On the Terms of Reference for the Corrupt Practices Investigation Bureau

A quick thought: If I were the Prime Minister, I would, against partisan self-interest, boot the Corrupt Practices Investigation Bureau (CPIB) out of the Prime Minister's Office (PMO) and restructure it.

At the highest level, the CPIB should be headed by a group of equals. If any member of that group wants to launch an investigation, the investigation will be launched. (Of course, there should be rules governing how these investigations might be conducted.) Now the question is how to appoint these individuals and their tenure.

Perhaps, each government might appoint up to 3 individuals, the President up to 1, and the Attorney General up to 1. These individuals would serve up to the dissolution of the government after the present one. That is to say, they may be there for up to two Parliamentary terms. (This is to prevent a corrupt government from...)

Taking this further, the CPIB might be split up into two independent organizations (which can investigate each other).

But I'm not the Prime Minister, and I'm not in the Cabinet, and I'm not in Parliament, and I didn't even bother to run. So my initial statement looks rather vacuous in this light. Still, I would support any Prime Minister with the integrity to properly institutionalize anti-corruption in the government.

Implementing Proportional Representation within the GRC System

While it may not be popular to support the existence of GRCs, there are administrative arguments for the grouping of constituencies into GRCs in Singapore. However, the current implementation of the administrative grouping is poor. Parliamentary Elections for GRC seats are akin to a high stakes game where large fractions constituents of constituents will be disenfranchised. (e.g.: in a 55% - 45% result, 45% of the constituents are not represented by the team they voted for.)

Now, unless candidates from political parties are of such atrociously low quality as to be unable to work together with each other, there is a strong case for the use of Proportional Representation in Singapore. Having representatives from various political parties ensure that each constituents can be represented by the party they believe in (if that party has sufficient support for at least one representative to enter parliament).

Who Gets How Many Seats

In a Proportional Representation system for GRCs, voters vote for parties. There are various variants of Proportional Representation, but we shall adopt one where each party selects which of its candidates take the seats It wins. This variant is selected to address the legacy of race in Singapore politics. But before getting to that, an important aspect of implementing Proportional Representation should be dealt with.

The chief issue with Proportional Representation where there are small numbers of seats (less than 7, for instance) is how to allocate seats to parties in response to the realized vote-share realized by the participating parties. In principle, the number of seats each party wins in a GRC should be the fraction of votes won multiplied by the total number of seats available in that GRC. In practice, however, these numbers are never prefect whole numbers. Thus, it is important to deal with this matter in as fair a manner as possible.

This means that the objective is to use a rule of seat allocation that, in all cases, under-represents as few voters as possible, and over-represents as few voters as possible.

To calculate the level of over/under-representation, take the fraction of allocated seats and divide it by the vote-share of the relevant party. Let that number be γ. If that γ is greater than 1, then the party is over-represented by (γ-1)×100%. If that γ is less than 1, then the party is under-represented by (1-γ)×100%. If γ is exactly 1, it would be sufficient cause to "go buy 4D".

Going back to the example of the 55% - 45% result, if there were only a single seat (or the winning party took all seats), 55% of the constituents would be 81% over-represented and the remaining 45% would be unrepresented (infinitely under-represented/disenfranchised). In the case where there are two seats and one went to each party, the 55% would be 9% under-represented and the 45% would be 11% over-represented. This is a much better result. Now, in the case where there are three seats and 2 went to the party with a 55% vote-share and 1 went to the other party, the 55% would be 21% over-represented and the 45% would be 26% under-represented. Flipping this around, in the case where there are three seats and 1 went to the party with a 55% vote-share and 2 went to the other party, the 55% would be 39% under-represented and the 45% would be 48% over-represented.

Now, I would like to propose a truly optimal rule, so like many academics, I will shift the goal posts slightly. Philosophically, we might say that each constituent is allocated a representative holding a seat, and each representative in a GRC with K seats may be allocated to at most 1/K of all constituents. It is clear that almost always, even in the best case, some constituents will be allocated to a representative whose party he/she did not vote for. Now, we would like the number of such consituents to be as small as possible. With such an objective, it is easy to propose an optimal rule.

Now, suppose the vote share of each party i is given by v(i) and the total number of seats is N. Then the number of seats that party should get (in a world where seats are infinitely dividable) is f(i)=v(i)×N. Since this is not to be, each seat is to be taken by a single representative from some party. Now, party i is initially allocated a number of seats equal to f(i) rounded down. The remaining seats are allocated in order of how close each f(i) is to "the smallest whole number greater than f(i)" (a.k.a.: f(i) rounded up if f(i) is not a whole number, and f(i)+1 if f(i) is a whole number).

Using this rule, it is obvious that as few as possible voters are left unhappy ("allocated to a representative from a party they did not vote for"). This is because we made "unallocated" groups of voters "happy" in order of size. So the left over ("unhappy") groups are, thus, the smallest ones.

Before dealing with another important issue, here is a worked example. The vote share of three parties are 25%-45%-30% in a 6 seat GRC. This means 1.5-2.7-1.8 fractional seats. So the initial allocation is 1-2-1 seats with 2 balance seats. Now, 1.5 is 0.5 less than 2, 2.7 is 0.3 less than 3, and 1.8 is 0.2 less than 2. So, the third and then the second party are allocated an additional seat each, resulting in a 1-3-2 seat allocation. This means that (1.5-1)/6=0.5/6=8.33% of the electorate are left "unhappy". In a majority takes all system, 55% would be left "unhappy".

A Legacy Issue: Dealing with the Race

Now, race is a legacy issue that Singaporeans have to deal with. The ethnic integration policy that the PAP government implemented in 1989 to prevent the formation of racial enclaves led to the concern that minorities would be disenfranchised as they would not have the critical mass to vote minority candidates into parliament in a first-past-the-post voting system. While it is my hope that, eventually, race becomes a non-issue, I felt it necessary to have a reasonable answer to the question of how to deal with it.

Now, disenfranchisement is not a purely philosophical issue, and to resolve it in a Proportional Representation system one would have to argue that representation at a national-level is a sign of enfranchisement, and the lack absence of minority candidates at a local-level does not affect the level of aid that minorities receive. I will not bother to make the argument for the latter as other commentators have already made it for me, and the former is self-evident.

Now, Singapore's resident population is 74% Chinese. It would be reasonable, then to require that political parties to, of all the candidates they send to parliament over all GRCs, send at least one minority candidate for each four Chinese beyond the first four Chinese candidates. Arithmetically speaking, if the number of candidates that a party sends to parliament is greater than four, the ratio of Chinese candidates minus 4 to minority candidates sent to parliament should not be greater than 4. (e.g.: 4C, 3C+3M, 8C+1M are ok; 5C, 9C+1M are not ok.)

The above system is not perfect. It will fail in the event that the political landscape is so fragmented that small parties with small vote shares all put non-minority candidates into parliament. Thankfully, the political landscape in Singapore is far from being like that (so we can cross the bridge when we get there).

A more major problem would occur when the best candidates of political parties are non-minorities. As such, these candidates would effectively be the ones who carry the ground. Now, if this system results in any of the top candidates not being sent to parliament, then in a sense, voters would have been cheated. On the flip side, such a system would spur all parties to cultivate high-quality minority candidates, ensuring effective representation for minorities in the long run.

Conclusion?

I've sketched a practical means for implementing Proportional Representation in Singapore. In doing so, I have implicitly argued that the basis for using such a system would improve representation and reduce the extent of disenfranchisement. That is to say, it would further the democratization of Singapore.

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Afternote: I'm also an advocate for Approval Voting, which can be said to properly measure "the mandate of the people". (Refer to this past post for details.) I would like to think of a way to integrate Approval Voting with Proportional Representation. Unfortunately, the two obvious ways of doing this (interpreting approvals as full votes and interpreting approvals as fractional votes) are less than satisfactory.

The Government as Friend to the People (An Essay from Long Ago)

I decided to re-read the contribution that I wrote for the 35^th ISC Symposium in 2005. (Incidentally, a fellow PSC scholar from my "batch" won the top prize/one of the top prizes for his contribution to the 2006 symposium.) That was my first exposure to, not the "Swiss standard of living", but Swiss prices. I also looked at some of my old blog posts. Amusingly, it turns out that I my beliefs in social justice have not changed very much.

In any event, I'd like to share that old essay. It is essentially an extended idealistic rant about how a government should relate to the people. (Notably, the flow could have been better.) My own views on this subject have not changed: the government should act with the good of the people as the ultimate objective...

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The Government as Friend to the People
Introduction
“Distrust of Politicians High” reads an online newspaper article dated 20 November 2004 [1]. There is arguably no more poignant outcry against this international phenomenon than a recent track and MTV by rap artist Eminem, “Mosh”. The lyrics say it all: “… no more blood for oil, we have our own battles to fight…” [2]¹ The decline in public trust is corollary to a growing number of governments being perceived not to be fulfilling their responsibilities — to govern in the interests of the people. This essay advances a view that governments should act in the manner of a true friend of the people, while seeking to discuss public policy in a realistic manner. To achieve this, an education centric policy will be advanced.

Consider the idea of friendship, sound conceptions of which are found in Aristotelian thought. Aristotle defines three possible forms of friendship: friendship based on pleasure, friendship based on utility, and the “perfected” friendship [1]. In Aristotelian thought, paramount importance is placed on telos — that for the sake of which something is done. In each of these classes of friendships, the purpose of all interactions is exactly the basis of the friendship. It is clear what the first two categories entail. As for the “perfected friendship”, interactions are characterized as being for the sake of the friend. Hence, in such a friendship, one acts not with a view that benefiting a friend is good for oneself, but rather with a view that benefiting a friend is good.

This essay suggests that governments should relate to the people in the sense of the perfected friendship — regulating and allocating resources for the sake of the people. This is not as easy as it sounds. In a manner of speaking, it is an attempt to benefit all parties involved — no mean feat. This essay would discuss various aspects of attempting to achieve this goal. I will then venture to propose a policy based on education as a means to this end. It is practical, though probably difficult to implement, but arguably within sight for a number of countries in the world today.

Governments Have To Make Choices
No theory of government can be divorced from economics, the allocation of state resources being a chief function of a government. It is useful to perceive the economy as a mapping from the set of “possible allocations of physical and human resources, and forms of economic regulation”, to the set of “possible outcomes”. In its duties, a government has to make choices, even in the unlikely event of perfect knowledge of all possible choices and outcomes. Unless viewed with a one track mind, there exists no magic formula best for a state.

A certain statement illustrates this point well: “Maximizing commodities is not the only measure of a decent living.” It should be noted that the aforementioned set of outcomes does not reflect only economic output, but rather various other so-called “performance indicators”; Social welfare, for instance. But there exists no basis for meaningful comparison between this and commodious aspect.

Hence, the role of the government is to choose within the perceived set of pareto-optimal options, to introduce vocabulary from multi-objective optimization. A pareto-optimal option means an option that is not dominated by any other, that is, there exists no other option with all aspects of output performing better than or equal to it, with at least one aspect performing strictly better.

Certain choices benefit certain groups more than others, or even at the expense of others. A one liner describing US President George W. Bush’s tax cuts reads “Rich gain, Poor lose, Trade-offs for the middle class.” — a poignant illustration of this, as well as singular focus on economic growth². In this essay, it is proposed that governments make choices based on the interests of all. This is difficult, but arguably possible as discussed below.

Conflicts of Interest
An apparent obstacle to the simultaneous promotion of the interests of all is the conflict of interest between the corporation and labor, with huge implications on technical progress and economic growth. I speak of the fact that certain actions require a given critical mass of motive strength to be performed. A single man may be able to master all workings and contingencies of operating a mill, but he is inadequate to the task of managing those of a large nuclear power plant. Without further elaboration, corporations are necessary for the maintenance of the modern economy.

For a corporation to not disintegrate, certain prerequisites have to be met, such as revenue requirements. These requirements are invariably related to the manner in which labor is reimbursed: the greater the reimbursement, the more stringent the requirements for maintaining the corporation. Furthermore, expansion of the corporation, and hence economic growth, has prerequisites more demanding than those for subsistence of the corporation.

If government imposes safety requirements, labor potentially benefits but not the corporate baseline. With corporate tax cuts, social spending falls, affecting labor indirectly. It may appear that the interests of the worker conflict with economic progress. Or is it? Consider an endeavor that increases the capabilities of labor. Corporate performance improves as does the capacity to reimburse. This is an effect of public spending on education. Depending on how well it is implemented, in spite of increased taxation to fund it, all parties involved could benefit.

Education and Technical Progress
Promoting education promotes technical progress. This is obvious, but requires elaboration. Technical progress is a product of “creativity”. The term “creativity” is a cultural anachronism. In what we understand as “creativity”, nothing new is truly created. Rather, it is the juxtaposition of existing objects, concepts and ideas into new ones. The development of inventions and theorems is a result of this process. The role of education is to introduce known objects, concepts and ideas, primarily so they may be utilized, and secondarily that they may be improved in future. In other words, education aims primarily to increase competence, and in an auxiliary capacity, to promote technical progress.

Technical progress increases efficiency, but often causes unemployment, which may be circumvented by suitable public spending for the creation of jobs — opportunities to put education to use, to be addressed next.

Self-cultivation, Opportunities and Meritocracy
A major problem in modern day society is the loss of hope among parts of the population. This stems from the apparent lack of prospects for advancement, and hence, apparently nothing to work towards, in turn leading to a lack of willingness to pursue self-cultivation. A leading symptom of this is the “Don’t ask me why; I only work here.” mentality. Promoting education is pointless if people perceive that they derive no benefit from heightened capabilities. By extension, there would be apparently no point in any exertion to the end of education or self-cultivation. Hence, it is necessary to promote an environment where there exist opportunities for advancement, rewarding actions benefiting society.

All else being equal, people pursue greater rewards in preference to lesser ones, and it is logical to encourage higher levels of competence. It follows that rewards should be bestowed proportional to levels of competency. This is the principle of meritocracy. But employing a principle is not sufficient, it is necessary to provide the actual opportunities or promote an environment in which these may arise. The principle of meritocracy gives a basis for hope. Opportunities make it real.

What exactly constitutes an opportunity? At an abstract level, it is the possibility to employ oneself in return for a desired reward. On a practical level, this would mainly refer to jobs, for the most part, and outlets for the exhibition of ability. Drawing on historical evidence, in the USA during the 1940s and 50s, well implemented public spending in the avenue of job creation was able to cancel the effects of recession and bring about prosperity. This suggests that public spending on the generation of opportunities brings tangible reward and possibly a high return on investment. These need not be jobs per se; facilitation of the recognition of educational qualifications is a benign improvement to the economic environment with related positive effects.

Opportunities are not handouts. Rewards have to be worked for and it becomes a matter of personal responsibility to cultivate oneself to achieve these rewards. One who wishes to be employed as a scientist has to accumulate and synthesize knowledge; the aspiring athlete must train his mind and body; one who does not desire to pursue anything need not do so.

It would appear that such a manner of juxtaposing the principle of meritocracy and promoting opportunities equates to empowering people to live their lives as they will, depending on how they wish to interact with society. In the presence of opportunities, to emphasize the point, this empowerment acquires a reality as various courses in life become truly open to people. This is the gift of liberty.

Responsibility in Personal Life
The grant of responsibility is a sign of regard. Previously, meritocracy and opportunities were discussed as being functionally equivalent to placing the responsibility of selection and pursuit of professional goals in the hands of people, where it arguably belongs. This section discusses the return of responsibility to people in their personal lives.

As mentioned in the introduction, in recent years, the government has had an increasingly greater hand in dictating what actions are permissible even when they affect mainly the person performing the action. For example, the consumption of selected drugs without prescription has been outlawed, and gambling is often regulated. A notable opinion is that this, sometimes called “the criminalization of victimless acts”, serves as a tool for the control of “dangerous classes”. Whatever form they take, these restrictions represent a denial that the individual has the capacity to act responsibly; tantamount to saying, “You are incapable of choosing wisely, I shall choose for you.” The government, I believe, should respect the people.

To respect the people, the government has to deregulate the personal lives of the governed. However, sudden deregulation could lead to individuals harming themselves, which, on the outset was what regulation was put in place to prevent. Given the state of affairs today, immediate deregulation is not a practical option. One looking back to the Fall of Man may wonder how much of that fruit of the Knowledge of Good and Evil presently remains within the descendents of Adam and Eve. It is knowledge that is required.

To be able to act responsibly, people require knowledge of what possible choices they may make, and their respective outcomes. Given a comprehensive scheme promoting education, people would be able to choose in an informed fashion. Naturally, deregulation of the lives of the governed should proceed in tandem with the promotion of education.

On the whole, I believe this to be the exemplar of the government acting as a friend of the people. “You have the following choices, these are their consequences. Choose what you will.” This statement is characterized by respect tempered by concern — the mark of a true friend.

Summary and Conclusion
The ideal outcome of such a policy is a people that on one hand is a skilled workforce, and on the other, also a collection of individuals taking interest in self-cultivation and responsibility in their lives. This is a scenario congenial to the development of both economy and individual, in general beneficial to all and arguably worked towards for the sake of all.

The maintenance of this condition, I am inclined to believe, is predicated on sustained public policy promoting education and a sufficient range and volume of opportunities. Personally, I am inclined to believe that the humanistic educational reforms³ of Wilhelm von Humboldt in Germany in 1809 were the root cause of the rise of Germany as a scientific and industrial powerhouse [4].

Although, the comparatively short term gains obtained by promoting the interests of corporations at the expense of the people may seem attractive to a party trying to stay in power or please its corporate backers⁴, it remains that a choice has to be made. And the true friend will act for his friend, for the sake of his friend.

Excerpts from a translation of Wilhelm von Humboldt’s Limits of State Action were read by Noam Chomsky at a seminar in 1970, of which one aptly describes the ideal product of such a policy. “… artists, men who love their labor for its own sake, improve it by their own plastic genius and inventive skill, and thereby cultivate their intellect, ennoble their character and exalt and refine their pleasures.” [3]

References
[1] Daniel Robinson, “Lecture 13: Aristotle on Friendship” in The Giants of Philosophy. The Teaching Company. (Audio Lecture)
[2] Eminem, “Mosh”. Music Television. (Music Video)
[3] Noam Chomsky, “On Government in the Future”. Sound Seminar, Recorded at the Poetry Centre of the New York YM/YWHA on 16 February 1970.
[4] Richard Miniter, “Wilhelm von Humboldt: German Classical Liberal”. Accessed on 11 December 2004.
[5] Straits Times Interactive. “Distrust of Politicians High Globally”. 20 November 2004. Singapore Press Holdings.

Note: Endnotes are included for interest only and are not part of the essay.
Also of interest: “In Praise of Idleness” by Bertrand Russell

Endnotes:
^{1 (back)} This endnote is best read after the essay.

Eminem denounces the “psychological warfare to trick us to think that we ain't loyal”. This appeal to the somewhat vacuous notion of “supporting our troops” is meaningless in the sense that any American taking an interest in America cannot be against that. Yet, that same person can be against waging a pre-emptive war. In a related issue, consider the “scientific methods of strike breaking”, where strikers fighting for better working conditions were demonized as being “against harmony” or “un-American” in massive propaganda campaigns.

This form of propaganda partially denies one moral freedom to choose. It is an even stronger affront to human moral freedom than regulation of one’s personal life. It amounts to deception, or at least deliberate misguidance. This very denial of moral freedom is denounced by moral philosopher Kant.

Returning to Eminem, in the same track, “Mosh”, he also advocates Americans taking responsibility to shape America’s future.

^{2 (back)} One may argue that the policy or deliberately increasing inequality had economic growth singly in mind. Evidence supporting the policy is most likely based on studies, such as "A Reassessment of the Relationship Between Inequality and Growth" by Kristin J. Forbes appearing in the September 2000 issue of “The American Economic Review". The author is a current member of the President’s Council if Economic Advisors and was appointed in May 2003. In that article, regression analysis was performed on a number of data sets, and it was found that “in the short and medium term, an increase in a country’s level of income inequality has a significant positive relationship with subsequent economic growth.” This conclusion was said to be “highly robust across samples, variable definitions, and model specifications.”

^{3 (back)} See reference [4] for a short introduction to the reforms of Wilhelm von Humboldt.

^{4 (back)} Noam Chomsky writes voluminously on the topic of corporate power and its effects. Among other things, he is also a strong advocate of collective responsibility. One is strongly encouraged to read him.

The Case for Government Transparency and Openess

The recent CPIB probe of high-level Home Affairs officers (the SCDF commissioner and the CNB chief) [See: MHA's statement] has resulted much mockery of the idea of that good (high) pay keeps people honest and un-corrupt. That idea makes sense, but one must do the math, and the math is all about risk and reward. The smaller the risk of being caught and the larger the reward, the more likely someone is to be corrupt. At a high enough level, one would actually face a lower risk of being caught. This is also why a past Minister of National Development was investigated for accepting $1M in bribes (in 1981-1982 dollars) (he committed suicide before being charged).

This presents a strong case for government transparency. When decisions are made with sizeable economic consequences (such as urban development plans), such information should not be kept secret for too long. (For property development, that might mean 1 to 2 weeks; for financial information, that might mean immediate release.)

Without such transparency in place, the ones to benefit would be crooked corporate interests in corrupt public servants, and there is no reason why crooked parties and corrupt public servants should be the main beneficiaries of information of economic value.

Transparency would improve economic efficiency. Economic interests with the capacity to take advantage of this information would compete for the business that that information generates. This would mean higher capacity, lower prices for consumers, the pressure to innovate, and an virtuous cycle of positive economic outcomes.

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Postscript: To those who argue that we should trust "our own people", I am not convinced that we should rely on a large number of self-interested individuals to all be un-corrupt. There is bound to be some number who think they can get away, and a decent fraction of those who do. Instead, the system should guard against this through disincentives. I advocate strong institutions in almost all areas of government and business.

Preventing Floods in Your Garden

A long time ago I wrote to the Straits Times Forum grumbling about (irresponsible/deceptive) subcontractors of property developers who leave all manner of building waste, discarded food containers, wires, and so on buried in the garden plot in landed homes. Furthermore, the garden soil would be low quality clay with a thin layer of top soil covering it. Last year, my dad bought a terraced house along Corporation Walk, and I took charge of the garden. That was when I discovered, first-hand, these shady practices. That is not the point, but it paints the backdrop for this post on small-scale flood prevention.

Clay soil is horrid for planting, digging and draining water. My garden flooded horridly when I first moved in. I did a bit of clay removal last year, which improved the situation, but there was still flooding, albeit acceptable. Today, inspired by the potentially visionary point made by Minister for MEWR Vivian Balakrishnan that a prolonged drought would be more worrying to him than flash floods, I have decided to exercise my mechanical engineering muscle for the first time in real life (fluid mechanics, in particular; I transitioned to being something of an engineer of data-driven decision support systems from my third year as an undergraduate, but still got my degree in mechanical engineering).

Over time, I noticed that one area of the garden drained well, while another was dismally horrid, ponding (*snigger* *snigger*) with even low levels of rainfall. So I decided to channel some of the water from the former area to the latter. Now, a pipe would clog, and I didn't have the material. As a result, I settled for a sand channel. Sand is rather porous and a channel of sand would behave like a pipe. Now, fluid flow through a porous material is governed by Darcy's Law, which basically says that the flow rate is proportional to the gradient of the channel. So I dug a channel with a small gradient, and filled it with sand and prunings (just because), then covering it with some soil.

Long story short, when it rained moderately to slightly heavily just a while back, there was no more flooding. Now, with a little more civil engineering expertise (and a hundred million dollars), I'm sure we can get flooding under control in the city area. All it takes is a suitable application of engineering principles.

Improving the Verification of Credentials for Foreign Professionals

In view of the fact of endemic college application fraud in China and India (supported by a cottage industry of "Application Agencies"), it would not be surprising that application fraud from those countries would extend to the realm of work permit and Permanent Residency applications. In fact, it seems that the most distrustful of college applications from China turn out to be college professors who are themselves China nationals. (I put it down to it being likely that they have encountered the "Application Agencies" on their visits home.)

Perhaps higher verification standards should be used by the Singapore government for verifying the credentials of foreign professionals. The both applications for Permanent Residency and Employment Passes require documentary evidence of degrees and diplomas. This takes the form of originals which are viewed and returned. The high level of professionalism of the fraud industry would make it hard for ICA staff to detect fraud even with their training and experience.

Now, applications for postgraduate studies typically require original transcripts, either with the application or before an offer is made (scans are accepted as a preliminary in those cases). These transcripts are required to have been sent directly from the degree awarding institution to the assessing body at the applicant's own expense (typically less than SGD 20). This additional layer of security might reduce fraud. Or, it might turn out to be another iteration in the fraud arms race. Ultimately, I see a business opportunity for Chinese and Indian university registrars. (Which may end with fraud penetrating the university registrar, leading eventually to fraudulent grades, and finally a painful bursting of the fraud bubble.)

The future has always been bright for the street smart and amoral.

Reimagining the Kampung

When I was an undergraduate, I stayed in on-campus housing. The place I stayed in was set up like a "large apartment" which comprised a corridor flanked by personal rooms with a shared kitchen and bathrooms. The set up resulted in a natural place for hanging out (the kitchen) and private places to retreat to when one happened to feel less sociable.

There is a sense in which the Kampungs of old, or at least my picture of them, were like that. The use of common facilities led to people from different familial units leaving their private spaces and gathering in common spaces to use these shared facilities. While waiting for these to become available or after using them, people would hang around to interact with each other.

Why does this not happen in HDB apartments, landed developments and just a bit in condominiums? To me it seems that there are too many steps to take. Locked doors. Distance. Socializing is not as easy, and opportunities are not so readily available due to more daily functions being performed with private as opposed to shared facilities.

In my undergraduate "home" on-campus, the main door to the "apartment" was secured by "transponder access" (horribly insecure, I know), so those of us staying inside were comfortable leaving our doors open and stroll out to the kitchen to see who was there. I would imagine that a similar process would take place in a Kampung where the village would be "secured" by the property of everyone knowing everyone else (thus, everyone knowing who did not belong and to be wary of them), so homes would be open and people would step out and look to see who was around in some "central plaza". The lack of private facilities would force people into a shared space to socialize. Social interaction, in turn, generates friendships, attachments and mutual assistance. This was what happened when I was an undergraduate too. (Well, there were one or two anti-social people who kept to themselves and we did not reach out to. Amusingly, there are always a few people who keep to themselves in every village.)

I think such a housing concept might work. Multiple families which are not necessarily related sharing a mega apartment with shared facilities. The fact that appliances like washing machines are not fully utilized implies that cost savings (earth savings) will be accrued. The generation of mutual assistance would create an additional social safety mechanism which could supplement public assistance schemes and not suffer from the same "awareness" problems.

There are, of course, (many) implementation issues, but this idea looks interesting and might be good to explore.

Towards a Ministerial Salary Scheme Designed for Inclusive Growth

I would like to talk about developing KPIs that are robust to manipulation. Before beginning, I would like to apologize in advance that this article will be slightly technical. It has to be as KPIs have to be properly designed to be aligned with social objectives (such as "inclusive growth").

This alignment with social objectives has to be done with the maximizing behaviour of individual policy makers in mind. It is thus natural to begin with a discussion on how systems of KPIs are "gamed" by those who are the subject of measurement, since their pay-offs (salaries) are essentially (increasing) functions of the KPIs.

Following the discussion on how KPIs are manipulated, I will cover why KPI manipulation should be taken into account. Then, I will comment on the manipulability properties of the current salary scheme. Finally, principles by which robust KPIs may be designed will be discussed. In the annex, I will run through the process of creating a salary scheme aligned with the objective of encouraging "inclusive growth".

Preliminaries on KPI Manipulation

As a preliminary to what follows, it should be stated clearly that the process of manipulation of a system of KPIs is essentially one of performing optimization to maximize one's pay-off. (Here, the term optimization is used here in the sense of attempting to maximize some pay-off function over all possible decisions.) In practice, optimization is based on manipulating the (policy) levers that one has control over.

Having spoken briefly about manipulation, let us consider "growth". One might summarize all forms of economic and technological engineering as effort directed at two objectives that may be concurrent: (i) improving efficiency to reach the efficiency frontier (where it is possible for every aspect to be improved without making any aspect perform more poorly; "transitioning to a better indifference curve"), and (ii) making the trade-offs that maximize one's benefit. Of the two, only (i) may be thought of as true growth and happens to be the more challenging objective, while (ii) is the task of selecting, from economically efficient alternatives, the one most beneficial to oneself.

Now, we are concerned about policy makers trading something that benefits them less for something that benefits them more. In other words, KPI manipulation. When a policy maker does that to increase his own pay-off, winners and losers are created. In simple economic (game theoretic) analysis (which assumes self-interested behaviour), the pay-offs for those winners and losers do not matter to the policy maker, who is only interested in his own pay-off.

Why Bother?

We cannot be so naive as to assume that intelligent people will not optimize for their own benefit. This will happen, and our policy makers are, at the very least, not stupid. As such, incentives have to be set up such that the maximizing behaviour of policy makers are aligned with social objectives.

To be cynical about the present government, a peg to the salaries top earners generates the incentive to implement precisely two types of policies: (i) those that encourage higher salaries for top earners and (ii) those which trade the welfare of non-top earners for higher salaries at the top. The only defence against this behaviour would be "human goodness" or "the threat of non-election". Game theory and common sense would tell us that appeals to the former are nothing but cheap talk. This configuration of incentives is undesirable. Incentives should be in place to directly support "inclusive growth" (or whatever policy objective is articulated) rather than leaving the objective out of the incentive system (which makes sense to office holders only if it is there for public consumption and is not, in fact, the true objective).

The current and proposed ministerial salary systems are textbook examples of incentive systems which are not aligned with the stated policy objective ("inclusive growth"). Subsequently, I will do a cursory analysis of the current ministerial salary scheme, which I will abbreviate as MSS.

An Analysis of the Current Salary Scheme

One important observation that can be made about the MSS is that some aspects of the growth objective are weighed much more heavily than others. In the MSS case, the ratio of the weight given to the salaries of top earners to those of low-income workers is extreme. Without bonuses (which is based on GDP growth), this ratio is infinity (i.e.: the income of low-income workers do not matter at all). Thus, the underlying optimization problem might be framed (polemically) as such:

maximize Expected Salaries over: Feasible Economic Policies subject to: Probability[Re-election with Comfortable Majority] ≥ 1-δ

An over-simplified, but concrete, (and still deliberately polemical) version of this might look like:

maximize 0.6 Expected Median Salary of Top 1000 Earners (EMS) over: non-negative EMS and Expected Median Salary of Singapore Citizens (EMSSC) where: α EMS + β EMSSC ≤ γ (Efficiency frontier type Constraint) subject to: EMSSC ≥ λ ("Re-election Constraint")

which has optimal solution [EMS, EMSSC] = [(γ-βλ)/α, λ]. This solution informs us that (i) only the bare minimum will be done to "ensure re-election" and (ii) all other economic capacity will be directed towards boosting the salaries of top earners.

It should be recognized that this is a simple model designed to be polemical. However, it highlights the fact that when (intelligent) policy makers optimize for their own benefit, it can negatively affect general welfare unless their incentives are aligned with the general good.

Principles of Design for a KPI System/Salary Scheme

"Inclusive growth" is a policy objective of the "general welfare" type. The other being of the "narrow quantum leap" variety such as "putting an man on the moon by the end of the 1960s". The former entails spreading out resources and the latter entails focusing them. Presently, I'd like to make suggestions of the kind of ingredients that might go into KPIs/salary formulas for policy objectives of the "general welfare" variety.

To ensure that no one is left behind, it is important to ensure that the KPIs do not make it profitable to lower the welfare of one group in favour of another. For instance, with a KPI such as C₁ [Factor A] + C₂ [Factor B], and a technological/economic aspect that allows trading of 1 unit of [Factor A] for 2 units of [Factor B] using 1 unit of "policy effort", unless the coefficient C₁ is close enough to 2 C₂, trade offs will be made that lower one of the factors to its minimum level. (For this example, if C₁ - 2C₂ exceeds 1, [Factor A] will be increased and [Factor B] decreased; and if 2C₂ - C₁ exceeds 1, [Factor B] will be increased and [Factor A] decreased. Also, for the more mathematically inclined, this example clearly brings out how "linear" KPIs without feasibility conditions/veto criteria can be dangerous.)

Trade offs are the essential mechanism by which KPIs are manipulated. (I know of no others and would be keen to learn of others.) If the effort to make a trade off is worthwhile for the self-interested policy maker, the motivation to make that trade-off will exist. This principle has other serious implications in the public sector which I decline to touch on at this point.

Now, the converse to the aforementioned principle (which is also true), is that if the effort to make a trade off is not worthwhile for the self-interested policy maker, the motivation to make that trade-off will not exist. I believe that if growing the pie becomes the only practical means of increasing their rewards and remuneration, policy makers' efforts can be focused to that end and it will be possible to promote objectives like "inclusive growth".

As a rule of thumb, the more broad-based a KPI is, the more effort required to make gains due to trade-offs. Furthermore, a broad-based KPI is precisely what is needed to measure "inclusive growth". (The more mathematically inclined might think of using a function of the minimum of a set of subsidiary KPIs, or a function of the a set of the "order statistics" of subsidiary KPIs, which would require that all/most sub-KPIs rise in order for the parent KPI to rise.)

Conclusion

I hope the forgoing discussion was useful and helped stimulate thought on how to design KPIs or a salary scheme to achieve policy objectives. We have discussed how the ability to make trade-offs allows policy makers to optimize their KPIs without growing the economic pie (or the per-capita economic pie) and how this can be dangerous. It has been suggested that if these trade-offs are no longer easy to make, it would be more profitable for policy makers to work on "increasing the general welfare" (as a chief means for increasing their pay-offs).

I would like to close with a suggestion of a Ministerial Salary Scheme that I believe is more compatible with "inclusive growth" than the existing and proposed ones. I will describe the development of that scheme and what motivates the various components of it. I hope that the principles outlined in this article will eventually be used in the development of an improved (and more rigorous) salary scheme. (The reader should be warned that math will be encountered.)

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Annex: A Proposed Ministerial Salary Scheme Designed for Inclusive Growth

Note that this does not consider MP allowances, which are (rightly) paid over and above ministerial salaries. The salary scheme will be based on a benchmark salary paid to a junior minister, with senior grades getting (arbitrary) multiples of that salary. This benchmark will move in response to changes in economic conditions and the economic performance of Singapore. Let us denote the benchmark salary for the year Y, as S_Y.

Suppose a target salary is computed using a scheme like that suggested by former NMP Siew Kum Hong and call it C₂₀₁₂ (where the 2012 refers to the year of the original benchmark and "C" is for consumption). For those who have not read Siew Kum Hong opinion piece, S₂₀₁₂ is the price of a basket of goods and services that amounts to a decent standard of living for someone of a minister's social standing. Now let C_Y be cost of the same basket of goods in year Y.

I would suggest that a minister's salary be partially inflation adjusted to make it robust to market changes. (This would be one perk of office, and is entirely arbitrary.) Suppose that (arbitrarily) that amounts to one third of the original basket of goods. The rest should move with the wage levels of Singaporeans.

Define the income at the α fractile (highest income among the lowest earning 100α % of working Singapore citizens.) in year Y is I_α,Y, and determine K_α such that 2/3 C₂₀₁₂ = K_α I_α,Y.

So we find that S₂₀₁₂ = C₂₀₁₂ = (1/3) C₂₀₁₂ + K_α I_α,2012 for all values of α, and we can benchmark ministerial salaries as

S_Y = (1/3) C_Y + K_α I_α,Y

for any value of α. However, this pegs salaries to a particular income group, which introduces the motivation to manipulate public policy to increase the incomes of that group. Thus, we should broaden the base.

Suppose α were drawn from the set A = {0.05, 0.06, 0.07, ..., 0.99}. I start from the 5% level to avoid pathological low-income cases (such as refusal to work) and end at the 99% level. Now for any set of positive weights w_0.05, w_0.06, w_0.07, ..., w_0.99 corresponding to the elements of the set A such that they sum to 1 (Sum[α in A] w_α = 1), the following holds: C₂₀₁₂ = (1/3) C₂₀₁₂ + Sum[α in A] w_α K_α I_α,2012. This leads to a fairly broad based benchmark:

S_Y = (1/3) C_Y + Sum[α in A] w_α K_α I_α,Y.

The weights w_α should be reasonably even, perhaps even equal. However, I am of the mind that income inequality should be reduced, so it might make sense for there to be a small variation in weights for instance such that w_α decreases with α and w_{0.05 =} 2 w_0.99.

Unemployment can be incorporated in this framework by including unemployed people in the income distribution. However, care should be taken to not build in the incentive for policy makers to introduce policies that introduce disincentives for home making and other economically valuable but unpaid work. This would require a lot more work to flesh out, so this will be left as an idea.

The final modification might appear a little complicated, but the idea is simple. We would like broad income growth and not income growth focused on the "easiest" part of the income distribution. Thus, we should consider the fractiles which have had the lowest growth since the benchmark year. Since A has 95 elements (95 possible values of α), we could perhaps consider 60 elements every year.

Let G(Y) be the set {I_α,Y/I_α,2012 : α in A} and let B(Y) be the set {α in A : I_α,Y/I_α,2012 is one of the bottom 60 elements of G(Y)}. Let the normalizing constant for the weights used, M_Y := 1 / (Sum[α in B(Y)] w_α). (This ensures that M_Y Sum[α in B(Y)] w_α = 1.)

Now, we arrive at the salary benchmark:

S_Y = (1/3) C_Y + M_Y Sum[α in B(Y)] w_α K_α I_α,Y.

To arrive here, we have done the following:

1. Determine a benchmark standard of living, an associated basket of goods and services and its price in the benchmark year.
2. Split the benchmark salary into an inflation adjusted component (perk!) and a market adjusted component which depends on the incomes of Singaporean workers.
3. Made the benchmark depend on multiple income fractile points to account for the standards of living of a broad range of Singaporeans.
4. Set the weights associated with each salary benchmark to promote the reduction of income inequality, while ensuring that the weights are not "badly skewed". (Note: In effect, this is a weighted average of all the salary benchmarks of item 2.)
5. Decided to use only a sub-set of the elements of A to compute the weighted average. The elements used relate to the income levels which have grown the least since the benchmark year. This promotes the raising of all income levels, and punishes ministers (with stagnating wages) for stagnating wages of their constituents.

Consider the following examples of how the "performance" term (the second term) varies with changes in income. (i) all incomes rise {fall} by 1%, the "performance" term rises {falls} by 1%; (ii) income levels at 60 of the fractiles in the set A remain the same and the rest rise, the "performance" term remains constant (since the worst 60 fractiles are used). These examples illustrate the idea of inclusive growth.

I hope this portion has been informative and interesting. I must emphasize that this is just an example of how to apply the ideas in the forgoing article. However, I hope that such ideas might be used to develop a salary benchmark in a more rigorous fashion.

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Afternote 1: A final element of this scheme would be conditions for when a re-benchmarking can be called for. My sense is that it would be sensible for this to be done after each election. Also, I feel that the President's pay should be entirely inflation adjusted.

Afternote 2: It does strike me that a 1% rise in part of pay for a 1% overall rise in income seems stingy. However, it is arguable that while government policies are able to torpedo incomes, the dominant cause of rising incomes are drive and intelligent action on the part of individuals. To postulate a further bonus for income growth does not make much sense.

The problem with this is that indifference to facilitating income growth might be encouraged on the part of office holders. It this makes sense is to add loss aversion into the mix (c.f.: prospect theory, which led to a Nobel Prize in Economics), where drops in income at the reference fractiles are penalized more heavily than increases are rewarded.

Afternote 3: It is entirely possible to use a similar mechanism to allow salaries to rise to match that of top earners if national income growth targets are met. (Naturally, I refer to stretch goals.) The functional form of such a benchmark, R_Y ("R" for reward), might look like the following:

R_Y = S_Y + (I_Target,Y - S_Y) f(G_Y, G_Target )

where I_Target,Y is some target "top rate" income for the year Y,

G_Y = {M_Y Sum[α in B(Y)] w_α K_α (I_α,Y / I_α,2012) } - 1

is a measure of "inclusive growth", G_Target is its associated (stretch) target and f is a non-negative function that is increasing in the first parameter and decreasing in the second. (e.g.: f(x, y) = Max(0, x/y)² or f(x, y) = Min(Max(0, x/y)²), Max(0, 2x/y - 1)) which is more reasonable.)

Afternote 4: It is appears that the idea of designing KPIs to make effortful manipulation non-profitable has not been mentioned in the academic literature. I would like to pre-emptively coin the term "friction" for it.

Coordination Problems and Approval Voting

I came across the following abstract. It is not too technical, and highlights the coordination problem that Approval Voting solves (i.e.: vote splitting leading to a strictly inferior outcome for most voters).

This paper shows that information imperfections and common values can solve coordination problems in multicandidate elections. We analyze an election in which (i) the majority is divided between two alternatives and (ii) the minority backs a third alternative, which the majority views as strictly inferior. Standard analyses assume voters have a fixed preference ordering over candidates. Coordination problems cannot be overcome in such a case, and it is possible that inferior candidates win. In our setup the majority is also divided as a result of information imperfections. The majority thus faces two problems: aggregating information and coordinating to defeat the minority candidate. We show that when the common value component is strong enough, approval voting produces full information and coordination equivalence: the equilibrium is unique and solves both problems. Thus, the need for information aggregation helps resolve the majority's coordination problem under approval voting. This is not the case under standard electoral systems.

The conclusion the authors arrive at is not surprising (though the math might be novel, noting that the journal it is published in is regarded as top-tier in the economics establishment).

In the article, the benefit the majority perceives for the two preferred candidates is modelled as a combination of a "common value component" (with different values for the majority and the minority) and an "individual component".

What the authors conclude is that when the "common value component" for the majority is "large enough", then the use of approval voting produces a outcome with a perfectly coordinated majority (as if there were perfect information) where the candidate with the largest number of expected (approval) votes is the majority candidate preferred by more (majority) voters.

The intuition behind it is that the "common value component" serves as a signal of the possibility of a bad outcome is the majority does not coordinate itself. When the inferior outcome is a threat, the majority unites; when it is not, the majority falls into partisan voting.

The citation information of the article is as follows: Bouton, L. and Castanheira, M. (2012), One Person, Many Votes: Divided Majority and Information Aggregation. Econometrica, 80: 43–87. (Here is a link to a recent pre-print.)

On the Ministerial Salary Review

The recent ministerial salary review has sparked substantial discussion on the principles upon which political leaders should be remunerated as well as how this remuneration should be quantified. The Terms of Reference (TOR) of the committee appointed by the Government to perform this review stated that they were to (i) "take into account salaries of comparable jobs in the private sector and also other reference points such as the general wage levels in Singapore", as well as (ii) to recommend Ministerial salaries at "a significant discount to comparable private sector salaries to signify the value and ethos of political service".

It can be said that the committee did well within the ambit of their TOR. They proposed technical improvements such as reducing the volatility of the benchmark by basing it on a larger pool of top earners in the private sector and a slightly better metric for national progress which does not rely entirely on Gross Domestic Product (GDP), itself discredited as a measure of the size of a modern economy. Their report is available here. However, it is clear that their proposals were not well received by all. Many recent commentaries on the subject opine that the proposed ministerial salaries are still too high, and also that the TOR of the committee were too limiting and essentially presupposed a salary structure.

The intent of this article is to summarize the various positions taken on the ministerial salary review. I will compare the proposals of the government appointed committee (henceforth, GAC) with those in the November 2011 report by the Singapore Democratic Party (SDP) and the positions taken by the National Solidarity Party (NSP), those of the Reform Party (RP), those of the Workers' Party (WP) as well as those of others.

A Comparison of Proposals

I begin by comparing the guiding principles behind the two reports proposing systems for ministerial remuneration. These are presented below and they could not be any more different.

Guiding Principles
GAC	SDP
Take reference from comparable jobs in private sectors and other reference points. Recommended wage levels should be at a significant discount to comparable private sector salaries to "signify the value and ethos of political service".	"Place greater emphasis on public service." Propose a system that promotes transparency and accountability.

It is apparent that the TOR of the GAC greatly restricts the kind of solution that the GAC can present. At first glance, one might assume (correctly) that the resulting report would recommend a refinement of the current system and a tweaking of the parameters therein to incorporate the "significant discount" stipulated in the TOR. It turns out that this happens to be the case.

The SDP report, in contrast, begins by surveying practice in selected countries (with healthy Corruption Perception Indices) and distilling the principles underlying those remuneration systems. This methodology, essentially presupposes that ministerial salaries will not be pegged to those leading earners in the corporate world, but rather to either general wage levels or to salaries in the civil service. The recommendations of the report reflect this, adopting the former peg. In addition, the SDP report sets out to propose a system that promotes transparency and accountability, which is an institutional objective. The GAC report, however, does not include such an objective in its TOR and, as such, does not report on this matter.

The following table summarizes proposals on basic pay made by the GAC, SDP and others.

Proposals on Remuneration
GAC	SDP	NSP, RP, WP, Others
Pay for a entry-level minster (MR4) with good performance pegged to 60% of the median income of the top 1000 in the private sector. Allowances of MPs and salaries of other political appointments as multiples of the MR4 salary level. President's monthly salary will be set to be equal to that of the PM, but no performance bonuses will be given. No pensions.	Allowance of a Member of Parliament (MP) should be pegged to ten times the mean wage of the bottom 20th percentile of the workforce. Salaries of ministers and the president to be pegged to MP allowances.	(NSP) Median wage as a benchmark. (WP) Salaries of ministers should be pegged to MP allowances. MP allowances should be pegged to the salaries of divisional directors in the Civil Service. (RP) Small fixed component with larger variable component linked to a broader set of KPIs. (RP, WP) Introduce deferred components to address the time lag in impact of policies.
MP: $192,500 Minister of State: $770,000 Senior Minister of State: $935,000 Minster (MR4): $1,100,000 Minster (MR4): $1,100,000 Minster (MR3): $1,320,000 Minster (MR2): $1,540,000 Minster (MR1): $1,760,000 DPM: $1,870,000 PM: $2,200,000 President: $1,540,000	MP: $168,000 Cabinet Minster: $504,000 PM: $672,000 President: $756,000 (It is clear that these numbers are intended to be indicative, so the same resolution as in the GAC's report is not necessary.)	(Former NMP Siew Kum Hong) The salary should be enough for ministers to maintain a reasonable lifestyle. i.e.: "comfortably cover mortgage payments for a reasonably-priced landed property in a reasonable location; payments for 2 cars for the family; education for a minister’s children (including overseas education); some retirement savings; and so on." This will be politically defensible and allow the minister to do his/her job without undue financial distractions.

There isn't much to say about the proposals by the GAC. As previously mentioned, the report proposes some technical improvements but does not deviate much from the pre-existing system. The underlying assumption that ministers sacrifice high corporate salaries (in the non-government-linked private sector) requires proof in the form of leaders from private sector taking pay cuts to serve as ministers. Only given such proof would the opportunity cost argument, underlying the system proposed, be acceptable. While the absence of such proof does not demolish the argument, it significantly weakens it.

The SDP report, having surveyed international practice, highlights that ministerial salaries are typically not pegged to those of the highest wage earners, but rather median incomes of citizens or to those of certain ranks in the civil service. It proposes pegging MP allowances to the mean wage of the lowest 20% of earners in the workforce and pegging ministerial salaries to MP allowances to link living standards of ministers with those of their constituents.

While I feel that this is a reasonable proposal, it is, like that of the GAC, entirely arbitrary. In this respect, a proposal by former NMP Siew Kum Hong strikes me as a more realistic method for arriving at numbers. He sketches how to ensure that a minister's salary should support a certain standard of living (as a function of his/her rank), which amounts to a system which will be simultaneously politically defensible and allow the minister to do his/her job without undue financial distractions. It also links the living standards of ministers to the prevailing cost of living.

Moving on, the following table summarizes proposals on performance bonuses made by the GAC, SDP and others.

Proposals on Performance Bonuses
GAC	SDP	NSP, RP, WP, Others
Annual Variable Component: up to 1.5 months Performance Bonus: up to 6 months (good performers typically get 3 months) National Bonus: up to 6 months	Discontinue variable bonuses.	(NSP) Include a variable component tied to national vote share, vote share being a "composite KPI, encompassing all issues that Singaporeans care about" (RP) Small fixed component with larger variable component linked to a broader set of KPIs. (RP, WP) Introduce deferred components to address the time lag in impact of policies.

The National Bonus Matrix (below) gives the payout levels for the National Bonus proposed by the GAC. The 100% level for each component corresponds to a payout of 0.75 months for a maximum total National Bonus payout of 6 months. Notably, it has been argued that the bonus targets are too easy to meet.

The SDP report recommends no performance bonuses as ministerial pay is remuneration for "public administration performance rather than private sector achievement". This argument is somewhat unconvincing. On the other hand, it might be argued that a well selected peg to incomes incorporates bonuses in the salary as income growth increases pay for ministers. (Furthermore, income growth is strongly positively related to growth and the standard of living.) I am under the impression that they have, in fact, made this alternate argument after the GAC published its report. However, I can't find a statement to that effect on the SDP website.

I feel that some element of pay for performance should be present. However, it should not be along the lines of the National Bonus which I feel is, to put it frankly, wimpy and uninspiring. Is an unemployment rate of less than 3.5% truly a stretch goal? A broad-based National Bonus would incorporate the diverse interests of the various groups of Singaporeans. One might develop such a bonus scheme though doing a massive survey of Singaporeans and distilling all that is important. Such a bonus scheme would be very broad based and robust to gaming, leading to office holders giving up gaming the system in favour of pursuing truly inclusive growth. Such a scheme would not deter public spirited individuals from stepping forward, but it might cause apprehension in those who are more concerned about easy money.

Furthermore, I believe that individual performance bonuses should be split into a discretionary component (decided by the PM) and a well defined KPI-based component. To properly measure relevant performance, the KPIs should be individualized based on the mission of each minister's ministry. Such KPIs might be easy for ministries like Transport to develop, but good KPIs are not so easy to develop for those such as Education. This is a challenge that I cannot shy away from. Furthermore, noting the (possibly long) time lags associated with the introduction of a policy and its impact, deferred payouts are not unreasonable and should be considered.

Finally, I come to the institutional proposals that have been made. Notably, the GAC makes none since their TOR makes no mention of institutions.

Institutional Proposals
GAC	SDP	NSP, RP, WP, Others
	Establish independent salary commission. Ministers to make public, through the commission, their commercial interests, shareholdings, directorships and other financial interests.	(NSP) Ministers to make public, through the commission, their commercial interests, shareholdings, directorships and other financial interests.

A major thrust of the SDP report are recommendations to the build government institutions that are robust to misbehavior. Aside from the recommendation to set up an independent salary commission, the SDP report also recommends that the Corrupt Practices Investigation Board (CPIB) be moved out of the Prime Minister's Office and be made directly answerable to Parliament. I agree with these proposals. Strong institutions provide an important layer of defence against a misbehavior and are important to have for a well-functioning government.

Other Comments

While income from directorships are included in the tax returns used to estimate the incomes of top earners in the private sector, directorships for ministers would provide additional income over their salaries. This provides an easy means to circumvent the pay cut. In fact, additional board appointments in Statutory Boards and Government-Linked Companies might be easily used to increase effective incomes. This is clearly open to abuse. I would regard service by ministers on the boards of Statutory Boards and Government-Linked Companies to be an important part of government. As such, no additional remuneration should be given to ministers for their service on such boards. In addition, to avoid conflicts of interest and unseemly chasing of private sector board positions, ministers should not be allowed to take up board appointments in private sector companies.

In addition, democratic values might also be a factor in remuneration. A "re-election top-up" for ministers who held ministerial positions in the last term could be a component of remuneration that reflects whether the electorate want a minister to continue as a minister. (This would be equivalent to a "freshman discount".) The NSP has made a similar proposal, noting that vote share was, in effect, a composite KPI. In contrast to them, I think it should be an element of basic pay.

Conclusion

This has been a somewhat long article (for a blog), and I thank the reader for joining me up to this point. I have summarized notable proposals for the review of salaries and presented our own perspectives. I hope that this has been interesting and/or useful.

In closing, I would like to quote a paragraph from the citation for the Man of the Year award by The Guardian (Nigeria). I think this is fitting as it would be ideal for our national leaders to be men and women who are, to put things in local public-service lingo, of "Man of the Year calibre"; men and women who leave lasting positive legacies of thought and action; men and women who are, simply, great:

Greatness is an attribute much in retreat in our society these days. But it is the quality that is imperative for a nation, for a people to make progress. Greatness is the depth of character that is unswayed by material attraction and superficial rewards, especially of the sort that is flaunted by persons of lesser pedigree, and craved by many, including sundry jobbers and petty crooks. Greatness is the strength to say no when everything and everyone else seems swept away by a certain madness that benumbs the senses. Greatness is the ability to look past the present and see beyond the future. It is the courage to envision a better society, to insist on what is right, on what is proper to realize that better society.