Do bankers create less value than cleaners?

A report from a Marxist 'left leaning' think tank, the New Economics Foundation (NEF), is causing a fuss this morning.

Purporting to measure the 'social value' created by various jobs, it comes to the entirely predictable conclusion that bankers earn a lot and contribute nothing (in fact, make a negative contribution) to society.

Witness the graphs below, knocked up by ourselves based on the NEF's figures.

Salaries by job

Source: NEF

Social value by job

Source: NEF

The study has proven popular with the likes of the Daily Mail and is likely to appeal to Adair certain-activities-of-banks-have-limited- social-value Turner.

As the Financial Times points out, if the figures are accurate, a rational government would close the City down immediately.

Fortunately, however, the figures aren't all that accurate (and the government's not all that rational). Most obviously, it's not entirely clear how the figures for 'social value' were calculated, nor whether they're comparable across the jobs being discussed.

For example, bankers, tax inspectors and advertising executives are said to 'destroy social value' for, 'every pound in value they create.' Meanwhile, hospital cleaners, recycling workers and childcare workers create social value for every 'pound they're paid'.

Equally, all bankers are assumed to earn at least 500k. And with the City assumed to be a prima facie drain on society, no attention's paid to the efforts of Bob Diamond and others to elaborate on its contribution to the Greater Good.

Prop trading desks aren't socially useless, Bob pointed out last week: "There is a real purpose for structuring credit risk for pension funds, for example. We shouldn't assume that all derivatives are bad," he said.

Unfortunately, left leaning think tanks and the Daily Mail aren't interested in pension fund liabilities.