Bonuses for MPs

But how do we attract abler MPs? Pay them less and reduce their perks is Cameron's answer – I can't wait until he gets his hands on Afghanistan. Steve Punt did a bit of salary research for Radio 4's The Now Show and takes a different view: "Another way of looking at it is that they do a rather thankless and time-consuming job under relentless public criticism and yet they're paid less than the head of estate capacity procurement at the Ministry of Justice or the head of consumer services at Calderdale Council."

The problem, as David Mitchell points out, is not that MPs are exceptionally greedy, or even exceptionally stupid, it is that they are incentivised to appear frugal when they have no desire (and who would?) to engage in frugality.

So: a solution? Performance-linked bonuses. This would mean that how much an MP is paid is reflected in how well that MP is seen to do their job by their constituents.

So: pay MPs a base salary of something somewhat less than they are paid now (say: £50 000/year) then pay them a bonus on top of that.

The bonus is determined by the electorate. So if a voter thinks an MP has done a good job then they can tick the box saying "I wish to contribute £20 to the incumbent's bonus."

If the MP had done a really good job and 15000 of their constituents ticked the box then they'd get a payout of £300 000 on top of their £50 000 salary. This would work out to a salary of around £110 000/year.

One of the good things about this system is it would allow people like me to express personal support for our MP, despite the fact I would never consider voting for his party. It also means that MPs wouldn't have to be childless millionaires in order to get by.

This brilliant idea of performance-linked bonuses for MPs brilliant idea (c) the inestimable Daniel Davies

Update: thanks to @PaulGrahamRaven for this video of Dan Pink talking at TED on why financial incentivisation might actually harm and disrupt creative faculties.

In the speech Pink argues that the kind of non-mechanistic, creative industries of the 21st century will actually suffer under a traditional Taylorist regime of incentivisation. Pink highlights results of the candle-problem as evidence that the prospects of true creativity and innovation are damaged by gross financial incentive.

People, Pink argues, respond better when they are given autonomy: freedom to persue our own projects in our own time and in our own way.

It's a good point.

The question to ask then is: what kind of work are MPs supposed to be doing? Are they performing the (relatively) mechanistic tasks that a good constituency MP is supposed to be doing, like sorting out parking tickets, solving planning issues, and trying to help their constituents with their problems?

Or are MPs supposed to be doing the more abstract, creative job of crafting excellent pieces of legislation?

Considering how royally (no pun intended) screwed-up our political system is the effect (either positive or negative) of any kind of incentive structure would not show up against the huge systemic institutional failure of the safe-seats/marginal-constituency problem.

Dan Pink identifies what is wrong with managerialism in much the same way as Dillow does, with recourse to scientific fact, and offers much the same solutions: more freedom, less hierarchy, no meaningless targets and greater worker power.

Managerialists believe in hierarchy and manipulating symbols, they believe that people must be coralled and controlled and inventivised to work well and be productive.

The truth, as Dan Pink describes, is that people work better when they are simply given a task that they believe is important, and are given as much freedom to persue it as possible.

MPs obviously know what they do is important, so this is an argument for greater independence amongst MPs from the party machine, a weakening of the parliamentary whips, and a rebalancing of power away from the Crown towards parliament, and more independently-minded MPs in general.

G20: what was that about?

Since I read The End of Politics by the august Chris Dillow I have become even more sceptical of the capacity of politicians to identify and accomplish worthwhile goals.

So news that the 20 most powerful politicians on this fair globe of ours have got together and have decided that something must be done is not especially comforting, especially as much of what they suggest seems tangential to the main problem of anthropogenic climate change.

This is unsurprising given the other great lesson of The End of Politics is that there is no such thing as a clearly defined national interest or even (within fairly wide parameters) such a thing as a single global interest. Any government policy will result in winners and losers. There will always be tradeoffs between different interests. TANSTAAFL.

And yet rather than focus on the big problem of a powerful, complex, open, and unpredictable system that we also all happen to live inside these 20 individuals chose to focus on a powerful, complex, open, and unpredictable system that we all happen to rely on for ongoing wealth and economic development (I betcha can't tell which one is which!).

Mmm. Tradeoffs at work.

I have not opinion on the credit crunch. I imagine things will be back up and running soon enough. As to the climate it is best to try to tread as lightly as possible and stop pushing the button. We've got a good thing going on here: it would be a damn shame if we continue pissing it up the wall.

And it is not managerialist to desire that governments do something about climate change. Given the potentially huge negative consequences of continuing to vent gas this can be thought of as a case of stopping a crime: one of the few things that it is generally agreed states are pretty good not bad at.

But I repeat: there are always going to be winners and losers.

Which is why it is important that everyone is consulted, everyone's point of view is heard, and the losers are given respect and sympathy for their plight.

That is why the death of one of the protestors at the summit was particularly sad.

The Put People First campaign achieved a couple of it's goals: tougher action on tax havens, and closer regulation of all financial instruments. But there didn't seem to be any particular emphasis on the environment or climate change, undoubtedy the areas where most medium and long-term good can be accomplished.

I'm sure I'm not the only one who can read and has access to a history book. Financial panics and recessions happen every few years.

But if there is one good thing politicians can do it is to try to find some way of averting the negative consequences of anthropogenic climate change.

A global $100/barrel all-border tariff on crude oil would be a good start: such a tax would avoid the colossally complicated, inevitably inefficient, bureaucratic corruptofest that any kind of "embedded CO2" tax system would entail whilst encouraging investment in innovative alternatives to our current oil-based infrastructure.

Combine it with a cap 'n' trade system for CO2 emissions and we're well on our way to dodging the climate change bullet.

The End of Politics: a review

I stumbled across Chris Dillow's blog (entitled Stumbling and Mumbling) after reading repeated references to managerialism in The Yorkshire Ranter and DSquared Digest.

A brief read of Dillow's blog suggests he is clearly too clever by half and, which is more, he knows that intelligence is irrelevant if you don't pay attention to empirical observations, or further are incapable of making accurate empirical observations.

Which leads into The End of Politics - Dillow's book.

Dillow's thesis is that, contrary to the standard caricature of being "all spin and no substance", New Labour does have a distinctive ideology.

This ideology holds that it should be possible to combine equality and economic efficiency, and that there is no trade-off between these two goals. Any problems that emerge can be dealt with through effective management.

Dillow calls this ideology managerialism. Managerialists believe that the job of government is to behave like managers of a company. Managerialists do not perceive the inherent trade-offs and conflicts of interest that are endemic to politics, and are indeed the reason for the existence of politics. Managerialists believe conflicts of interest can be resolved with good leadership and appeals to a well-defined national interest.

Managerialism is distinct from the scientific management of Frederick Winslow Taylor, which was concerned with organising resources effectively. Rather managerialism is the belief that there exists an abstract concept of "good management" that can be applied to every situation, regardless of the underlying organisational substrate.

Managerialists are obsessed with the idea that the world is new and constantly changing, thus simultaneously justifying managerialist action and ensuring that it is impossible to objectively test the efficacy of a managerialist policy because by the time it is implemented things will have changed.

Dillow also draws a link between Old and New Labour, describing how they are defined by their desire to achieve equality and economics efficiency simultaneously.

Dillow argues that there are trade-offs in politics that can't be managed away.

Further he argues that notions of "economic efficiency" or "equality" or even "rationality" are ambiguous and incoherent in and of themselves. He cites Newcomb's Problem to identify areas where traditional conceptions of rationality are limited.

Dillow shows that the arguments that globalisation have changed everything are false, and that concern over globalised capital and labour is as old as Adam Smith.

Instead, globalisation is used to justify New Labour's managerialist schemes.

Globalisation isn't necessarily irreversible, as the existence or non-existence of tariffs or immigration controls are at the whim of politicians.

Dillow shows that the evidence as to whether the national minimum wage destroys jobs is inconclusive, but taken as a whole, the research generally seems to indicate that the national minimum wage does destroy jobs but this is difficult to detect in aggregate economic data.

The attempts by the Beveridge-report inspired postwar settlement to achieve full employment lead to worker militancy and increased inflation, as workers campaigned successfully for higher and higher price rises in response to increased inflationary pressures that were in fact being caused by inflationary pay rises.

Dillow's arguments are a recurrent theme in what I've been reading. The Black Swan by Nassim Nicholas Taleb, The Origin of Wealth by Eric Beinhocker and now The End of Politics all have in common an empirically-supported belief that the powers of human rationality are more limited than we tend to assume. That centrally-planned projects often fail and that extensive government oversight of the economy is generally a bad thing.

So if the capacity of political leaders to manage things is inherently limited in all sorts of ways what is to be done?

The title The End of Politics is appropriate: Dillow pours flammable liquid over all the most cherished ideals of all politicians and sets everything alight.

Given the robust and thoroughly empirical nature of this book I am entirely persuaded by Dillow's arguments that most political projects are stillborn. There is never enough information for politicians to make good decisions, even if they were capable of doing so, or even had a clear idea about what qualifies as a "good" decision.

As an alternative to top-down managerialist politics Dillow argues in favour of the open society: that decision making should be as democratic as possible, simply because no centralised authority can possess all the necessary information to make good decisions.

Dillow believes hospitals should be run by doctors and nurses, and schools run by teachers, because no centralised manager in Whitehall can possibly predict "the facts on the ground."

He also suggests the intriguing idea of a citizens basic income as a way of partially solving the problem of welfare vs. working tax credits. It's an interesting idea, and one that appeals to the dilettante in me.

The basic lesson of The End of Politics is that in the complex world in which we live political and business leaders need to be more humble in the face of the inherent limitations of centrally directed institutions.

The best way to get anything done is to create the circumstances by which effective solutions can be evolved from the interactions and daily business of all the millions of people and machines in the world.

Nowadays, as professions become more and more specialised, it is important to hand control back to the professionals. Just as David Allen's Getting Things Done system was defined by Wired magazine as "Taylorism for the modern knowledge worker."

Just as the study of productivity has shifted emphasis from centrally-directed institutions to professional individuals Dillow argues that the response to increasing complexity in the world is to decentralise politics and business.

Both The End of Politics and The Origin of Wealth convey the message that economists and policy makers need to be more humble about the extent to which the economy can be controlled and that the best laid plans gang aft aglay.

Dillow advocates an open society and more genuinely democratic debate in which heterodox views and those who stand to lose out from policies are given a fair hearing. Political debate is likely to be fairer if things are done in the open.

My response to this book was initially fatalistic: if the world is so complex that we can never hope to control it, why bother attempting anything?

Dillow's answer is that government has a role in creating the circumstances in which innovation can take place. But it is not the role of government to attempt to change people or manipulate the economy, because it is incapable of doing so effectively.

In a broader context it is clear that our conception of human nature is changing and altering. We are coming to realise that we are not wholly rational, and even that rationalism itself is a canard.

Dillow has an excellent blog: Stumbling and Mumbling.