They seem to make several points.

Oh, and what it does to family dynamics. There was something in the Times today about how the credit crunch is good because it reduces the number of divorces. (Fantastic. So wonderful! Aaaargh!)

I am ranting now, I know.. but yes, thanks for pointing out that it is not a network of upper class white British men. In fact most of the people I know of who are in ibanks are anything but that. And I don’t just mean in the social circle.

In the end there won’t be much of a difference to the wealth of CEOs. In a world where Nick Leeson can write about ethics in the financial market, just about anyone who is really responsible escapes pretty well.

My question, while rhetorical, is not really an economic one. It’s more about understanding how the system of finance operates. It’s so easy for the smug middle class to sit back and say ‘Oh look, the bankers are getting it now’, but the poorest of the lot probably don’t care.

Yani: For starters, the person mention in the post wasn’t you. We had our conversation before the credit crunch really bared its fangs. Before Lehman Brothers crumbled and before people started losing their jobs en masse.

People are entitled to their economic idealism. Just as I am to mine. However, what I found unpalatable was the lack of understanding that one banker losing his job results in a big house of cards falling. All over zone 4 construction has stopped midway and migrants find themselves trapped. They are not entitled to benefits, not entitled to council housing in many cases, don’t have enough money to go back and have lost their jobs here.

The issue of dispropotionate wealth distribution is different from the financial system collapsing. If anything, the collapse of the financial system has more to do with the wrong ways to address the lack of propotionate distribution.

As for Schdenfreude, nothing specifically wrong with it. So long as it’s acknowledged. Instead we have schdenfreude masquerading as “knowledge of the economy”. Yes, fundamentally this was caused due to an element of recklessness, but paranoia in the market has an equally large hand.

As for the Schdenfreude, I admit it is not an attractive emotion. Let me try to justify it (badly).It has felt for a long time in the UK that those guys (because it is mostly guys) that work in the City are the brightest and best and that the rest of us doing less high profile and less profitable jobs are somehow inferior. So admittedly my Schadenfreude is a result partly of an inferiority complex….but it is also the result of a complex mix of other factors.

If you take a look at extracts from Polly Toynbee’s new book, Unjust Rewards, she highlights the arrogance, the unwillingness the pay taxes (progressive taxation is at the heart of any European social contract) and the extent to which the most highly paid in the City are out of touch with British society. When asked how much one has to earn in the UK to be in the top 10% of earners, her sample said nearly £200,000 p/a. The actual figure is between £40,000 and £50,000. This demonstrates not only being out of touch with the lives of well over 90% of the British population but also with economic reality in general. Of course it would be wildly inaccurate to say that the attitudes and opinions of the people she interviews in her book are representative of everyone who works in the City but it makes pretty uncomfortable reading nonetheless.

I think that to be bothered by the disproportionality of the salaries and bonuses is also justified. Of course people work long hours in the sector, but do they work 10 or 20 or 50 or even 100 times as hard as a teacher or a nurse or a private sector employee in a different sector? You don’t have to be a ‘Commie’ to passionately believe that an excess of inequality in any society can have very negative outcomes in terms of crime and social mobility amongst other things. In fact some economists suggest that too much inequality is inefficient because it leads to de-motivation and a withdrawal of effort which then has a negative economic impact. Although many factors have influenced increased inequality in the UK over the last 10 years, I am sure that massive salaries and bonuses in the City have contributed.

Also remember, this loss itself was strong enough incentive for John Mack of Morgan Stanley to be ready to surrender to a Wachovia which itself was struggling.
Now I am not defending any of these guys at all. All I am saying is as inefficient as it is, the market economy is the best we’ve got!!