Monday, December 14, 2009

I'm not Sure I Buy This

Now it's no secret that I don't like the finance industry. I happen to think that bankers are overpaid for what they do. I also don't appreciate their actions in bringing about the financial crisis and their action in pumping the housing market up to ridiculous proportions.

That said, I really can't endorse the figures that have come this latest report from the New Economics Foundation. Apparently:
The report said tax accountants were the most destructive, laying waste to £47 of value for every £1 they created. Elite City bankers (earning £1m plus bonuses) destroy £7 of value for every £1 they create and advertising executives wreck £11 of value for every £1 they are paid.

On the other hand, the report judged that waste-recycling workers generated £12 for every £1 spent on their wages. Childcare workers create between £7 and £9.50 of value for every £1 of pay and hospital cleaners create more than £10 in value for every £1 they receive in pay.
As I said, I think bankers are overpaid, but the numbers in this report are just absurd. I find it hard to believe the conclusion that bankers make no contribution towards the economy.

A more detailed look at the methodology they used doesn't help. For bankers the calculation largely seems to be based around the cost of the financial crisis over the next 10 years, which doesn't strike me as a particularly good method (why not consider year's prior to the crisis for example).

The report basically amounts to doing a little bit of maths in a very selective fashion and using it to justify a set of political conclusions. I don't approve of that kind of behaviour when it's used by the Taxpayers Alliance so I feel it would be wrong of me not to criticise a left wing think tank for taking the same attitude to their research.

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