If you pay peanuts, you get monkeys

Clancy Yeates has a good FOI article on this in the SMH today. It seems the RBA's independent directors rightly got their backs up that the Treasurer was seeking to pull-down RBA pay to levels consistent with "community expectations" rather than the market competitive requirements needed to retain top RBA staff. (It would be interesting to know what Treasury's view was on this.) I have explained in this detailed post before why this is just not right. The real issue here is the Treasurer's pay. The fact is our parliamentarians are paid peanuts, and I can understand that it gets their goat when they see the RBA chief paid more than 3x what the Prime Minister receives. The same problem exists in the US, where the President and Ben Bernanke are paid paltry sums. The bottom line is that Glenn Stevens could easily demand double what he earns as the RBA's head honcho were he to walk from the job, as I outlined here. Likewise his leading underlyings. If we want the best possible people running monetary policy, we have to pay them appropriately. As the saying goes, if you pay peanuts, you get monkeys, except, of course, in the case of politicians.