Bonuses for good governance in Madagascar

Mr. Ravalomanana became president [of Madagascar] and quickly became a favorite for his businesslike style [TC: he was earlier a dairy tycoon].  The president grades his cabinet members, granting the best ministers bonuses far greater than their measly government pay and firing the worst.  The economy, which shrank 13% during the turmoil in 2002, has begun to recover although inflation has been a worry recently (WSJ, 18 April, p.A6).

I doubt if this kind of bonus scheme can work more generally, although it remains an interesting question why not.  I suspect that it requires an honest and disciplined president, combined with questionable cabinet members who otherwise will not do the right thing.  How often do you see that exact combination? 

Over time I expect the payments to shift to cabinet members who support the president.  Even a benevolent leader will see reason to make the payments in this fashion, but I fear the move toward outright corruption.   A private business, in contrast, gains more simply by having subordinates march in tune with the CEO.  But we have never worked through all the relevant differences in the two cases.  Surely some MR readers would like to see a bonus for Timothy Muris (former FTC head) and a fine imposed on…well…take your pick.

By the way, Madagascar is now the number one poster child for Bush’s Millennium Challenge Account.  I know they have wonderful and highly underrated music, but didn’t they have a civil war just a few years ago?  I am not yet ready to be bullish on this one.


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