Has Dawn broken in the Bank of England?

The Times

Sam Fleming Economics Editor Last updated September 3 2010 12:01AM

A senior Bank of England official reignited the debate over levies on financial transactions yesterday, saying that policymakers needed to address the “myopia and volatility” in the markets.

Andrew Haldane, executive director for financial stability at the Bank, said that disincentives may be needed to tackle endemic short-termism. They could include levies on investments to promote longer-term behaviour and discourage high-frequency churning, Mr Haldane said in a paper to be delivered at a Beijing conference.

It’s a bit like the moment when the little boy said “But the King has no clothes”. Finally, someone "inside the system" is questioning the prevailing mind-set. A senior member of the City’s establishment is beginning to wonder if keeping on doing what they have always done may not make anything different; you may remember Rita Mae Brown’s definition of Insanity?

The psychology of change tells us that the first reaction to the need for something to be different is Denial. We certainly have had years of that. The second reaction is Resistance that ranges from irritation to aggression, and we have heard plenty of that over the last two years, mostly in the form of elaborate self justification. (Yes, self justification is a known behaviour of those resisting unwelcome realities). The third reaction is Exploration, the urge to start to look for the possibility of making something different happen. Mr Haldane has just arrived, welcome.

We have written at length on this topic in this blog series starting with our August 2009 blog Cracking the Bonus Culture - Why Regulation cannot be the answer. In that post we drew attention to the lessons of Control Theory, understood by all engineers (who are trained in scientific thinking), and ignored by economists (who, sorry guys, do not understand it). We asked what effect some form of transaction damping (as now postulated by Mr Haldane, joining a small vanguard) could have. We opened up a question, that develops in later posts and is fundamentally germane to understanding the issues and behaviours, of what the real difference might be between money and true wealth.

So, it is Told You So, again. In which we take little satisfaction, except in the hope that Mr Haldane may have opened the door to a more informed debate and to the beginnings of effective change in the way that the people in the financial world think about what they do and how they do it. We know that changing the bad habits of ages is not easy, and that it can take many years. Indeed, the claim that it is so difficult and so slow as to be impossible is a common self justification (there it is again) by those resisting change.

This is our speciality. We have spent nearly 20 years developing, and proving in action, tools, techniques and skills that enable highly accelerated change to attitudes, values and behaviours. More important, since we are a very small partnership, we have invested massively in making these tools, techniques and skills both transferable and transportable. Any leadership can engage in the personal discovery and coaching programme that will enable it to create its own change leadership resources to deploy with its own employees to make the differences that they need.

Thank you, Mr Haldane, for bringing Common Sense to Capitalism. Can we help you make something different actually happen? It is what we do. There is much to discuss, there is so much that may seem impossible that is feasible, and so much more that can be achieved so much faster than might be imagined.

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