Bankers should count themselves lucky that the UK and French governments are only considering a 50 per cent supertax, because their value to society is negative, says a report released today by the New Economics Foundation.
To me, the report is a perfectly sensible attempt to describe the externalities - the difference between the private value and the social value – that are embodied in different jobs. But it is combined with numbers that appear to be complete guesses alongside some horrible howlers. For example, attributing a very high social value to nursery workers because they enable higher labour supply is entirely wrong, since that value is not captured by society but by the mothers and fathers who work and earn money.
But the underlying idea is sound and the implication is clear. It is a perfectly reasonable task of governments to discourage jobs where social value is less than the private value and vice versa. By this logic, if the social value of a job is strongly negative, it should be outlawed.
The logic continues that if elite bankers – or any other profession – don’t like the idea of state intervention along these lines, they will be able to find well-remunerated jobs elsewhere in the economy, since we are told they are superstars and are worth every penny they earn. Mervyn King, Bank of England Governor, was speaking along the same lines in 2008, when he commented to Parliament: “Such a high proportion of our talented young people naturally think of the City as the first place to work in. It should not be”.
The problem for me comes in the measurement. Which jobs have the highest social value compared with private value and which have the lowest? Journalists tend to score pretty badly on that. I would like to know what readers think, so I will throw this one open.
