According to a 2011 Pew Research Center poll, more than 40 percent of people aged 18 – 30 believe they will receive no retirement income from Social Security, even though Social Security receipts are estimated to equal about 75 percent of benefits on a sustainable basis under the current regime.5 Congress and the White House should enact a fiscal program that starts with mild restraint, but credibly builds that restraint over time so as to put the nation’s debt burden on a clearly sustainable course. Ideally, the program would have broad bipartisan support and provide clarity not just on the near-term outlook, but also about how the major entitlement programs would be adjusted. Also, steps could be taken to increase the productive capacity of the economy over time. Such actions are desirable because a more productive economy will generate higher living standards and have greater fiscal capacity. Let me briefly mention a few steps that could be taken to increase the economy’s potential over time – immigration policies that attract workers with scarce skills to the United States; education policies and job retraining programs that build and replenish human capital; spending on infrastructure to remove bottlenecks; tax simplification and the elimination of tax policies that distort investment and saving decisions; regulatory policies that are attentive to costs and benefits and that emphasize getting the incentives right. Counter-cyclical policies and structural policies are not substitutes, they are complements. We need both. The strength of demand today is importantly influenced by expectations about future living standards.

It is well understood that markets must be “fair” as well as “free” to do their job effectively - and that we have to have rules that reflect public policy concerns. But it is equally understood that, carried too far, prescriptive intervention can stifle competition and the market appetite for risk. In getting the balance right, market participants can do a lot for themselves. My impression certainly is that there is a growing recognition that high standards of professional competence and integrity are vital to a firm’s reputation and commercial success, or even its survival - and that helps to limit recourse to intervention. But it’s also true that we have a critically important, longstanding, tradition in this country that, where there is a perceived need for intervention, the relevant authorities consult extensively with the markets which helps to avoid unintended consequences and to ensure a measured and properly targeted approach. It’s a tradition which others would do well to adopt. My second explanation for the City’s success in financial services is non-discrimination. Provided they meet the standards of professional competence and integrity we expect in London, it makes no sense at all - in fact it would be self-inflicted injury - to distinguish between the firms or individuals who work here, on grounds of nationality or ethnic or religious background - or, in the case of individuals, on grounds of gender, which is a point, my Lord Mayor, which I know that you have made forcefully from the beginning of your term in office.