The Business Council of Australia's support for a freeze on MPs' salaries inevitably raises the question of sauce for the gander. Would the Business Council also agree that executive salaries should be frozen like those of MPs?
Reporting the BCA chairman's refusal to endorse similar belt-tightening by business executives to that advocated for MPs brought none-too-hidden suggestions of hypocrisy.
There is, however, a bit of a difference between remuneration for those in public office compared with those in the private sector. Business executives receive remuneration that is agreed to by the owners of their firms (or rather the representatives of those owners who comprise the Board of Directors).
There is a strong discipline on the level of corporate remuneration since every dollar paid to those running the company is a dollar less for those owning it. This means a neat tightrope is walked by the shareholders to ensure they get the right executives, which in the end comes down to them paying the appropriate remuneration in the context of a competitive market for management talent.
In principle they need to satisfy themselves that every additional dollar of expenditure for a valued management resource will provide more than one dollar in additional profits. Their stipends are voluntarily given on the basis of what people are prepared to have skimmed off their returns in order to get greater returns.
Similar calculations, with in most cases a somewhat different notion of profit, are made by football clubs, top tennis players, theatre companies and so on.
In each case, remuneration levels are set according to what their owners or the board think the executives are worth to the firm or club.
Although mistakes are made, the decision is no different from that we make for everything we buy that is not of an homogenous nature.
We trade-off money for a quality differential and sometimes we are pleased with the outcome and at other times we are disappointed. However, on the whole, making such decisions of our own volition provides a better outcome than any other means of making the choices.
In the case of the individual executive, as many will be learning right now, remuneration is not a sum of money that can be constantly ratcheted up. The penalty for poor decisions or possibly bad luck can be economic ruin.
The salaries of politicians and other public officials are less subject to market tests.
The best-paid cabinet ministers in the world are reputed to be the Saudis ($5m a year) and among the world's worst paid politicians are the Swiss. This is perhaps inversely proportional to the degree of their good governance (certainly to the degree of their citizens' liberty). US Cabinet Ministers and public servants are less well paid than our own -- and have fewer perks -- and yet the US has as sound a government system as any in the world.
While this is not an argument in favour of lower levels of income for public servants and politicians, it underlines the difficulties of choosing the right levels of remuneration when the discipline of individual self-interest is absent.
Many politicians and public servants point to the often far superior remuneration conditions in the private sector as beacons that mark their own value. Yet, hardly any actually make the shift to the private sector and those that do tend to do so in some variant of lobbyist.
This suggests a different skill-set between public and private sectors with no real correspondence between the two. It probably also means that we are over-paying senior executives in the public sector because their next best employment opportunities, as revealed by their continuance within the sector many claim to be grossly underpaying them, is another public sector job.
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