Incentives in the public sector

New Labour doesn't understand basic economics. That's a message I take from Shuggy's post on England's dire maths teaching.
He points out that there's a terrible shortage of maths teachers, and that Ofsted is complaining about "teaching to the test" stifling creative thinking.
Both problems are due to bad incentives. There's a shortage of maths' teachers because relative wages are bad. And teachers teach to the test because its in their interests to do so: they get a quiet life if test results are good, if nothing else.
New Labour doesn't seem to realize this because it doesn't grasp instinctively the basic premise of economics - that, at the margin, people respond to incentives.
Instead, it has a romantic idea that public servants have a vocation. At last year's party Conference, Brown spoke of "public service at its best, not just a career but a calling, the ethic of duty, care, compassion and service."
This, I suspect, wasn't just flannel but the expression of his instinct, that workers in the public sector have higher motivations than the money-grubbing private sector.
And here's the problem - this isn't wholly false. Many (most?) public servants do have high motivations. But so too do many private sector workers; you'll be surprised how many City traders get intrinsic satifaction from their jobs.
This is what makes public sector reform so tricky. On the one hand, if you pretend everyone has high motives, you'll ignore the fact that bad incentives have bad effects.
But on the other hand, if you treat everyone as if they were motivated by money alone, you might drive out these higher motives and worsen management-labour relations. There's some evidence that this happens in blood donations; if you pay people to give blood, some stop giving.   
And Alan Ball tells the story of when Don Revie took over as England manager. At an early team meeting, Revie tells the squad: "Great news, lads. I've got the FA to double your appearance money." Ball and Emlyn Hughes turn to each other and say together: "I'd pay to play for England." Their relationships with Revie never recovered.
Julian Le Grand has more on this issue in this book.

Comments

[Igor Belanov]

Alan Ball and Emlyn Hughes are (or in Hughes case were)complete hypocrites, so I wouldn't trust their judgement in the slightest. They are simply typical of the anti-Leeds prejudice of the time.
Revie looked after his Leeds players well and created a good team atmosphere that paid off on the pitch. The reason it didn't work with England was partly because the manager-player relationship is different in international football and partly because of the opposition to Revie from players and media that was there from the start.