Monday, April 9, 2007

Legislator Pay

Tim over at the Adam Smith Institute blog suggests Brits overpay Parliament Members (MPs). Tim writes:
Demand in this case is fixed, there are 646 constituencies, so that is the number of MPs we require. There were some 3,500 people putting themselves forward for those more limited number of positions. Indeed, many of those paid £ 500 out of their own pocket in electoral deposits to have even the chance of applying for the job.

At first sight then we are paying too high a price for our MPs, as many more are willing to do the job than we have space for. However, shouldn't we be looking at the quality of such candidates? Making sure that we attract those fully qualified? Well, that's the nice thing about democracy. By definition, all and any of us is indeed qualified. So at second sight we are also over-paying our MPs.
Now, it might be true that MPs are overpaid, but as always, there is a trade off. Most constituents are qualified to apply for the job of legislator, but the qualification of applicants to actually be a legislator is determined by voters. The effect of reducing legislator wages, ignoring rent capturable as a legislator, is to limit the applicants to those who value their time less than the wages and fringe benefits offered. There is a trade off between taxes going to legislator pay and the overall quality of applicants. It is important to find an appropriate wage level.

There may be one novel benefit to reducing legislator pay. High pay may attract professional politicians who fake high qualification well, but will be poor agents for voters. Lower pay may limit applicants to those that get value from being good agents for voters.

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