The Long View
On official allowances
The unfolding scandal in the United Kingdom, where members of parliament are facing public outrage over their allowances and tax exemptions, reminds me of one of my favorite political autobiographies: Jose E. Romero’s “Not So Long Ago: A Chronicle Of My Life, Times & Contemporaries” published in 1977 by Alemar-Phoenix. To my mind, it’s about as honest as any politician’s account of his life can be expected to be. Romero, who was a congressman, assemblyman, majority floor leader, Constitutional Convention delegate and then secretary of education and sugar lobbyist, covered political events in which he played a part from 1925 to 1946 (it seems he died before he could complete his memoirs).
His book helps explain how government officials went from living within their means to trying to supplement salaries that failed to keep up with inflation or the requirements of their jobs.
“I entered Congress,” he wrote, “just when the great economic depression of the thirties began to be felt, and the first thing we did was to reduce salaries and expenditures by 10%. Congressmen’s salaries then were fixed at P600 a month, P7,200 per annum, and in our time there were no extras or allowances whatsoever. The reduction in our salaries of 10% amounted to P60 per month, and this was applied to all government employees, so that teachers who were getting P50 a month got a cut of P5 a month. It pleases me now to recall in what good spirit this sacrifice was made by all. Because we did not resort to deficit spending, the prices of everything, especially rice and other foodstuffs, remained low, so that no hardships were felt, especially by the poor. There was no complaint or discontent because everybody sacrificed equally.”
This account by Romero brings up one (harmful) change over the years, which is that government salaries for officials that hold a great deal of responsibility have shrunk while the salaries of the rank and file, on the other hand, remain all right. The gap between a congressman’s salary and that of a government director is almost negligible, while the gap in responsibilities remains vast. To compensate, all sorts of allowances have to be created which supplements the take-home pay, but does not address the need to offer salaries commensurate with what’s expected of an official.
Just to update a detail I first mentioned in this space in 2005: if today the President of the Philippines earns about P640,000 a year, consider the equivalent, in today’s money, of the President’s P30,000 annual salary when the position was established in 1935. According to Henry Ma of the Asian Development Bank, in 2008 pesos, the presidential salary would be P10 million today.
Since salaries in keeping with their responsibilities are politically dangerous, politicians keep their salaries low by means of increasing their own allowances. Romero’s autobiography points to the precise point when congressmen decided they had to find ways to boost their salaries. He wrote of the situation the last Congress of the Commonwealth faced, in 1945: “The members of Congress,” he recalled, “like most other citizens, had lost most of what they had … To compound the problems of the members of Congress and everybody else, inflation was rampant. Even sugar was lacking and was selling at five times the usual price.”
He continued, “In order to alleviate the situation of the members of Congress who were getting no more than the six hundred pesos per month provided for in the Constitution, President Osmena, in the use of his emergency powers, authorized the Auditor-General’s Office to make advances to the members of Congress to enable them to meet the cost of living in Manila during the sessions. This was the principal reason afterward for the approval of the much-criticized Back Pay Law.”
An accounting problem then arose: “At the end of the sessions, the Auditor-General was pressing for payment of the advances made under the authority given by President Osmena. Their term of office was expiring. The solution was found in the payment of Back Pay to the members of Congress for salaries due them during the war. This move was bitterly criticized by the public, and the question became an issue in the succeeding elections and caused the defeat of many members of Congress in their bid for reelection.”
But, Romero argued, “Taking an objective view of the situation, however, this form of relief for the lawmakers was almost a necessity. The amount involved was only a little, over P20,000 for every member of Congress, and the payment made was only once. Of this amount each legislator had already received some P8,000 in advances. It was simply impossible for the lawmakers to live in Manila at six hundred pesos a month with the inflation then rampant. Had the lawmakers at that time less respect for the Constitution, and had they then discovered the magic formula of the allowances, they could have solved their problem by making payments to themselves, not in the relatively small amount of P20,000 but ten times as much, as succeeding legislators were to get – and not only once, but every year.”
And so, “Many of the members of Congress were defeated in the election that followed on this issue of Back Pay, but later members of Congress were to be reelected again and again after paying themselves much more in the form of allowances than the legislators of 1945 paid themselves in the form of Back Pay.”
So the moral of the tale is things haven’t always been the way they are, but that things can change pretty swiftly and then gain their own momentum. Which is precisely what’s happening in the UK.