Type A and B politicians. Reminder to UMNO

Suppose, we increase the salaries of our ministers many fold. Ministers by 600k a year, so on and so forth. Will the salary structure attract talented people into becoming politicians and into public service? The idea is: high pay attracts better talent and reduces corruption. You know the drill: you pay peanuts, you get monkeys.

Let's analyze this proposition a bit farther.

We all know that Singapore ministers earn astronomical salaries. The idea to compensate political leaders with high salaries was thought out by Lee Kuan Yew. His intention was to attract the best talents into public service. The attrition rate from 1^st generation leaders was high. Many fell by the way side, succumbing to baneful influences.

How do you attract the next generation of leaders? He was concerned that, if left alone, the best talents would opt for business careers other than public service. So he indexed the salaries of ministers and political leaders in public service to a certain number of the highest salary earners in Singapore.

But public service isn't an attractive place for talented people. Government can't pay gargantuan salaries. That's public money. They can only pay reasonably high salaries, competitive enough to sufficiently attract talented individuals. On top of that, the Singapore elder leaders have still got to talent scout. The anecdotes about senior leaders conducting several levels of interviews are well known.

In Malaysia party elders don't talent scout. They are interested in setting up a self perpetuating system of leadership, i.e. perpetuating THEIR leadership. This is directly opposite the creation of a self continuing system which means, the show goes on even without you. The 'without you' qualification is the scary part to politicians. So, typically, the leader sets up a system that perpetuates his rule. His subordinates are under achievers and mostly second raters. They won't rock the same boat they are in and certainly won't go against those to whom they are beholden.

On the other hand, that typical response and behavior reveals a lot about the type of politicians you are. Which type do you belong to?

Politicians are of 2 types, types A and B. Type A are career politicians. Type B are people who have political careers. Type B are the ones who make hay while the sun shines, make money out of their office. Type B are those who want to establish a self perpetuating system. Types A are those who enter politics to make a difference to improve things and enjoy having power because it gives then avenue for application.

The high salaries didn't answer one question though- why did the political leaders enter public service in the first place? Was the main reason, high salaries? A talented person can earn more in the private sector. Tony Tan was earning much more with OCBC. Richard Hu earned more with Shell Singapore than from government. Never met Tony Tan, but when I first joined OCBC in 1980, Tony Tan was heading OCBC group I think. He was a 1^st class graduate in physics I think. When I was in Shell, Richard Hu had just left Shell Singapore. That's why I am using the examples of these people.

How do you entice talented people into public service? By talented I mean with formidable academic achievements, sterling service record and all that. Bright people, articulate, possessing of verve, presence of mind, cool and collected. Earning high salaries remove anxieties, insecurities, even out the risks and help retain the talents brought in.

But there is one lingering question. If high salaries were the only consideration, the PAP senior leaders wouldn't have to talent scout would they? Talents will invariably come into public service, because they are attracted to high salaries.

High salaries do not necessarily lead to quality politicians. They are powerful motivators but do not explain the continuing presence of quality leaders. They stay until they are voted out or retire. So there must be other things besides high salaries that can explain the presence of talented people in public service.

Singapore makes a big deal about this thing called character. A leader must have character and they go all out identifying the elements that make the character of a leader. How do you attract politicians of character then?

To get to the answers, we ask the perennial question, who wants to be a politician and why? How do monetary incentives affect the quality of politicians? A simple interpretation of what Singapore did would suggest that if society offers better financial rewards to politicians, it will attract the best talents.

This interpretation would be a tad naive, because it over simplifies the issue. Politicians then become like tomatoes or any other fruits that money can buy. We get better quality tomatoes, or a better car, if only one is prepared to pay more for them. But the market for politicians differs from the market for tomatoes.

How?

The fact may be that there are 2 types of people in politics. (1) Those who are career politicians, call them group A and (2) those who have political careers, group B. Group A (career politicians) are people who "live for" politics: they really care for a cause and/or they enjoy power. These guys only leave politics when they are voted out.

Group B people "live off" politics: they are there for the money and they leave politics when voted out or when outside opportunities (in business, consultancy, etc) are better. They are not necessarily bad. They have different priorities.

But public offices prefer those who believe in a cause. Society too benefits having people who believe in a cause. How do you set up a system to ensure that more type A politicians come in?

What motivates each group to join politics? Group A people enter politics because of the non-monetary rewards of being in office; group B people enter politics in order to increase their monetary rewards (when and after they leave politics).

So, coming back to our opening lines; what happens if, say, the salary of politicians were to be increased many folds? For a start, there will be more 'flimsy' politicians. But, the increase in the number of wannabees will come mainly from group B (those who live "off" politics).

Ideally, in a situation of perfect information (i.e. voters can perfectly ascertain the quality of politicians), as the pool of candidates is now larger, the average quality of elected politicians is bound to increase.

The problem, of course, is information asymmetry: initially, the quality of a politician is not well-known to voters, only revealing itself over time, if at all. Suppose that there are initially 100 candidates from each group and only 100 in total are elected. Maybe this takes place; with uninformed voters choosing pretty much randomly, there would be, on average, 50 chosen from group A and 50 from group B.

Suppose now that the salaries double and, as a result, there are now 100 candidates from group A and 150 from group B. Uniformed voters, choosing blindly, will now elect 40 from group A and 60 from group B. Higher financial rewards have then altered the types of politicians. Whether the average quality of politicians has gone up or not depends on the quality of the new people emanating from group B.  Quality can go down if the salary increase leads to too many low-quality group B entrants.

As time goes by, talent gets partially revealed. The next time voters go to the polling booth, they have a better picture of the incumbents. Some group B people, who will have revealed their talent, will now be offered better outside options (in consultancy, etc) and do not ask for another mandate. There is therefore some adverse selection at play: only the worse of group B stays.

Group A people stay put, as they are career politicians. And new entrants arrive, only to confuse voters. What impact would the doubling of salaries now have on the new set of politicians chosen by voters? Once again, it depends. Two opposing forces are at play here. On one hand, the higher salary of politicians means that more candidates from group B will stay (lessening the adverse selection effect). This has a positive impact on the quality of politicians.

At this juncture, we don't judge our choice of type A or B politicians. We just want high quality politicians. But we have to in the end and so we move on to the next stage.

What do these tell you? That if you leave it purely to market forces, or allow the free flow of natural selection, the talent you actually want, i.e. those who believe in a cause, will be overwhelmed by group B politicians.

So what do you do? You intercede. You set up a system of identifying talented and suitable candidates. You set up a system that supports a self continuing politics. UMNO must talent scout and must set into play, a system that favours those who believe in its cause.