Okay, but now consider other monopsonies. There are plenty. What most people get paid is almost entirely decoupled from the net value they create, and oftentimes it's only tangentially related to the value they give to their employer.
The labor market isn't fully efficient but I don't believe it's "almost entirely decoupled" from the value employees provide. If you provide with certainty $100k/y of value and your employer pays you $30k/y, there'd be no shortage of entities willing to bid up that price. Who wouldn't take profit within their risk tolerance? What mechanism do you think would prevent this from happening?
• Job security – some people are just too poor to go on the job market for a few weeks or months, meaning they don't have much leverage to get their employer to increase their pay…
• Perverse incentives – some jobs are all about destroying value, e.g. loan sharks, most of the advertising industry… http://news.bbc.co.uk/1/hi/8410489.stm (2009) has a short list.
• Monopsony – what if your employer is the only one currently in a position to make that much from you (or all the competitors have already filled their positions)?
I could go on, but I'm only scratching the surface of my surface-level knowledge.
I vigorously agree that some jobs destroy value on net, but the report described in the BBC's article is pretty unconvincing. I have the impression that the people who wrote it knew what conclusion they wanted before they began.
As an example, they claim that the UK's top bankers and fund managers destroy about £7.40 in value for every £1 they get in salary. How do they get that figure? They assign to those people ...
* 100% of the predicted reduction in UK GDP from 2008 to 2014 as a result of the 2008 crisis (as measured by the difference between IMF forecasts immediately before and immediately after)
* an "adjustment to reflect a loss of 5% of UK economic capacity between the onset of the crisis and 2020" (that sounds like double-counting to me, but I can't tell because they don't give any details)
* 100% of an estimate of increased debt as a result of the crisis, obtained as the difference between an IMF forecast immediately after the crisis and the UK government's forecast immediately before it (sounds like more double-counting to me, and I bet the government's predictions are systematically more optimistic than the IMF's)
* an "allowance for debt servicing costs on the additional debt incurred"
* 50% of 1/6 of the tax revenue from the UK financial sector (treated as a pure positive to weigh against the pure negative of value destroyed by the 2008 crisis). The 1/6 is because they guess 5/6 of the UK financial sector is retail rather than wholesale finance and consider the gains attributable to top bankers to be only in the wholesale part. The 50% is because not all of the tax paid by the wholesale financial industry is paid by, or otherwise attributable to, its top bankers.
* 50% of 2.5% of the UK's GVA or "gross value added" as estimated by the ONS. The 2.5% is the ONS's estimate of how much London financial services contributed to GVA. The 50% is because not all of that is attributable to the top bankers. I don't know why they're using GVA here but GDP when estimating value destroyed by the 2008 crisis.
* 50% of 50% of an estimate of post-tax earnings of finance workers in the City of London. Post-tax because they already counted tax revenue. 50% because not all the credit for those people having those jobs belongs to the top bankers. 50% because if they didn't have those jobs then they'd presumably have other jobs.
The costs of the 2008 crisis are considered as a one-off. For the benefits, which are a recurring thing, they assumed a 20-year career for those bankers.
Soooo many things about this look highly dubious to me. There isn't a 2008-scale crisis every 20 years. The 2008 crisis was a global thing and we have no idea what fraction of it was the fault of people in the UK, versus what fraction of its effects were suffered by the UK. It's not at all clear that it's entirely attributable to "top bankers". Their measures of value destroyed by the crisis look very susceptible to double-counting and other errors. If there's a good reason for using GDP to reckon the loss and GVA to reckon the gain, it eludes me. So far as I can tell, the ONS's reckoning of the financial industry's contribution to GVA is looking only at things like how much revenue the financial industry gets for the services it provides, whereas the claimed benefits of the financial industry to the economy are all about things like providing liquidity, more efficient allocation of capital, etc., which they don't consider at all. Almost all the key numbers in their calculation are low-effort guesses: look at all those "50%"s.
I would be 100% unsurprised if it turned out that top bankers' net contribution to the world is negative. But I don't think this report really tells me anything of value about whether that's so.
That was the first profession in the report. I haven't looked at the others. I strongly suspect they are just as terrible as this one.
If these reduce the value you provide then that's as designed. How can you provide value without skills? How can you provide value by _not_ doing things you find unethical? These aren't inefficiencies of the market for labor, they're facets of it working exactly as desired.
> • Job security – some people are just too poor to go on the job market for a few weeks or months, meaning they don't have much leverage to get their employer to increase their pay…
Do you... quit your job before you look for a new one? Increase in pay levels for lower skilled jobs is not really about individual cases, but the aggregate. If Profession X generates more value than the current pay level, that increases general demand for Profession X, and reduces the time needed to match up with a new employer. Sure there's some thresholding involved, but not enough to 'entirely decouple' price and value.
> • Perverse incentives – some jobs are all about destroying value, e.g. loan sharks, most of the advertising industry… http://news.bbc.co.uk/1/hi/8410489.stm (2009) has a short list.
Eh this is pretty hand-wavey stuff. Loan sharks don't _destroy_ value from an economic perspective. Nor does advertising. Nor does banking. Societal problems though they might have.
This means that you can't model it as a liquid market.
> Do you... quit your job before you look for a new one?
I don't, because I don't work such long hours that I don't have the capacity to do anything after work. Some people have multiple jobs just to cover rent and food; adding a third (looking for new jobs) isn't always possible.
> Loan sharks don't _destroy_ value from an economic perspective. Nor does advertising.
Then economics is wrong. Wasting people's lives and attention is destroying value. Keeping people in debt, causing suffering… you're not extracting as much value out of people as they're losing. They're net negative.
