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Senators, ministers, presidents, .... all these people earn a lot of money, and not just during their work: when the president of the US leaves office, they will receive about 200.000 dollars annually as a pension.

Question 1: Why? What is the point of giving so much money away? I understand it is not much compared to what they could make elsewhere given their new-found network, but it is still a lot of money compared to an average American.

Politicians say that they do what they do because they want to see their nation prosper. If true, why would they willingly take so much money away, as opposed to letting it stay in the budget?

The only argument I've ever heard of is that the high salary is needed to attract the best. This seems contradictory: the high salary will not attract "the best", the high salary will attract everyone, and the best will be lost in the ensuing mass of people all claiming to be servants of the country.

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    Because they can make so much more money doing something else, for example, look at how much a certain former presidential candidate makes for a single speaking engagement. – hownowbrowncow Dec 5 '16 at 17:00
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    If you think that's a lot of money for a public official, you probably shouldn't look up how much MORE wealth they generally accrue while in office. – PoloHoleSet Dec 5 '16 at 17:59
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    Don't look up CEO salaries if 200k shocks you. – user1530 Dec 5 '16 at 20:46
  • Where did I say it shocks me? I literally just said in my post that I recognize they can earn much more money elsewhere. That's beside the point. They are not in it for the money, or at least that is what is being claimed, so it is a natural and obvious question to ask "why do you make so much of it, then". – Jadu Dec 5 '16 at 20:57
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    One of the de facto laws of compensation in a bureaucracy is that nobody can get paid more than the guys at the top and that applies to the federal government too. So, caps on politician and Presidential salaries are de facto caps on the pay of senior civil servants running Fortune 500 sized organizations and highly skilled professionals. If you don't pay the President enough, the pay of senior generals, senior cabinet department executives, top lawyers, physicians, scientists, economists and everybody else is too low to hire good talent and they don't have the perks that politicians do. – ohwilleke Dec 7 '16 at 1:19
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There are primarily two reasons: competitiveness and corruption.

Competitiveness

You did hit the nail on the head - part of the reason is competitiveness. Public offices compete with private jobs for the same people. In order for public office to be an attractive prospect, the salary needs to be competitive with the kinds of jobs they would be able to hold if they weren't in office.

This seems contradictory: the high salary will not attract "the best", the high salary will attract everyone

Part of this is a misunderstanding: it isn't that a high salary attracts only the best. It will attract many people, but it is required to attract the many of the most talented people. Inadequate candidates will be screened out by the political process: many aren't eligible for office, many more will not receive the support of their party, many will fail to attract enough donors to run an election, and of course many will fail in their primary/caucus/election.

In short: in many cases this salary is appropriate for the kinds of skills that elected officials are expected to have. The pay needs to be this high to lure in these candidates.

Corruption

Having a high salary helps prevent corruption. If that sounds strange, let me introduce you to the fraud triangle.

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For our purposes, the important element is pressure. A person commits fraud (or engages in corruption) when they are under financial pressure. By paying a high salary, a person is insulated from financial pressure and the risk of fraud is reduced. Additionally, there is an idea that an elected official should not have other earned income - that could create a conflict of interest while in office. That increases the importance of offering a decent salary.

It isn't that high

It's also important to put that $200,000 salary in perspective. For many executive or professional people, that is not a particularly high salary.

According to the Bureau of Labor Statistics:

  • The average CEO makes $185,000 per year.
  • The average lawyer makes $136,000 per year.
  • The average general manager makes about $120,000.
  • The average physician makes about $200,000 per year.

And these are averages. A President or Congress person (and likely state officials) are above average achievers, and likely to be earning more than average in their field.

  • I find that "average CEO" number quite surprising. Do you know if it includes owners of small/mid-sized privately held businesses? That would explain it, even though I wouldn't think of those as a "CEO". – Bobson Dec 5 '16 at 18:10
  • You can find their description of a CEO here. That estimate appears to be lowered by some state and local government employees with this job description. – indigochild Dec 5 '16 at 18:18
  • That looks like what it is. The averages when broken down by industry look much more like what I'd expect (the $200,000 range). Thanks for the link. – Bobson Dec 5 '16 at 18:26
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    @Bobson I would guess that the average CEO numbers (1) doesn't include equity compensation (which usually makes up the majority of their compensation) and (2) includes CEOs of both big and small companies. – David says Reinstate Monica Dec 5 '16 at 18:51
  • I would agree. Equity agreements are not a part of salary, so it's likely not included here. This would be true of all non-wage/salary benefits. – indigochild Dec 5 '16 at 18:53
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Theory: Politicians in a democracy need to earn enough to be financial independent. Otherwise they would depend on other sources of income during their mandate. Those sources of income would then have control over the politician and could exert influence on their decisions.

That income should be large enough that a politician is not susceptible to bribery. So it should be high enough that they can afford anything they and their family reasonably need to be happy.

Building a network to secure a future income is not what a politician is supposed to do during their mandate. First, they are supposed to invest their time into their political work, not into forming connections. Second, being forced to secure their future income during their mandate motivates a politician to work for the interests of those who will give them that income when their mandate is over, not in the interest of their voters.

Reality: The people who decide on the wages for politicians are the politicians themselves. If you could set your own wage, would you reduce it?

Budget considerations are usually not relevant, by the way. For example: A US congressman makes $174,000 a year. That's $93 million for all of congress per year. The budget the US congress decides on every year is $3.7 trillion.

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    The theory seems suspect (leaving aside whether it matches reality) because financially independent!=upper-middle-class salary. – user4012 Dec 5 '16 at 16:35
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    Also I would add that these salaries are large, but we aren't talking CEO of a fortune 500 large. Since these are very senior positions you can argue that it is a reasonable salary for them. – David says Reinstate Monica Dec 5 '16 at 18:50
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    Federal departments (and maybe some state ones) have revenues larger than most fortune 500 companies. So maybe that is a good comparison. – indigochild Dec 5 '16 at 20:18

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