A Bit Rich

The New Economics Foundation (NEF) has recently produced a fascinating document entitled ‘A Bit Rich’: Calculating the real value to society of different professions. http://www.neweconomics.org/sites/neweconomics.org/files/A_Bit_Rich.pdf
These are some highlights from the report:
This report sets out to shatter some myths about pay and value. Chief among them – and the point of the research – is to show that there is not a straightforward relationship between high financial rewards and good societal outcomes. This isn’t 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.
In the UK we live in a society of extremes. The incomes of the very rich and the very poor continue to pull away from each other. This is influenced by many factors but wage inequality is at the heart of them. It is a corrosive, destabilising issue that is linked to a range of social problems. It disproportionately affects some groups – particularly women, who predominate in low paid (and unpaid) work. The least well paid jobs are often those that are among the most socially valuable – jobs that keep our communities and families together. The market does not reward this kind of work well, and such jobs are consequently undervalued or overlooked.
Because social and environmental costs are not properly accounted for, the market tends to oversupply products that may have a significantly negative environmental or social impact – such as cheap consumer goods and complex financial products. In the same way we underpay work that has a high social value, creating high vacancy rates in our most important public services such as nursing and social work. By making social value creation an important societal goal we could set the right incentives to maximise net social benefits, ensure a greater return to labour rather than capital, and a more equal distribution of economic resources between workers.
While collecting salaries of between £500,000 and £10 million, leading City bankers to destroy £7 of social value for every pound in value they generate.
For every £1 they are paid, childcare workers generate between £7 and £9.50 worth of benefits to society.
For a salary of between £50,000 and £12 million, top advertising executives destroy £11 of value for every pound in value they generate.
For every £1 that hospital cleaners are paid, over £10 in social value is generated.
For a salary of between £75,000 and £200,000 tax accountants destroy £47 of value for every pound in value they generate.
Our model projects that for every £1 of value spent on wages for recycling workers, £12 of value will be generated.
The executive summary alone is well worth a read and here are the key recommendations:
• End the policy silence on high pay.
• Learn from the successes of anti-discrimination legislation.
• Build social and environmental value into prices
• Introduce more progressive taxation.
• Launch a green industrial policy.
• Encourage new forms of ownership.
• Radically reform the role of the City.
• Invest in universal child care and paid parental leave.
These are the progressive green and social policies that will benefit us most. I see no evidence that any of the conventional parties are heading in that direction.

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