The President introduces the new Secretary of the Treasury

Keyword: “integrity.” But why should public service be a financial sacrifice?

Keyword: “integrity.” It’s always heartwarming when nice guys finish first.

Obama’s reflection on the sacrifices made by people like Geithner and Lew – and their families – and the fully-justified praise Geithner and Lew offered to the civil servants at Treasury and OMB, raised a question about when we’re going to start paying those civil servants – who don’t get to cash in with stints in the private sector – reasonable salaries.

When the top career lawyers for the government make less than twenty-something associates at top law firms, is it any wonder the public gets the short end of the deal? Singapore pays its top civil servants real money. Why can’t we?

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact:

11 thoughts on “The President introduces the new Secretary of the Treasury”

  1. The problem is not with the pay at the top. There are always plenty of very talented people willing to gig near the top of the public sector for a few years, and then go back to their well-paid private sector jobs. Rotation, at that level, is built into the system. And rotation is probably not a bad idea for these folk–you don’t want J. Edgar Hoovers or even Hyman Rickovers. And you want Presidents to have their people to implement their policies, even at the cost of some dilettantism.

    The big problem is with the upper-middle management-professional jobs: roughly GS-13-15 and SES. (This includes federal trial judges.) These folk are where the institutional knowledge and integrity are, if not the top-level policy decisions. And they’re the ones who are badly underpaid, with relation to their private-sector counterparts. They shouldn’t be rotating, and shouldn’t have strong incentives to rotate or marry a spouse making the big bucks.

    The military has a very different set of personnel problems, especially with regard to contracting officers. We needn’t go into them here.

  2. Precisely!

    But I’d also say that having people at the very top of the government financially reliant on what they can do after government service isn’t such a great idea, either.

    1. It’s been sort of grotesque to watch Clinton and Gore get rich, I agree, and Jerry Ford did remarkably well after office. Reagan’s $2 million paycheck for one speech titillated the nation for a week. And the post-Cabinet activities of a number of lesser lights have been less well known but not much less remunerated.

      I suspect that the solution will be lowering the compensation of twenty-something associates, though, rather than boosting the civil servants much. Decimation is happening on Wall Street! And kids are staying away from law school in droves, now that the word is trickling down about life after anything but top half of the class at a top-14 school.

  3. We can’t pay the middle-level people what they might be able to get in the private sector because of inequality. On the one side of it, the private-sector jobs a public-sector upper-middle manager or individual actor might aspire to are grievously overpaid (either directly as a result of the corruption premium, or indirectly as a result of 1% self-dealing). But at the same time, many of the upper-middle jobs in the private sector that are currently done by people with as much talent, expertise and dessert as the upper-middle government people, pay similar wages minus the tenure, retirement benefits, health coverage and general security that goes with working for the government.

  4. Mr. K-
    You seem determined to persuade your readers (as I remain, barely)that your value is that of the classic “reverse barometer”. Last week an encomium to the insufferable McArdle creature.Now the suggestion that a major problem is NOT the appointment of officials who will merely collude with our market gangsters but the fact that they have to be satisfied(presuming no outright bribery DURING their “service”)with a temporary sabbatical from the ever flowing river of pelf to which they will surely eventually repair.

    1. What you fail to recognize is that the dissatisfaction and the collusion are two sides of the same coin. Let’s say I go to work as a lawyer for the SEC, or an economist for the Treasury or the Fed, or a program manager for DARPA or NIH — all jobs that make a crucial difference in how the laws get enforced and how policy gets turned into action. I look at my peers across the table in the private sector (maybe some of them even former colleagues or classmates) who are earning 3-10x what I am, have no worries about saving for their retirement or their kids’ college educations or their skiing/diving/surfing/climbing trips, and it’s hard not to want that for my family. But if I’m a hardass and a stickler about regulations and laws and transparency and distributional effects, that’s never going to happen. I’ll be lucky to keep my government job. So it’s awfully tempting to believe that all the arguments my private-sector counterparts make are really sensible, that they’re negotiating in good faith, that we’re all working together.

      Now let’s say, on the other hand, that I had guaranteed job tenure, a promise of full educational support for my kids (and maybe spouse), and a retirement plan that didn’t involve lots of downsizing. Sure would be easier to make decisions that involved never getting another private-sector job.

      1. Empirically, there’s another pattern: lawyers at the SEC and the IRS polish their credentials for transition to the private sector by winning cases for the government. But I’m entirely with you: there should be a financially viable career entirely inside the federal bureaucracy.

        1. Mark, you’re mostly right about enforcement lawyers. (One caveat: industry is happy to hire successful hardasses, but shies away from folks they consider to be zealots.) But I think that paul is right in the military procurement field, and perhaps even policymaking.

  5. If they are in it for the money, they are not the people you want. It is (should be) a different culture – one where the money is merely decent, but the work great. Jane Jacobs said it well.

    1. I think someone got a Nobel prize for showing that people in government respond to the same incentives as people in the private sector.

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