Wednesday, June 27, 2007

Newsflash: Central Banks Don't Understand Supply & Demand

I cant believe the news today. Oh, I cant close my eyes and make it go away...You'd think that banks would like understand simple economic theories. You'd think that or you would've at least hoped it to be the case. Well here's an interesting excerpt from an article hitting the newswire today:
"Bank of England Struggles to Keep Staff Lured by Pay"

June 26 (Bloomberg) -- The Bank of England's governing board said it's concerned about an exodus of economists, who were lured by higher pay in London's financial services industry last year.

Governor Mervyn King, whose own pay rose to 283,564 pounds ($567,000) last year, is vying to keep analysts and government statisticians from choosing record bonuses at banks over civil service wages. The starting salary offered by the Bank of England to an economist with a PhD is 37,230 pounds, a third of the 2005 average earned by their counterparts in a U.K. bank.

``The main thing that has changed over the last year is that the private financial sector seems to be recruiting at a massive rate,'' said Simon Hayes, an economist at Barclays Capital in London who left the central bank 18 months ago. ``The bank can't compete on salary. Not at all.''
So lemme get this straight: When people are paid more for doing the same task, they tend to move towards the higher paying jobs...Remarkable! Tell me more!... So if there is a high demand for a scarce resource, the prices/wages actually increase? Whoa Nelly!

Basically the Central Bank doesn't understand supply and demand...moreover how is this a newsworthy story. What are you supposed to say "Oh well, those government workers should really stay with their shittier jobs."

I mean it's not as if these are teachers who feel that the have a non-financial incentive to keep enlightening young minds....these are economists. If there's one thing they're supposed to understand it is to be cold and heartless. That's like what they do. The fact that their employers are stupefied by this finding is baffling.

Maybe the Bank of England is so dumb because too many of the workers who understand Econ 101 already left...


Janet said...

I think all this article was trying to say is that it's too expensive to afford good people. I don't the banks are stupid.

Kiandra said...

People should read this.