Why it doesn't pay to be a banker

When will we bid farewell to the fable that earning money is the same as deserving it?

    Mayor John Lindsay takes a first hand look at rubbish piling up on west 98th Street due to the refuse workers' strike in New York [ Frank Hurley/Getty Images]
    Mayor John Lindsay takes a first hand look at rubbish piling up on west 98th Street due to the refuse workers' strike in New York [ Frank Hurley/Getty Images]

    Thick fog envelops City Hall Park at daybreak on February 2, 1968. Seven thousand New York City sanitation workers stand crowded together, their mood rebellious. Union spokesman John DeLury addresses the multitude from the roof of a truck. When he announces that the mayor has refused further concessions, the crowd's anger threatens to boil over. As the first rotten eggs sail overhead, DeLury realises the time for compromise is over. It's time to take the illegal route, the path prohibited to sanitation workers for the simple reason that the job they do is too important.

    It is time to strike.

    The next day, rubbish is left uncollected throughout the Big Apple. Nearly all the city's refuse collectors have stayed at home. "We've never had prestige, and it never bothered me before," one binman is quoted in a local newspaper as saying. "But it does now. People treat us like dirt."

    When the mayor goes out to survey the situation two days later, the city is already knee-deep in rubbish, with another 10,000 tonnes added each day. A rank stench begins to percolate through the city's streets, and rats have been sighted in even the swankiest parts of town. In the space of just a few days, one of the world's leading cities has started to look like a slum. And for the first time since the polio epidemic of 1931, city authorities declare a state of emergency.

    Still, the mayor refuses to budge. He has the local press on his side, which portrays the strikers as greedy narcissists. It takes a week before the realisation begins to kick in: The rubbish collectors are actually going to win.

    "New York is helpless before them," the editors of The New York Times despair. "This greatest of cities must surrender or see itself sink in filth."

    Nine days into the strike, when the rubbish has piled up to 100,000 tonnes, the refuse workers get their way. "The moral of the story," Time Magazine later reported, "is that it pays to strike."

    Rich without lifting a finger

    Perhaps, but not in every profession.

    Imagine, for instance, that all of Washington's 100,000 lobbyists were to go on strike tomorrow. Or that every tax accountant in Manhattan decided to stay at home. It seems unlikely that the mayor would announce a state of emergency. In fact, it is unlikely that either of these scenarios would do much damage. A strike by, say, social media consultants, telemarketers, or high-frequency traders might never make the news at all.

    When it comes to rubbish collectors, though, it is different. Any way you look at it, they do a job we cannot do without. And the harsh truth is that an increasing number of people do jobs that we can do just fine without. Were they to suddenly stop working, the world wouldn't get any poorer, uglier, or in any way worse.

    Take the slick Wall Street traders who line their pockets at the expense of another retirement fund. Take the shrewd lawyers who can draw a corporate lawsuit out until the end of days. Or take the brilliant ad writer who pens the slogan of the year and puts the competition right out of business.

    Instead of creating wealth, these jobs mostly just shift it around.

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    Of course, there is no clear line between who creates wealth and who shifts it. Lots of jobs do both.

    There is no denying that the financial sector can contribute to our wealth and grease the wheels of other sectors in the process. Banks can help to spread risk and back people with bright ideas. And yet, these days, banks have become so big that much of what they do is merely shuffle wealth around, or even destroy it. Instead of growing the pie, the explosive expansion of the banking sector has increased the share it serves itself.

    Or take the legal profession. It goes without saying that the rule of law is necessary for a country to prosper. But now that the US has 17 times the number of lawyers per capita as Japan, does that make American rule of law 17 times as effective? Or Americans 17 times as protected? Far from it. Some law firms even make a practice of buying up patents for products they have no intention of producing, purely to enable them to sue people for copyright infringement.

    Bizarrely, it is precisely the jobs that shift money around - creating next to nothing of tangible value - that net the best salaries. It is a fascinating, paradoxical state of affairs. How is it possible that all those agents of prosperity - the teachers, the police officers, the nurses - are paid so poorly, while the unimportant, superfluous, and even destructive shifters do so well?

    When idleness was still a birthright

    Maybe history can shed some light on this conundrum.

    Up until a few centuries ago, almost everybody worked in agriculture. That left an affluent upper class free to loaf around, live off their private assets, and wage war - all hobbies that don't create wealth but, at best, shift it about, or at worst destroy it. Any blue-blooded noble was proud of this lifestyle, which gave the happy few the hereditary right to line their pockets at the expense of others. Work? That was for peasants.

    In those days, before the Industrial Revolution, a farmers' strike would have paralysed the entire economy. These days, all the graphs, diagrams, and pie charts suggest that everything has changed. As a portion of the economy, agriculture seems marginal. Indeed, the United States financial sector is seven times as large as its agricultural sector.

    So, does this mean that if farmers were to stage a strike, it would put us in less of a bind than a boycott by bankers? (No, quite the reverse.) And, besides, hasn't agricultural production actually soared in recent decades? (Certainly.) Well then, aren't farmers earning more than ever? (Sadly, no.)

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    You see, in a market economy, things work precisely the other way around. The larger the supply, the lower the price. And there's the rub. Over the past few decades, the supply of food has skyrocketed. In 2010, American cows produced twice as much milk as they did in 1970. Over that same period, the productivity of wheat has also doubled, and that of tomatoes has tripled. The better agriculture has become, the less we are willing to pay for it. These days, the food on our plates has become dirt cheap.

    This is what economic progress is all about. As our farms and factories grew more efficient, they accounted for a shrinking share of our economy. And the more productive agriculture and manufacturing became, the fewer people they employed. At the same time, this shift generated more work in the service sector. Yet, before we could get ourselves a job in this new world of consultants, chefs, accountants, programmers, advisers, brokers, doctors, and lawyers, we first had to earn the proper credentials.

    This development has generated immense wealth.

    Ironically, however, it has also created a system in which an increasing number of people can earn money without contributing anything of tangible value to society. Call it the paradox of progress: Here in the Land of Plenty, the richer and the smarter we get, the more expendable we become.

    Rubbish floods East 10th Street, New York, between Avenues B and C during the refuse collectors' strike [Vincent Riehl/Getty Images] 

    When bankers struck

    In May 1970, after lengthy but fruitless negotiations over wages that had failed to keep pace with inflation, Ireland's bank employees decided to go on strike.

    Overnight, 85 percent of the country's reserves were locked down. With all indications suggesting that the strike could last a while, businesses across Ireland began to hoard cash. Two weeks into the strike, The Irish Times reported that half of the country's 7,000 bankers had already booked flights to London in search of other work.

    At the outset, pundits predicted that life in Ireland would come to a standstill. First, cash supplies would dry up, then trade would stagnate, and finally unemployment would explode. "Imagine all the veins in your body suddenly shrinking and collapsing," was how one economist described the prevailing fear, "and you might begin to see how economists conceive of banking shutdowns." Heading into the summer of 1970, Ireland braced itself for the worst.

    And then something odd happened. Or more accurately, nothing much happened at all.

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    In July, The Times of London reported that the "figures and trends which are available indicate that the dispute has not had an adverse effect on the economy so far". A few months later, the Central Bank of Ireland drew up the final balance. "The Irish economy continued to function for a reasonably long period of time with its main clearing banks closed for business," it concluded. Not only that, the economy had continued to grow.

    In the end, the strike would last a whole six months - 20 times as long as the New York City refuse workers' strike. But whereas across the pond a state of emergency had been declared after only six days, Ireland was still going strong after six months without bankers. "The main reason I cannot recollect much about the bank strike," an Irish journalist reflected in 2013, "was because it did not have a debilitating impact on daily life."

    But without bankers, what did they do for money?

    Something quite simple: The Irish started issuing their own cash. After the bank closures, they continued writing cheques to one another as usual, the only difference being that they could no longer be cashed at the bank. Instead, that other dealer in liquid assets - the pub - stepped in to fill the void. At a time when the Irish still stopped for a pint at their local pub at least three times a week, everyone - and especially the bartender - had a pretty good idea of who could be trusted.

    "The managers of these retail outlets and public houses had a high degree of information about their customers,"
    explains the economist Antoin Murphy. "One does not, after all, serve drinks to someone for years without discovering something of his liquid resources."

    In no time, people forged a radically decentralised monetary system with the country's 11,000 pubs as its key nodes and basic trust as its underlying mechanism. By the time the banks finally reopened in November, the Irish had printed an incredible £5 billion in homemade currency. Some cheques had been issued by companies, others were scribbled on the backs of cigar boxes, or even on toilet paper. According to historians, the reason the Irish were able to manage so well without banks was all down to social cohesion.

    So were there no problems at all?

    No, of course there were problems. Take the guy who bought a racehorse on credit and then paid the debt with money he won when his horse came in first - basically, gambling with another person's cash. It sounds an awful lot like what banks do now, but then on a smaller scale. And, during the strike, Irish companies had a harder time acquiring capital for big investments. Indeed, the very fact that people began do-it-yourself banking makes it patently clear that they couldn't do without some kind of financial sector.

    But what they could do perfectly well without was all the smoke and mirrors, all the risky speculation, the glittering skyscrapers, and the towering bonuses paid out of taxpayers' pockets. "Maybe, just maybe," the author and economist Umair Haque conjectures, "banks need people a lot more than people need banks."

    When Irish bankers went on strike in 1970, the Irish took matters into their own hands - with the help of the country's bartenders and shopkeepers [Peter Macdiarmid/Getty Images] 

    Another form of taxation

    What a contrast with that other strike two years earlier and 3,000 miles away. Where New Yorkers had looked on in desperation as their city deteriorated into a rubbish dump, the Irish became their own bankers. Where New York was staring into the abyss after only six days, in Ireland things were still going swimmingly even after six months.

    Let's get one thing straight, however. Making money without creating anything of value is anything but easy. It takes talent, ambition, and brains. And the banking world is brimming with clever minds. "The genius of the great speculative investors is to see what others do not, or to see it earlier," explains the economist Roger Bootle. "This is a skill. But so is the ability to stand on tiptoe, balancing on one leg, while holding a pot of tea above your head, without spillage."

    In other words, the fact that something is difficult does not automatically make it valuable.

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    In recent decades, those clever minds have concocted all manner of complex financial products that don't create wealth, but destroy it. These products are, essentially, like a tax on the rest of the population. Who do you think is paying for all those made-to-measure suits, mansions, and luxury yachts? If bankers aren't generating the underlying value themselves, then it has to come from somewhere - or someone - else. The government isn't the only one redistributing wealth. The financial sector does it, too, but without a democratic mandate.

    The bottom line is that wealth can be concentrated somewhere, but that doesn't also mean that's where it is being created. This is just as true for your former feudal landowner as it is for the chief executive of an investment bank. The only difference is that bankers sometimes have a momentary lapse and imagine themselves the great creators of all this wealth. The lord who was proud to live off his peasants' labour suffered no such delusions.

    Bull***t Jobs 

    And to think that things could have been so different.

    Nearly a century ago, economist John Maynard Keynes famously predicted that we would work 15-hour weeks by the year 2030. He thought that our wealth and prosperity would increase dramatically and that we would convert much of that wealth into leisure. Keynes was certainly not the only one to believe that it was just a matter of time before we solved the "economic problem". Well into the 1970s, economists and sociologists forecasted that "the End of Work" was near.

    In reality, that is not at all what has happened. We are plenty more prosperous, but we are not exactly swimming in a sea of free time. Quite the reverse. We are all working harder than ever. Many people explain these circumstances by assuming that we use money we don't have to buy stuff we don't need to impress people we don't like. In other words: We sacrificed our free time on the altar of consumerism.

    But there is one puzzle piece that doesn't fit. Most people play no part in the production of iPhone cases in their panoply of colours, exotic shampoos containing botanical extracts, or Mocha Cookie Crumble Frappuccinos. Our addiction to consumption is enabled mostly by robots and developing world wage slaves. And although agricultural and manufacturing production capacity have grown exponentially over the past decades, employment in these industries has dropped. So is it really true that our overworked lifestyle all comes down to out-of-control consumerism?

    David Graeber, an anthropologist at the London School of Economics, believes there is something else going on. A few years ago he wrote a fascinating piece that pinned the blame not on the stuff we buy but on the work we do. It is entitled, aptly, On the Phenomenon of Bullshit Jobs.

    In Graeber's analysis, innumerable people spend their entire working lives doing jobs they consider to be pointless. "Bull***t jobs", Graeber calls them. They are the jobs that even the people doing them admit are, in essence, superfluous.

    When I first wrote an article about this phenomenon, it unleashed a small flood of confessions. "Personally, I'd prefer to do something that's genuinely useful," responded one stockbroker, "but I couldn't handle the pay cut." He also described his "amazingly talented former classmate with a PhD in physics" who develops cancer detection technologies, and "earns so much less than me it's depressing." But of course, that your work happens to serve a weighty public interest and requires lots of talent, intelligence, and perseverance doesn't automatically mean you are raking in the cash.

    Or vice versa. Is it any coincidence that the proliferation of well-paid bull***t jobs has coincided with a huge boom in higher education and an economy that revolves around knowledge? Remember, making money without creating anything of value isn't easy. For starters, you have to memorise some very important-sounding but meaningless jargon. (Crucial when attending strategic trans-sector, peer-to-peer meetings to brainstorm the value add-on co-creation in the network society.) Almost anybody can collect rubbish, but a career in banking is reserved for a select few.

    In a world that's getting ever richer, where cows produce more milk and robots produce more stuff, there is more room for friends, family, community service, science, art, sports, and all the other things that make life worthwhile. But there is also more room for bull***t. As long as we continue to be obsessed with work, work, and more work (even as useful activities are further automated or outsourced), the number of superfluous jobs will only continue to grow. Much like the number of managers in the developed world, which has grown over the past 30 years without making us a dime richer.

    On the contrary,
    studies show that countries with more managers are actually less productive and innovative. In a survey of 12,000 professionals by the Harvard Business Review, half said that they felt their job had no "meaning and significance," and an equal number were unable to relate to their company's mission. Another recent poll revealed that as many as 37 percent of British workers think they have a bull***t job.

    By no means are all these new service sector jobs pointless - far from it. Look at healthcare, education, fire services, and the police and you will find lots of people who go home every day knowing, despite their modest pay cheques, that they have made the world a better place. "It's as if they are being told," Graeber writes, "You get to have real jobs! And on top of that, you have the nerve to also expect middle-class pensions and healthcare?"

    So who is more useful to society - the stock trader or the rubbish collector? [Doug Griffin/Getty Images]

    There is another way? 

    What makes all this especially shocking is that it is happening in a capitalist system, a system founded on capitalist values such as efficiency and productivity. While politicians endlessly stress the need to downsize government, they remain largely silent as the number of bull***t jobs goes right on growing. This results in scenarios where, on the one hand, governments cut back on useful jobs in sectors such as healthcare, education, and infrastructure - resulting in unemployment - while on the other investing millions in the unemployment industry of training and surveillance whose effectiveness has long been disproved.

    The modern marketplace is equally uninterested in usefulness, quality, and innovation. All that really matters is profit. Sometimes that leads to marvellous contributions, sometimes not. From telemarketers to tax consultants, there is a rock-solid rationale for creating one bull***t job after another: You can net a fortune without ever producing a thing.

    In this situation, inequality only exacerbates the problem. The more wealth is concentrated at the top, the greater the demand for corporate attorneys, lobbyists, and high-frequency traders. Demand doesn't exist in a vacuum, after all; it is the product of a constant negotiation, determined by a country's laws and institutions, and, of course, by the people who control the purse strings.

    Maybe this is also a clue as to why the innovations of the past 30 years - a time of spiralling inequality - haven't quite lived up to our expectations. "We wanted flying cars, instead we got 140 characters," mocks Peter Thiel, Silicon Valley's resident intellectual. If the postwar era gave us fabulous inventions such as the washing machine, the refrigerator, the space shuttle, and the Pill, lately it has been slightly improved iterations of the same phone we bought a couple years ago.

    In fact, it has become increasingly profitable not to innovate. Imagine just how much progress we have missed out on because thousands of bright minds have frittered away their time dreaming up hypercomplex financial products that are ultimately only destructive. Or spent the best years of their lives duplicating existing pharmaceuticals in a way that's infinitesimally different enough to warrant a new patent application by a brainy lawyer so a brilliant PR department can launch a brand new marketing campaign for the not-so-brand-new drug.

    Imagine that all this talent were to be invested not in shifting wealth around, but in creating it. Who knows, we might already have had jetpacks, built submarine cities or cured cancer.

    Friedrich Engels, a close friend of Karl Marx, described the "false consciousness" to which the working classes of his day - the "proletariat" - had fallen victim. According to Engels, the 19th-century factory worker didn't rise up against the landed elite because his worldview was clouded by religion and nationalism. Maybe society is stuck in a comparable rut today, except this time at the very top of the pyramid. Maybe some of those people have had their vision clouded by all the zeros on their pay cheques, the hefty bonuses, and the cushy retirement plans. Maybe a fat billfold triggers a similar false consciousness: the conviction that you are producing something of great value because you earn so much.

    Whatever the case, the way things are is not the way they have to be. Our economy, our taxes, and our universities can all be reinvented to make real innovation and creativity pay off. "We do not have to wait patiently for slow cultural change," the maverick economist William Baumol challenged more than 20 years ago. We don't have to wait until gambling with other people's money is no longer profitable; until refuse workers, police officers, and nurses earn a decent wage; and until math whizzes once again start dreaming of building colonies on Mars instead of starting their own hedge funds.

    In the end, it is not the market or technology that decides what has real value, but society. If we want this century to be one in which all of us get richer, then we will need to free ourselves of the dogma that all work is meaningful. And, while we are at it, let's also get rid of the fallacy that a higher salary is automatically a reflection of societal value.

    Then we might realise that in terms of value creation, it just doesn't pay to be a banker.

    New York City, 50 years later

    Half a century after the strike, the Big Apple seems to have learned its lesson. "Everyone in NYC wants to be garbage collector," read a recent newspaper headline. These days, the people who pick up after the megacity earn an enviable salary. After five years on the payroll, they can take home as much as $70,000 plus overtime and perks.

    "They keep the city running," a Sanitation Department spokesperson explained in the article. "If they were to stop working, however briefly, all of New York City would come to a standstill."

    The paper also interviewed a city sanitation worker. In 2006, Joseph Lerman, then 20, got a call from the city informing him he could report for duty as a collector. "I felt like I'd won the jackpot," he recounts.

    Nowadays, Lerman gets up at 4am each morning to haul rubbish bags for shifts of up to 12 hours. To his fellow New Yorkers, it's only logical that he is well paid for his labours. "Honest," the city spokesperson smiles, "these men and women aren't known as the heroes of New York City for nothing."

    The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

    This essay is adapted from Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman. Utopia for Realists originated on The Correspondent, the ad-free journalism platform that serves as an antidote to the daily news grind.

    The book is available on Amazon. Like Bregman on Facebook and follow him on Twitter @rcbregman.

    This article first appeared in the Al Jazeera Magazine. 

    SOURCE: Al Jazeera



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