The UK prioritises financial and business services over productive manufacturing. We are all paying for that.

Manufacturing industry in the UK employs about 2.1 million people. That’s the number in the orange box in the image. Financial services employ about 1.2 million, as shown in the smaller blue box.

The amount of tax paid by manufacturing industry, counting income tax and National Insurance paid by or for employees, and corporation tax paid by the companies, is about £8,500 per person employed. This is shown in the green box.

The amount of tax paid per employee in financial services is nearly ten times as much - £80,000 per person. This is shown in the teetering pink box. It is teetering because it is not secure. Financial services only function when there is a productive industry to service, and if that gets too small then the source of its revenue will dry up.

That’s because financial services are an extractive activity, not a productive one. They originated in order to help facilitate investment in industry, but their object is to generate trading profits in their own right. These come from the margins they are able to take from transactions as they move money-wealth through the economy, but the source of that wealth lies in the productive industries.

In other words, financial services don’t create anything new of value; they move the value created by others from one place or one person to another. So having a larger financial services sector doesn’t make the country richer in total; it makes some people richer at the expense of others - for example it makes investors richer at the expense of consumers and workers.

They are so successful at extracting money-wealth in this way that they make enormous profits, pay themselves enormous salaries and consequently pay a huge amount of tax, as the image shows. Governments love and prioritise financial services while neglecting manufacturing industry because of that huge difference in the tax take. In doing so they forget that the true source of wealth lies in producing real goods and services that we want and need - productive output that increases the totality of wealth in the economy - rather than just shifting it from pillar to post.

All that tax in the pink box originates in the productive activities in the economy, and it represents only about a third of the wealth that is extracted from those activities. If less were extracted, financial services would be smaller and would pay less tax, but the productive activities would be bigger and would pay more tax. And since those productive activities would generate more real wealth across the economy, less government spending would be required to rebalance the gross inequalities that make the lives of so many people such a struggle.