Is banking harmful?

The basic argument for professional philanthropy is that, because giving your money away is so powerful, it’s well worth the slight harm to the economy of some high earning jobs.

But the NYT recently put up an opinion piece by Nicholas D. Kristof arguing that banking isn’t (necessarily) harmful at all:

‘I’ve been sympathetic to the Occupy Wall Street movement, but, look, finance is not evil. Banking has contributed immensely to modern civilization. By allocating capital to more efficient uses, banking laid the groundwork for the industrial revolution and the information revolution.

‘Likewise, the attacks on private equity seem over the top. Private equity firms like Bain Capital, where Romney worked, aren’t about destroying companies and picking over the carcasses. Rather, the aim is to acquire poorly managed companies, make them more efficient (sometimes by firing people but often by rejiggering the business model) and then resell them at a profit. That’s the merciless, rugged nature of capitalism.’

The basic argument applies whether or not you accept Kristof’s view, and it’s hardly universal. The New Economics Foundation claims banking is deleterious:

‘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.’