The New Economics Foundation’s latest report ‘A bit Rich?’ advocates a ‘fundamental rethink of how the value of work is recognized and rewarded’. This is on the back of the argument that wages paid to people in different professions don’t reflect the ‘real’, social value of their roles.
The report repeatedly reveals an automatic desire for state intervention and regulation, based upon an aspiration for significantly greater equality of outcome. Unsurprisingly the three examples used for ‘highly paid yet socially catastrophic’ jobs come from the private sector; namely banker, tax accountant and advertising executive. When analyzing tax accountants they note that “every pound that is avoided in tax is a pound that would otherwise have gone to HM revenue"; and proceed to look at “how this lost revenue could have been better spent" by the government. This analysis neglects the fact that despite huge increases in public spending and taxation in recent years few if any improvements in the state of public services can be noted. The NEF are wrong to argue that wealth is better off in the clammy fist of government than being put to productive use by those that earned it.
The report also seems strangely puritanical. Advertising executives are deemed vastly destructive because they create ‘insatiable aspirations’ and fuel the social and environmental damage caused by over-consumption – as if seeking to better your lot and consume over and above the absolute minimum is a sin. When measuring over-consumption the Joseph Rowntree Foundation’s Minimum Income Standard – categorized by the charity as the lowest income at which someone can lead a meaningful existence – is taken as the level of consumption deemed acceptable.
The report neglects the true reason for differences in wages: the need for certain skills. Almost everybody could go around a hospital with a bottle of antiseptic, but it is unlikely that many of us would be able to understand opaque tax laws that highly-paid accountants have to. To have jobs priced according to their social (read ‘political’) value and not the scarcity of required skills would result in a chronic misallocation of labour.
The report concludes that we need more progressive taxation, higher minimum wages and a national pay differential to prohibit anyone from earning over a certain amount. It is a call for socialism and all its attendant failures, and no pretence of social benefits should disguise it otherwise.