private-sector salaries. So they’re able to attract and retain top talent from various fields and reduce temptation for corruption (whether financial need or greed).

• Governance based on performance: Their appointments and promotions are based on performance and integrity rather than political connections or nepotism. You get fast-tracked through the ranks the better you are! Sounds lit - we in the U.S. wouldn’t know 🫠

• Zero Tolerance: Singapore has a zero-tolerance policy towards corruption. Their Corrupt Practices Investigation Bureau (CPIB) investigates and prosecutes cases of corruption swiftly and harshly.

  • Punishments for corruption are severe, like substantial fines and long prison sentences.

• Transparency and Accountability: Singapore also makes sure to have stringent financial disclosure requirements for public officials and regular audits of government expenditures to help build trust among citizens and businesses.

  • Fun fact: Singapore has had such good, safe reporting mechanisms on corruption that, in 1965(!), a Singaporean official narked on an American CIA agent, who had tried bribing him!
    

    

It’s refreshing to see this, honestly, because it means there’s hope - there are ways we can lower corruption! Imagine how much better our government would work for us if all government officials (not just politicians)

• (1) were paid competitive, proper wages, and

• (2) had performance-based incentives, so that the more they got done, they’d get more pay, vacation, and/or more index funds/bonds from a diverse portfolio, for example.

I really believe that most people don’t hate the government. What we hate is bad, dysfunctional government - public transportation that sucks, long lines at the *shivers* DMV, tons of paperwork to get your restaurant’s licenses approved, etc.

Still curious?

• Here’s Our World in Data’s long post on corruption - they show other cool stuff, like how countries whose people believe that corruption is low in their countries actually tend to have low corruption (more correlative than causal)

  • And “how in the US, states that are better educated tend to be less corrupt—notably, they show that this relationship holds even when using historical factors like Congregationalism in 1890 as a proxy for the current levels of schooling.”

  • Or how people are less likely to pay bribes in countries with stronger institutions supporting accountability.

  • Or how cultural norms (what’s considered to be acceptable behavior) is a big factor that affects corruption

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Thanks for taking the Pack,

Zach

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Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.