If you want to see mathematical sophistry that puts tricky derivatives pricing to shame, then look no further than this report from a left-leaning British think tank.Apparently the lowest paid people create the highest social value and the highest paid create the lowest. Then somehow maths is used to defend their assertions, but we’re at the same time told that maths shouldn’t matter in the end.
NEF: We have not aimed for precision in our calculations – there may be aspects of value that were left out. The point was to draw attention to the issue.
Here are some examples. By their view, the entire world seems to have completely failed to recognise and price value, even when trade was conducted privately between free individuals, for centuries.
NEF: 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.
Both for families and for society as a whole, looking after children could not be more important. As well as providing a valuable service for families, childcare workers release earnings potential by allowing parents to continue working. They also unlock social benefits in the shape of the learning opportunities that children gain outside the home. For every £1 they are paid, childcare workers generate between £7 and £9.50 worth of benefits to society.
Hospital cleaners play a vital role in the workings of our healthcare facilities. Not only do they clean hospitals and help maintain standards of hygiene to protect against infection but they also contribute towards wider health outcomes. The importance of these cleaners is often underestimated and undervalued in the way they are paid and treated. We estimated, however, that for every £1 they are paid, over £10 in social value is generated.
Waste recycling workers do a range of different jobs that relate to processing and preventing waste and promoting recycling. Carbon emissions are significantly reduced when goods are recycled instead of sending them to incineration or landfill. There is also a value in reusing goods, and we have included this in our model. Our model projects that for every £1 of value spent on wages, £12 of value will be generated.
We haven’t read the full piece in detail, but the easiest criticism seems to be that they have failed to account for supply versus demand.
For all the apparent good waste-recycling does, processing waste at a recycling plant is a job that the vast majority of people could do quite easily. The same goes for cleaning.
Despite the quaint notions of value we all may harbor, in reality value simply comes down to the supply of solutions vs. the demand of needs. For example, water is necessary for life, but I can’t claim that much income by selling it on the street since it’s pretty easy to find these days. Meanwhile someone will pay far more if I can get them a bar of gold.
For NEF to ignore supply and demand, yet argue economics, is akin to a scientist who ignores mass yet argues basic physics. NEF only degrades their underlying good intentions with such hogwash.
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