How to Pay Representatives

What is the best way to pay representatives?  Should they be allowed to apportion government funds for their own salaries through legislation?  Also, what resources (staff, lawyers, assistants, etc.) are representatives entitled to to do their job?  Should they be responsible for funding their own resources?  If it is left to them to apportion government funds, then there are obvious conflicts of interest.  Also, not all representatives are created equal, how can they apportion funding depending on the quality of representation?  It seems like we need some capitalism in order to promote that the best and most qualified individuals become representatives and that they are paid and funded in proportion to the quality of their work.

Representative Payment Proposal

The following proposal best makes sense when votes are in proportion to how much you pay in taxes, and that you transfer your votes to the representative you vote for.

During election, prospective representatives publish a price per vote.  The citizens then pay the representative based on how many votes they are transferring and the respective price.  For example, if you paid $10,000 in taxes, and each dollar represents one vote, then you have 10,000 votes.  You transfer your votes to a representative who published a price of $1.00 per 1000 votes, so you effectively pay $10 to the representative for representing your 10,000 votes, and as such, your $10,000 of taxes.

The prospective representatives can publish a price function, where they define a price as a function of how many votes they receive.  Obviously there will be economies of scale in representing more and more people, so prospective representatives will be able to offer lower prices when they receive more votes from the general populace.  However, since it will be unknown how many votes they will receive when people are voting, they must publish a maximum price (MP) for people to deposit when they initially vote.  This maximum price is coupled with a minimum amount of votes required (MVR) to be willing to be a representative.  For example, if their MP is $5.00 per 1000 votes, and their MVR is 30 million, then they will have a salary of 30M/1000*$5.00= $150,000 for which they are willing to be a representative.  If they receive more votes than their MVR, then the people who voted for them will receive a refund based on the difference between the MP and the actual price dictated by the price function and the votes received.  Here is a diagram:

Since the price is based on votes, and each vote is based on taxes, the citizen should have an easy time being able to pay the price.  The time between the deposit and the refund will effectively be the time between you voting and all the votes getting in, which should be reasonably quick.  The price function will be some inverse function to votes.

The funds that a representative receives during the election will cover all of their resources to do their job, which includes their staff.  Since the representative best knows how much staff and resources they require to do their job, they will request a price adequate to covering their expenses as well as paying themselves a fair and competitive salary based on their quality and efficiency of representation.

It is not unreasonable that representatives could receive quite a lot of money in such a system.  For example, the US tax revenue is about $3 trillion, and we have roughly 500 representatives.  On average, each representative is representing $6 billion in taxes.  If they price at $10.00 per 1000 votes ($1000 in taxes, effectively 1%), then they would be “paid” $60 million each.  However, considering expense ratios for managing mutual funds are on the order of 1%, it’s possible that this is truly the proper market price for effective representation (covering staff and resources to do a good job).

If you abstain from voting, perhaps because you don’t want to pay any money, then you effectively leave your votes to yourself and you are your own representative.

2 thoughts on “How to Pay Representatives”

    1. Yes, the agency problem should obviously not be overlooked when expecting public servants to serve the people. That’s why the capitalist in me believes you should pay them more, the more popular they are (and they will be more popular the more effective they are). This hopefully would incentive good representation and service.

      I think it is quite folly to expect public servants to serve the public out of honor or altruism. Public servants are human beings, not angels.

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