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Friday, 29 June 2007

Satonomics

The Leader of the Opposition reckons that paying people allowances to facilitate cross party negotiations could have a negative incentive on reaching cross party outcomes e.g. on the Constitution:

"When you look at the majority of people on the board, they have no regular income. They are getting K300, 000 as sitting allowance so they can prolong the process”
I agree with him.
In paying board members money to do what is effectively a charitable act, you are hoping to incentivise effort. However, as
Sata correctly observes, doing so can have the negative incentive to prolong the process.

The immediate solution is to create a definite end to the negotiating process. This has the additional advantage of also incentivising participating political parties [the non-board members] to reach a solution on negotiations quickly. However, that assumes the negotiations don't break down and get restarted again (or rather you can accurate foresee a "reasonable" time frame for concluding negotiations) - so effectively you could end up with a series of finite continuous games. What then is the solution?

Well may be instead of worrying about creating a definite time frame, we should instead focus on ensuring that the board members are also negotiators. That way, their interest in reaching a solution would act as a lever to disentivise them from prolonging the process. Incidentally, its not necessary to pay them - since the incentive to conclude the process quickly would be enough incentive to work. Sata of course naturally discounts this solution because it corrupts the necessary fairness of the process. Hence PF's
current opposition to Katele Kalumba's Chairmanship of the Board. And rightly so, since if Katele was a solution for the finite continuous games problem, then as we have seen its not necessary for him to get paid.

The real solution to the problem of course is one which Sata himself identified last week - appoint independent board members already paid externally [whose source of income is derived elsewhere] and crucially for whom service is itself an incentive for hard work. These people should also be viewed as arbitrators/administrators by all sides. Only one group comes close to satisfy these conditions : Church leaders.

2 comments:

  1. my point on the other subject on increasing the salary scale for workers to afford basic needs is very valid.

    on these politicians allowances what method are they using to reach these figures?

    they are the only people that are getting in the loop of buying.

    to improve the economy you need the man on the streets to be able to walk in a shop and buy a cup of coffee and a donnut. what he has done is create employment for coffee growers,tranporters,farmers
    shop owner,wheat farmers,farm labourers,etc.from K2,000

    this problem of caping allowances is not solvable,the minds involved are so clever and hold enough info to bring down any person against their interests.

    for example barristers and soliciters untouchable.

    the solution is just to put a budget in place of what is to be spent and time frame.any extensions should not be tolerated

    ReplyDelete
  2. "the solution is just to put a budget in place of what is to be spent and time frame.any extensions should not be tolerated"

    The problem is how you would predict when a decision would be reached. And even with a limited period of time, you would still need someone partial to administer the process.

    ReplyDelete

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