On the 5th of July, the Economist published an article on politician’s salaries. Available here before they take the article and my image source down (cos I’m too cheapskate to subscribe) http://www.economist.com/node/16525240?story_id=16525240

If I were to pursue Economic History, which I am actually starting to steer away from, I will need to be able to process simple quantitative data as above. In the following, I will be trying to be as objective as possible in only using facts to show facts. But as we know, all historians (or people in general) are bound to have a bias no matter how hard they try.

First, let’s examine the facts at face value. Singapore ranks second highest in terms of political leader’s pay to their country’s GDP per person. Second to Kenya, who is the main focus of the article and a fair bit more than Indonesia.

I would present some background information about Kenya to draw a contrast with Singapore but then I realise from the jagged line in their bar that they probably far exceed Singapore in the ratio. Indonesia would be more convenient especially since they actually rank LOWER than Singapore. Alan Beattie dedicates a chapter in his book False Economy to how they are an example of a corrupt country with a successful economy!

Congratulations for being the bane of development economists — for in 1970 and again in 1997 Indonesia was told by the World Bank that corruption might be a problem to development, Indonesia merely pointed at their rates of growth as a way of giving the World Bank the finger. In the study of development economics, Indonesia is the first name that comes to mind when “crony capitalism” is mentioned. It is apparently corrupt even with a high politician salary to GDP per capita ratio — and Singapore still exceeds their ratio by far.Maybe that’s why we have no corruption, some might argue.

The significance of a RATIO to the country’s GDP per person is that it compares the leader’s salary to how rich or poor the people are. It’s okay to have a high basic salary as long as the people are rich as well (low ratio). Examples include South Korea, Israel, Taiwan that have salaries in the $100,000 range but having a ratio less than 10 as compared to Singapore which is more than 40.

But the graph overshadows the slim numerical margin at the side. Upon closer examination, one realises that Singapore not only has the highest basic salary, but has one more digit than everyone else — at $2,183,516. The next highest is at $513,245. Basic SL math tells me that it is almost four times more (or is it more than four times, my math is not very good)

Now to evaluate if there is a LINK between politician’s salaries and corruption. The claim is that countries with high salaries have a lower level of corruption and vice versa. This can be done by checking against Transparency International’s Corruption Perception Index 2009. It’s a ranking and I blame my Singapore education for making me value rankings so much, not to mention the Post-Exam reviews I’ve been having for the past six years -_-

From a ministerial point of view, I am proud to say that Singapore ranks 3rd in the world when it comes to being perceived as uncorrupt. But New Zealand which is ranked first, only has approximately one tenth of Singapore’s basic salary.

But there are two more clear comparisons to show the link between corruption and high salaries. First example, Kenya ranks 146/180 despite Raila Odinga drawing a salary higher than Barack Obama. Second example, South Africa which ranks 55/180 with a salary of $272,280 has a higher salary but a higher level of corruption than Poland — at the bottom of the chart with a basic salary of $10,633 but ranking 49. There is a small difference in ranking between Poland and South Africa, but South Africa has 25 times the basic salary of Poland… and Poland is still less corrupt.

From a ministerial point of view again, the counter example would be India and China. India ranks 84 and China rank  79. This might be due to their low salaries — corruption becomes attractive as a top-up to their meagre ministerial monies. But perhaps since there are countries with low salaries that are high in corruption and high salaries with low corruption…there is only a tenuous link between the two???

But heh, Indonesia is more corrupt than both India and China at 111. (I had quite a time scrolling up and down the list looking for Indonesia) and that’s with a basic salary ten times more than India and China.

The statistical data might be misleading though– it only takes into account basic salary, leaving out things such as subsidised expenses from taxpayer money (think showing a card when visiting the hospital for an MRI) or even additional kopi money. To further criticise the above data, there might be other countries that have been excluded from the study that might have a basic salary higher than Hong Kong and closer to Singapore.

Above all, my comparison assumes that all other factors are equal or ceteris paribus (I blame my training in economics for such narrow simplifications), thus excluding many other factors such as cultural and geographical factors. i.e. larger countries might be more prone to embezzlement, or even the existing infrastructure or lack thereof. In other words, in some cases, the high or low levels of corruption might not have anything to do with salaries. I believe that it is highly unlikely that uncorrupt countries will turn corrupt upon a pay cut, or that corrupt countries will clean up upon a raise.

In conclusion, the point about politician’s salaries is like religion. There are many valid objections to it, but we just shouldn’t question it. And like religion, there are those who’ll say “without [our religion], there is no morality” or for that matter, integrity and low corruption.

Maybe there’s some merit to the argument — high salaries might be a good check against corruption, because there no longer is a need for embezzlement. Question is: how high?

But I think that at the very least the data shows that there can be countries with high salaries having high corruption and low salaries having low corruption. It’s a possibility.

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And you wonder why the Economist was almost banned, or at least sued for libel, lost and had to pay $230,000. (More than Britain Minister’s Salary HAHAHA)

I think the Economist is a pretentious read. It’s for people who want to show themselves to be pseudo-academics, especially if they’re not even 20 yet. I hardly see the enjoyment behind reading the economist weekly. Even worse is the level of incomprehensibility their business and finance section that most people my age just wouldn’t get. The youths who do are mainly (and probably) debaters — which I have to point out that its unlikely that it will actually help much.

If anything, it should be read from the back to the front. Starting from the obituaries to the books then to science and technology. Skip over business and geographical areas you don’t care about then making your way to the news. Gremlin has her own objections and thinks that its overrated.

My long time ‘childhood friend’ ATK, claims that the Economist uses anonymous writers because it takes in articles from University students (not necessarily a bad thing) But I’m not sure how reliable the claim is, given that they’re meant to be anonymous, its meant to be secret — how then does it leak?

Why subscribe anyway — I go to the internets and copy and paste the articles I like. After all, who really reads about The Americas especially when you’re in Asia?