How much are a public servant’s services worth in dollars and cents? This topic is absolutely hilarious to observe being discussed on mainstream media over here in Scandinavia (with a different currency than dollars, though). Without fail you will hear some weird justifications on the size of the paycheck.
I get it, it is hard to translate the value of a service. Companies struggle all the time with this and it’s a real head-scratcher for anyone in the consulting business to value themselves. If you are overpricing yourself you’ll quickly find out you have no one interested in buying your services.
On the flip side, it can be extremely profitable when you find your price. Dan Lok has a great video on the subject from one of his seminars where he asked the question “Do you know what an hour of your time is worth?”. Many modern entrepreneurs have cultivated different methods of finding what their time is worth.
You can get an hour of 1 on 1 consultation with the above mentioned Mr. Lok. What’s the price he charges? $10,000. Is that the price you’d pay for an hour with Mr. Lok? Most likely not. But someone is paying it and getting value out of it.
It’s even trickier putting a price tag on something when you don’t have any other service to compare or service that is in an industry where there is a clear cut profit motive. Enter the public service sector.
If we have to have a system of taxation (legalized theft) for some God-knows-why reason, it better be absolutely amazing for the price. Politicians salaries rarely match that expectation of amazing though. But you can’t have a high salary for no reason so there need to be justifications. Oh, sweet justifications.
The most common of these justifications is the logic of “If we want unbribable politicians running our lives, we have to pin the salary high enough that bribes are less common.”
Let us forgo the quick libertarian counterargument (which is that it’s really silly to have
someone in a position to affect others lives that might be open to getting bribed and is in itself not the smartest idea we could come up with…) and assume it’s a rational reason to give officials high salaries. How high do you need to make a salary for that person to become bribe-proof? Unnecessarily high. I can imagine scenarios where some rich person with enough motivation would drop a bag of money on the table in a heartbeat to sway bureaucrats or politicians over to their side, remove competition or what have you.
The mere existence of counter-measures against bribes and corruption (which are fairly bad as is) is proof that the government knows that they can not compete against a private sector bribery-attack.
A CEO of a company doesn’t have a high salary because it will make her immune to bribery from competing companies, she gets a salary that matches the profitability of having a good captain at the helm–a boss that costs too much for the revenue stream is the dead weight that will sink the whole ship. The paycheck also reflects competition among companies to get hold of the best to steer them into the profit-lagoon.
The dynamics of the public sector servants are completely different than the CEO, so any comparison of the private and public sector salaries fall flat on its face. The “CEO” (the Mayor) of Detroit wouldn’t survive a board meeting with that big, red arrow in his PowerPoint presentation in his quarterly report.
Which rolls us right into the second most common answer: The public sector has to compete with the private sector on salary, or else we only get second-rate people willing to tackle the duty of governing. We’d only get the ones that aren’t quite successful enough to compete in business world, so they have to take a pay hit and join the public sector world.
This is a less insane argument than the first, since it has a logical conclusion, and there is some merit to the statement. Let’s toy with this idea that we need to keep the salaries of the public sector high in order to lure over some of the talents from the private sector and thus ensure we get the most bang for our tax dollars. Why on earth is it virtually impossible to fire public servants in the western world? If they want private sector salaries their performance should be judged by private sector standards and anything less should lead to dusting off the old CV and some job searching, rationally speaking.
Yes, I know that if the extra protection is removed, we stumble upon situations where any shift in political leadership can lead to everyone and their grandma getting fired because they didn’t align with the freshly assembled administration. I view that as the price we pay for having such a huge government in the first place and highlights the absurdity of having a large bureaucracy.
– ALEX UTOPIUM Scandinavian anti-establishment blogger, editor for the Utopium Blog. Counter-economics, agorist-separatism, and free-market advocate.