I will begin with two brief stories, one personal and one public. A few years ago, I was a visiting professor at an American university. One day, a lady, more formally dressed than is usual in American university departments, knocked on the door of my office, asked to come in, closed the door, and identified herself as a Secret Service agent. Seeing my surprise, she immediately told me why she was there: a former colleague of mine, “Frank,” had applied for a position in the Antitrust Division of the U.S. Department of Justice, and she was investigating him as a normal part of the internal evaluation process for the application, which in the United States is known as vetting. What followed was a friendly but meticulous and exhaustive interrogation about Frank’s character, background, and reputation.

The second story is well known: between 1985 and 2005, several Portuguese politicians began receiving lifetime allowances for having held positions in the Government or in Parliament. Surprisingly, such allowances remain in place even after a criminal conviction of the holder. From these two stories emerges the central question: how should we select and remunerate politicians and holders of high public office?

It is not a simple problem. It requires weighing motivations, skills, and incentives over time. A first dimension of the problem is given by motivations and by the type of people who are attracted to politics. In some, intrinsic motivations dominate, together with a spirit of service and the desire to contribute to the public good; others are driven by extrinsic motivations such as material rewards and the discretionary exercise of power. If only this dimension mattered, remuneration should be relatively low, to attract mainly altruists with a spirit of public service. But in that case, there would be little competition for such positions, not only because the number of people with the desired characteristics may not be very large, but also because the honest performance of such missions entails exposure to confrontations, intense levels of scrutiny, and other personal costs. The lack of competition would create opportunities for the easier introduction of individuals who might already be expecting to obtain illegitimate benefits.

In addition to ethics and values, a second important dimension is that of abilities and competencies. It is reasonable to assume that desirable candidates should possess ambition and technical, personal, communicational, and executive competencies, in other words, broad-ranging abilities. To the extent that this package of characteristics is valuable in the labor market, paying these people poorly would mean discouraging the most capable.

In short, there are reasons for salary moderation, but there are also good reasons for good levels of compensation. There are no perfect solutions to the problem, but in other countries a model probably more reasonable than ours operates. In that model, entry is scrutinized, as illustrated by the case of Frank’s vetting. A bureaucratic evaluation and a clean criminal record are not enough. There must be an assessment that includes some work in the field, investigating conflicts of interest, integrity, and professional career. It is an expensive process that requires specialized resources, but it is cheaper than making a bad appointment and suffering the consequences afterward.

During the exercise of their duties, remuneration should be appropriate, even if modest. To make these functions attractive, total compensation should be generous, but a large part of that compensation should be deferred, paid only after leaving office. This may take the form of adding a substantial supplement to a retirement pension or, alternatively, of starting a lifetime allowance shortly after leaving office. The most important aspect is that this deferred remuneration be conditional on a trouble-free record of conduct. A court conviction must imply a substantial reduction or even the elimination of the pension supplement, especially if the conviction is linked to the functions performed. It is possible that the threshold for penalties should be more demanding. For example, in some cases properly substantiated disciplinary proceedings could also be considered. The essential point is that sanctions be effective and efficient, and not merely dead letter.

Compared with this model, in Portugal we fail in scrutiny at entry and we fail in discipline at exit. I believe that it is on both sides of the issue that we need to begin to change. I am fully in favor of restoring lifetime allowances, but only if they are integrated into a system that combines rigorous selection, balanced remuneration, and deferred benefits strictly conditioned on acceptable performance and integrity. In this way, we will have a greater probability of attracting the right people and protecting the public interest.

Miguel Gouveia, Professor at CATÓLICA-LISBON