Is Public Sector Wage Hike the Cure for Corruption?

Mark Gimein's piece in the Bigmoney.com has given me some reason to think about how to design systems of compensation for workers in the public sector to improve service delivery and reduce corruption. Mark uses the recent indictments and arrests of public service professionals in New Jersey to argue that the problem could be solved by raising substantially the compensation of public servants in the US. In my reading, he suggests that this principle perhaps has general application.

First, I am generally cautious at an supposedly incisive account for sorting out public problems that concludes with the need to merely spend more money. But I am really surprised with the comparisons that Mark makes by saying that public servants in the US should be brought as close as possible to private sector pay I order to reduce the temptation to accept bribes. Later in the story he unbelievably suggests that a raise in the pay of public servants would in turn ratchet upwards the cost f bribes and perhaps reduce their number.

To my mind, I see the fact that public service professionals frequently bear discretionary power for which there is little oversight as the main driver of the tendency to abuse that power. I suspect that there's little link between this and the absolute income per se. By stating that the US$ 171,000 pay for the governor of Illinois makes the individual particularly susceptible ti trying to sell a senatorial seat, Mark is obviously overstating the case. What I see here is that Governor Rod Blagojevic merely tried to capitalize his very broad discretion. That would most likely happen even if he earned US$ 1 million.

Because the piece makes interesting reading, this blog post will not summarize it fully. Instead I will comment on the link between lower corruption and higher wages for public sector workers that the author cites.To my mind, I suspect that the direction of causality is not only unclear but would be stronger for a high income nation because of the ability to develop more robust oversight mechanisms. While the influx of wealthy people into public service in the US is laudable, I would not dare say that I am convinced that this has reduced the degree of corruption in public service. Perhaps Mark Gimein should tell whether any town would want Madoff for mayor.