Pay Politicians Like Singapore Does

0:00You know, when you think about public service, you usually picture, uh, sacrifice,

0:05like the underpaid civil servant, the modest office.

0:09Right. Definitely. It's supposed to be a calling exactly.

0:13But welcome to today's deep dive where we're looking at a stack of academic papers

0:17and policy blueprints that suggest, well, the exact opposite.

0:22We're asking what if the best way to defeat political corruption is to actually pay

0:26politicians massive multi million dollar corporate level salaries.

0:30It's wild. I know it completely flips the script because instead of relying on

0:36this, you know, vague sense of civic duty, the research explores what happens when

0:40you essentially weaponize elite greed to force better governance.

0:45Yeah. And the mission for our deep dive today is to see if this framework might

0:49actually be the ultimate hack to fix bad governance.

0:53And you should really care about this because bad governance is, uh,

0:57it's essentially an invisible tax that directly drains your wallet every single day.

1:02Absolutely. It affects everything. It really does.

1:05And before we jump in, just a quick note, these sources touch on some pretty

1:09charged political concepts. And we aren't endorsing any specific ideology here,

1:14left or right. We are just neutrally unpacking the economic theories and, you know,

1:19the empirical data they provided.

1:21Right. And to actually see this data in action, we really have to look at Singapore.

1:25I mean, they're founding prime minister, Lee Kuan Yew had a very blunt philosophy.

1:29He basically argued that if you pay peanuts, you attract monkeys.

1:34And they took that literally, right? Because under their MR4 framework, a full

1:38cabinet minister can make up to what 1.8 million Singapore dollars a year.

1:43Yeah, up to 1.8 million, but there is a really clever built in mechanism here.

1:47That 1.8 million actually represents a permanent 40% discount compared to what that

1:52exact same person would make as a top tier private sector executive.

1:56Wait, a 40% discount. So they are still taking a pay cut.

2:00Exactly. It's all about the psychology of public service.

2:03The idea is that they want highly competent leaders, but they still want people

2:07willing to make some financial sacrifice.

2:09So that 40% cut acts as a filter to preserve a public service ethos while still

2:15paying them enough to basically remove the daily stress of financial temptation.

2:19You got it.

2:20But let me push back on that for a second.

2:23Does handing someone an insane salary actually purify human morals?

2:28I mean, if someone is inherently corrupt, aren't we just giving a corrupt person

2:32a bigger baseline income?

2:33That's a great question.

2:34And researchers actually looked into this and the short answer is no, it doesn't

2:39make them saints, but it completely alters their risk reward.

2:42Math.

2:43Okay. How so?

2:44Well, if you're making 1.8 million legitimately, the size of a bribe required

2:49to make you risk losing that lifetime income, it's just prohibitively high.

2:54Right.

2:55But not impossible because the sources point out that rare corruption cases do

3:00still happen in Singapore, right?

3:02Like their former transport minister, um, S is for on.

3:05Yeah. That's a perfect example.

3:07He actually pleaded guilty over accepting luxury items like Formula one tickets

3:11and a Brompton bicycle bicycle.

3:14Right. So temptation absolutely still exists.

3:17But the systemic rate of temptation across the entire government drops drastically,

3:22just because the stakes of getting caught are financially devastating.

3:26Makes me wonder if the math of high pay works so well to prevent corruption.

3:31Why don't other highly rated countries do it?

3:33Like look at Denmark, they consistently top global integrity rankings,

3:38but they definitely aren't paying their politicians millions.

3:41Yeah, that's known in the research as the Nordic paradox.

3:44Those countries achieve high integrity with low pay through their culture of

3:48deep egalitarianism and really flat wage structures.

3:52So everyone kind of makes similar amounts anyway.

3:55Exactly.

3:56When the gap between the richest and poorest and the society is small,

3:59there's just less social and financial pressure for politicians to aggressively

4:03cash in.

4:04Okay. But the sources argue you can't just transplant that low pay model

4:08everywhere, right?

4:09Especially into what they call highly financialized economies, places where corporate

4:14money absolutely dwarves public sector pay.

4:17Right. Because if you try to do that, you just invite the revolving door.

4:20Politicians will accept a low public salary today, knowing full well,

4:24they can use their government contacts to cash in as highly paid corporate lobbyist

4:28tomorrow. So if a country can't just rely on Nordic culture, they basically have

4:33to use cash.

4:34And Singapore takes us to step further with their national bonus,

4:38which I found fascinating.

4:40Oh, yeah.

4:40This is a huge part of their system up to 35% of a minister's multi million

4:44dollar pay is tied to strict socio economic metrics.

4:48And one of those metrics is literally the real income growth of the poorest

4:5220% of citizens.

4:54Just imagine how that changes the politicians daily priorities.

4:57Think about that for a second.

4:59Imagine if your local mayor couldn't get their end of your bonus unless your

5:03personal property taxes went down and your wages went up.

5:07It completely aligns their greed with your well being.

5:10Yeah.

5:11A multi millionaire minister doesn't need to personally experience poverty to

5:14want to fight it.

5:15Their own paycheck is literally being held hostage by the financial wellbeing

5:19of the working class.

5:21But obviously, you know, you can't just copy, paste Singapore's government into

5:24a massive Western democracy.

5:26And that's why these papers propose a modified blueprint for places like Australia,

5:31because they struggle heavily with soft corruption, right?

5:33Exactly.

5:34Things like that revolving door we just mentioned or regulatory capture or

5:38politicians make favorable rules for the corporations they eventually plan to work

5:43for.

5:43So the Australian blueprint suggests combining a base salary with an

5:48independent bonus tied to real world outcomes, like housing affordability and

5:52lower class wage growth.

5:54Right.

5:54But to kill that revolving door, they introduce something called the democratic

5:58transition annuity or DTA.

6:01It's essentially a $300,000 lifetime annual pension.

6:05But with a massive catch to get that pension,

6:08departing ministers must sign a perpetual ban on ever holding a corporate

6:12board seat or working as a lobbyist.

6:15It's essentially a lifetime non-compete cause.

6:17They get a huge retainer specifically due to absolutely nothing in the corporate

6:22world, which neatly addresses one of the biggest criticisms of this whole

6:25theory.

6:26Critics always argue that high public pay will just attract greedy mercenaries.

6:30And does it?

6:31Well, the DTA actually filters those mercenaries out.

6:35I mean, a true mercenary goes in a government specifically to build a powerful

6:38network that they can monetize later in the private sector.

6:41Right.

6:41But if they sign this non-compete, they can never monetize that network.

6:45It stops them cold.

6:46It stops them cold.

6:48So we've explored how realigning financial incentives from Singapore's

6:53performance bonuses to Australia's proposed lifetime lobbying bands could

6:58drastically improve state capacity.

7:00It really shifts our entire focus from hoping to find incredibly virtuous

7:04leaders to building an unsentimental system that just simply works,

7:09which leaves you with this final thought.

7:11If we accept that humans will always act in their own self interest,

7:15what if the ultimate civic duty isn't demanding that politicians be

7:18selfless, but designing a system where they're greed, accidentally

7:24creates a utopia for the rest of us.

7:26Something for you to ponder.