Bankers who demand spiralling pay awards and threaten to quit Britain over taxed bonuses are amoral. Perhaps they should listen to the government's happiness czar

The former HR director of a leading investment bank told me recently of the day a 22-year-old trader came to her feeling demotivated because his bonus was being capped at £1m. He didn't like it and wanted to know what she was going to do about it. She told him to get straight back to work or she would call his mother. A few weeks later he left for a higher salary at a rival institution.

She recalled the episode to illustrate her belief that the recent global financial and economic crisis is essentially a moral trauma, a judgement borne out by the continuing resistance of many bankers to attempts to reform their practices, even after billion-pound bailouts.

The excesses endemic in banking are amoral, not immoral. That trader and his ilk don't know any better. They are not aware of the gross iniquity implicit in their reward, because they are trapped in a world where such awards are normal. So inured to real life are many bankers that a bunch of them recently threatened to invoke the Human Rights Act to prevent the new tax on their bonuses.

We might be a lot better off if the threatened exodus of talent actually happened. Imagine a financial world not run by greedy mercenaries motivated to take excessive risks by huge rewards and by the knowledge that if they fail they will be bailed out by the taxpayer. There must be many individuals in the UK who could have made less of a mess of the banks than the bankers did and on a tiny fraction of their salaries.

Indeed, those who are paid highest often destroy most value. Research from the New Economics Foundation (NEF) into the social impacts of several jobs shows that elite City bankers—that is those earning bonuses of more than £1m—destroy £7 of value for every £1 they create. By contrast, hospital cleaners create more than £10 in value for every £1 they are paid. The measures NEF used include conventional economic returns, environmental impacts and the knock-on effects for jobs and wellbeing in society.

As well as nailing the lie that there is a straightforward relationship between high financial rewards and good societal outcomes, the research also shattered other myths about pay and value. These include the idea that the City of London is essential for the UK economy, that we need to pay high salaries to attract and retain talent here, that workers in highly paid jobs work harder, that if we tax the rich they will take their money and run, that the rich contribute more, and that some jobs are more satisfying so they require less pay.

Nearly 50 years ago management thinker Frederick Herzberg argued that pay is no more than a hygiene factor, and that the real motivators at work are things such as achievement, recognition, responsibility, advancement and the intrinsic satisfaction of doing a job well. Yet we persist in the delusion that money can buy happiness, when, in fact, it may do the opposite.

Research by Lord (Richard) Layard, the government's so-called "happiness czar", shows that once people earn £25,000 a year net, any more doesn't make them any happier. Indeed, the more they have, the more they want, the less they enjoy it and the less happy they become.

High pay is a symptom of a bigger disease—the cult of individualism—and it is from here that the amorality endemic in banking and at the top of many corporations stems. On the other hand, people who care about the happiness of others are themselves content, and Layard believes that policymakers should take as their objective the cheeriness and misery of the people. It may sound obvious, but if it were that evident, why have we persisted in trying to motivate bankers and company executives with financial rewards that serve merely to fuel their desire for even more?

Even a concerted drive by Europe and the US for even more corporate governance reform would amount to tinkering around the edges and make little material difference to the way the banks operate anyway. The likelihood is that bankers will see new regulations as another exciting challenge—something to be got round, or explained away.

By contrast, a civilisation based on Layard's Greatest Happiness Principle (GHP) rather than Gross Domestic Product (GDP) would represent a considerable improvement.