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Colombian politics are pricey, although it is perhaps better to say expensive. Something can be expensive yet of great value to the person paying for it. Pricey, however, is something we acquire, usually by force or out of necessity, having the feeling that it is not worth what we’ve paid for it. This happens when the difference between perceived value and price paid, or consumer’s surplus value, is minimal or non-existent.
For those who don’t make their living from it, professional politics is a public service: the service of studying, analyzing, discussing, proposing and making decisions of collective interest. Depending on the direct benefit obtained from their practice as professional politicians, the assessment of their value will vary from one individual to another. Therefore, the only reasonable way to escape interminable subjective assessments is to establish the cost of the work performed by professional politicians in relation to the ability to pay of the society that employs them; that is, in relation to the GDP per capita.
In 2019, each Colombian congressman received US$124,800 a year, which was a little more than 19 times the GDP per capita that year, estimated at US$6,500. A lot? A little? There is no other way to ascertain their value but to compare Colombia with other countries.
Figure 1 presents a comparison in absolute terms of the dollar salaries of legislators in 24 countries around the world, 13 of them in Latin America. Colombia ranks sixth among the selected sample, after Italy, Chile, the United States, Japan, and Austria. In Latin America, they appear in second place, surpassed only by their Chilean colleagues and above richer countries such as Mexico, Brazil, Uruguay, Argentina and Panama.
This leads us to a second important comparison: the salary of the congressmen compared to the GDP per capita of each country, shown in figure 2.
Colombian congressmen are unbeatable in the entire world: their annual salary is equivalent to more than 19 times the per capita GDP of Colombia. Then come, albeit far behind, eight Latin American countries. The parliamentarians of European countries have much lower salaries in relation to the per capita GDP of their countries. The simple arithmetic average of the salaries of legislators in the 24 countries included in the sample is 6.8 times the per capita GDP; that of the 13 Latin American countries is 9.9 times.
It is a pity that in this case competition does not work and cheaper legislative services cannot be imported. Raising this possibility is less scandalous than it seems since, at the end of the day, we import judicial services when commercial disputes are settled in international courts and tribunals.
The issue of congressmen’s salaries has again come to the forefront with the issuance of decree 1779 of 2020 which, according to article 187 of the Constitution, sets the increase in congressmen’s salaries at 5.12% for 2020. This has provoked the most diverse reactions, but the fact is that there is nothing to be done about it. But it is in the hands of the Presidency of the Republic to do something by 2021, not only in relation to the congressmen, but also to the entire public sector.
According to Law 4 of 1992, it is up to the National Government to set the salary regime for public employees of the National Executive, the Congress, the Judicial Branch, the Public Ministry (Justice Dept.) the Prosecutor’s Office, the electoral organization, the National Comptroller’s Office, the members of Congress and the members of the Public Force. Based on this norm, the government issues annual decrees that establish the increase in salaries in the public administration.
The law doesn’t establish the amount of such increase, but there is a long-standing practice of making it equal or similar to the legal minimum wage. It is enough that the Government breaks with this custom and proceeds to establish this increase taking into account the criteria established in article 2 of the aforementioned law.
In particular, in the current situation of the country, plunged into a deep recession and serious fiscal constraints, the national government should emphasize the following three criteria:
The increase in this remuneration should also be subject to “the general framework of macroeconomic and fiscal policy” and the “budgetary limitations of each agency or entity”. It is clear that the fulfillment of these two criteria obliges the government to decree a salary increase in the public administration equal to or less than 1.5%. Obviously this will not end the costly emoluments of Colombian legislators, but at least it will make them grow a little less in 2021.
People who are outraged by these outrageous salaries should remember them when they vote. The high salaries of the congressmen and, in general, the costly bureaucratic and welfare government that we suffer, are the responsibility of the citizens who vote for the politicians who promise a big and lavish government from which they expect everything. Hopefully one day they will learn to vote for those who promise a cheap government!
“Ñapa” or “tips”
The paradoxical attitude of the typical voter of modern democracies was described, as early as 1855, by the Belgian economist Gustave de Molinari in the delightful dialogue between a candidate and his voters, which I translate below:
The candidate: Do you want the government to take care of the education of your children?
The voters: Without a doubt. We want you to distribute education widely, to subsidize the universities widely, to multiply colleges and primary schools, to organize professional, agricultural, industrial and business education.
The candidate: Do you want the government to build roads, canals, railroads and telegraphs?
The voters: Yes, we want public works to never stop.
The candidate: Do you want the government to protect industry?
The voters: Yes, we want it to protect it from foreign competition, to give it subsidies and bonuses; and don’t forget about agriculture which gives farmers the resources to irrigate and fertilize their land, that it promotes the breeding of cattle, rabbits and silkworms.
The candidate: Do you want the government to protect the fine arts?
The voters: Of course! What would happen to painting, sculpture, architecture, poetry and music if the government didn’t help them? We’d be wild once more.
The candidate: Do you want the government to subsidize churches and cults?
The voters: Of course they do. We aren’t atheists, thank God.
The candidate: Do you want the military to be reduced?
The voters: Of course not. We want an army with a respectable footprint.
The candidate: Do you want the welfare budget reduced?
The voters: But please! We want, instead, the government to actively address the welfare of the working classes, to provide jobs for workers, and to address the needs of those who cannot work. We want it to institute workshops, relief and pension funds… In short, we want the government to be the Providence of the people!
The candidate: Very good. We agree. Now, what do you think about taxes?
The voters: We want those cut. Down with high taxes!
The candidate: You’re right, high taxes are unbearable. Which ones do you want to reduce?
The voters: All of them.
The candidate: Excuse me, please. You want the government to give you education and public jobs; to subsidize industry and the fine arts; to support churches; to hand out jobs and handouts, in other words, to spend a lot of money. But, on the other hand, you don’t want to pay taxes. How can you finance such budget? This is a difficult problem to solve.
The voters: That’s your problem, that is why we elected you. Do you accept our mandate, yes or not?
The candidate: You are right, your arguments cannot be refuted. We are here to listen to them. From the bottom of my heart, I accept your mandate.
The full text of the article containing this dialogue was published on January 5, 1855 in the first issue of the magazine L’Économiste belge Journal des réformes économiques et administratives. It can be consulted on the website of the Coopet Institute, a think tank dedicated to the dissemination of economic currents favorable to the values of freedom, property, responsibility and the free market. It is worth reading this wonderful text written in the best Bastiat way.
I recommend it to all my friends with a warm New Year’s greeting.
Luis Guillermo Vélez Álvarez is an economist and consultant at the Center for Systemic Economics Studies (ECSIM). @LuisGuillermoVl // Luis Guillermo Vélez Álvarez es economista y consultor del Centro De Estudios En Economía Sistémica (ECSIM). @LuisGuillermoVl