It is beginning to feel abusive, so I promise to stop. Next post on this will be positive – some sort of attempt to explain wage differentials, perhaps.
Adam Smith Institute has a useful, unsentimental discussion of the nef paper.
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.
Tom Papworth in fine form.
“New Economics Foundation” is an oxymoron. Economics is an a priori science. One might as well talk about a new mathematics. The witch-doctors at the NEF think that the rules of economics are man-made rather than natural, and that we can change those rules at will.
Unfortunately, judging by the drubbing the research has received from various experts, including Giles Wilkes and Chris Dillow, NEF employed some rather dubious assumptions in order to get to their final figures. I say unfortunately because the idea behind their paper is an extremely important one. The biggest problem we are facing at the moment is working out just how much to restrain bankers in the future
I still think generous, because, as Chris’s piece seems to imply, working out what anyone is worth is impossible a priori, IMHO. And the horribly illiberal consequences of some central agency working out “you are worth £X” are too nasty to conemplate. nef have already demonstrated how biased it can be – using one technique for one set of people, another for another.