Andrew G Haldane: The short long Speech by Mr Andrew Haldane, Executive Director, Financial Stability, and Mr Richard Davies, Economist, Financial Institutions Division, Bank of England, at the 29th Société Universitaire Européene de Recherches Financières Colloquium, Brussels, 11 May 2011. *  *  *  The views are not necessarily those of the Bank of England or the interim Financial Policy Committee. We are grateful to Nicola Anderson, Sarah Allen, Kath Begley, Antony Ford, Priya Kothari, David Miles, Mette Nielsen, Peter Richardson, Iain de Weymarn and Laura Wightman for comments and contributions. 1. Introduction  Is the world becoming short-sighted? As individuals, it sometimes feels that way. Information is streamed in ever greater volumes and at ever rising velocities. Timelines for decisionmaking appear to have been compressed. Pressures to deliver immediate results seem to have intensified. Tenure patterns for some of our most important life choices (marriage, jobs, money) are in secular decline.1 Some have called this the era of “quarterly capitalism”.2 These forces may be altering not just the way we act, but also the way we think. Neurologically, our brains are adapting to increasing volumes and velocities of information by shortening attention spans. Technological innovation, such as the world wide web, may have caused a permanent neurological rewiring, as did previous technological revolutions such as the printing press and typewriter.3 Like a transistor radio, our brains may be permanently retuning to a shorter wave-length. If these forces are real, they might be expected to be particularly important in capital markets.

Changes in the compensation instrument can also help – for example, remunerating in equity is better than in cash and remunerating in junior or convertible debt might be better than either.29  (d)  Taxation/Subsidies: Authors have suggested a variety of ways in which government could penalise short-duration holdings of securities, or incentivise longduration holdings, using tax and / or subsidy measures. These measures differ in detail, but the underlying principle is to link them to the duration of an investor’s holdings or the length or nature of a company’s investment.30  Some of these initiatives have been tried and tested in differing degrees, at different times and in different countries. They have not obviously arrested the short-termism trend. It might be time to increase the level of policy ambition if the telescope is to be corrected, the voting  26  Aspen Institute (2009), CFA (2006). 27  Duruigbo (2011). 28  Securities and Exchange Commission (2010), Aspen Institute (2009). 29  Haldane (2011). 30  Aspen Institute (op.cit. ), Poterba and Summers (1995). BIS central bankers’ speeches  13  machine socialised, the savage civilised. Public policy could help keep the plums in the pudding. Without intervention, the long could become shorter still. References Aspen Institute (2009), “Overcoming Short-termism: A Call for a More Responsible Approach to Investment and Business Management”, The Aspen Institute Business and Society Program, September 9. Barton, D (2011), “Capitalism for the Long Term”, Harvard Business Review, March.