Is it the £500,000 your bank, or otherwise reviled-financial institution, pays you each year?
Or the negative £3.5m you contribute to society?
That’s right — negative £3.5m. A study by left-ish think tank, the New Economics Foundation, puts the social value of bankers, having brought the financial system to the “brink of collapse,” at negative £7 for every £1 they create privately. On that basis, bankers should be paying the government £3.5m on their annual £500,000 salary to break even on the karmic scale, making the 50 per cent bonus supertax look downright generous.
Contrast your typical banker with say, a hospital cleaner.
For every £1 they’re paid, they generate £10 in social value according to the study, since they help reduce hospital infections and contribute to the “wider social value created by the hospital.” In a similar vein, childcare workers generate £7 worth of value for society for every £1 paid, while waste recycling workers create £12 of value.
And before you start nitpicking the numbers, a word of warning from the study:
Our Social Return on Investment analysis is not just an intellectual exercise – it has big implications for the way in which our society and economy are structured. Financial incentives are very powerful, and we tend to shower them on some of the professions that are the most socially and environmentally costly. This promotes undesirable behaviour, while positive activities are discouraged.
We have not aimed for precision in our calculations – there may be aspects of value that were left out. The point was to draw attention to the issue. We have not included detailed recommendations because it is clear to us that there are deep structural issues that need to be addressed, and change will not come overnight.
On that wider `issue’ note, prepare to forget almost every economic theory you’ve ever heard.
According to the study, the City of London is not essential for the UK economy (manufacturing, apparently, is much more important). Low-paid jobs don’t create a ladder for people to work their way up — social mobility is flat. The UK doesn’t need high salaries to attract and retain talent, since higher salaries don’t necessarily reflect the best people available. Etc.
As the FT’s economics editor Chris Giles puts it (with a considerable degree of restraint):
Many economists would find the calculations and some of the arguments in the report rather heroic . . .
Top bankers destroy value, study claims – FT