Jumping the gun on government rules such as DEI is a disturbing trend which the City must resist, writes Lucy McNulty in today’s Notebook
The City must not fall foul of ‘anticipatory obedience’
There is a tendency by people living in authoritarian regimes to over-obey because they think it is what is expected of them. Yale University professor Timothy Snyder coined this phenomenon “anticipatory obedience”. It is, he says, “a political tragedy”.
“It means that leaders can see what people will accept and then push them just a little further,” he wrote in his book On Tyranny. “When citizens obey in advance, voluntarily conforming to expectations before they are even imposed, they grant power to those who would exploit it.”
That this phenomenon is gaining traction across America in these early days of Trump’s second presidency has been well-documented: from self-censoring media outlets and tech companies to an unusually apolitical Oscars, its existence is increasingly hard to ignore.
More recently, it has spread to Wall Street with financial services firms increasingly pre-empting potential backlash from Trump’s administration by scaling back the diversity, equity and inclusion initiatives they had previously championed.
“It’s a very disturbing phenomenon,” says Alan Houmann, a veteran lobbyist who previously ran US giant Citi’s government affairs in Europe, the Middle East and Africa.
Houmann told the Following the Rules podcast that US bank bosses’ collective rollback of their DEI policies must serve as a wake-up call to the financial services sector more broadly. Certainly, it runs the risk of a more widespread pullback on DEI programmes amongst global institutions unaccustomed to writing multiple policies across multiple geographies.
That could prove damaging in the long run. “We spent years talking about the positive benefits of diversity,” Houmann says. “There’s a business case for diversity. Follow the rules, of course… but do the right thing by your employees.”
And while the UK’s robust employment laws should ensure minorities continue to be championed and protected in our workplaces, City regulators have opted not to introduce new rules intended to boost DEI in financial services amidst criticism of some of their proposals and government pressure for more growth-focused rulemaking.
And yet, Houmann warns, “once you’ve conceded the ground, it’s very hard to pull it back”.
Efforts to create diverse and inclusive workplaces should never be dictated by the political winds of the day. If we let them be, what will be next?
Talking up our capital markets
“I want mothers in Cumbria to care that we have a vibrant capital market,” London Stock Exchange (LSE) chief Julia Hoggett told Following the Rules last month.
After all, she explained, it is our capital markets that will finance a local business to create well-paid jobs for her kids, enable them to buy a house and ultimately allow her to grow old near her grandkids. “It’s not how we talk about the capital markets, [but] it’s what they do,” says Hoggett.
Hoggett is under pressure to boost the public’s interest in London’s capital markets as the LSE navigates declining listings and government pressure to revitalise the UK’s flagging economy. Just eight per cent of UK personal wealth is invested in equities and mutual funds, compared to a G7 average of 14 per cent, according to research from fund manager Aberdeen.
The Capital Markets Industry Taskforce, which Hoggett chairs, wants to make London’s capital markets more relatable to the public by demonstrating their direct impact on local economies and communities. This is vital work. But its success rides on all of us playing our part through conversations with family and friends on the everyday benefits our capital markets can deliver.
Manners going out the window
The ‘Overton window’ is a concept devised by political scientist Joseph Overton to indicate the range of subjects deemed to be politically acceptable to the mainstream population at a given time. Though typically quite stable, the window shifts slightly when the centre accommodates the far right or far left in aspects of policy. In the UK, however, concerns are growing that the window has moved too far towards the extremist and pernicious. “The whole veneer of politeness has gone,” one City veteran tells me.
Quote of the week:
“The regulatory system has become burdensome to the point of choking off innovation, investment and growth.”
Chancellor Rachel Reeves announces plans to fold the Payment Systems Regulator into the Financial Conduct Authority.
What I’m listening to:
IMO with Michelle Obama & Craig Robinson
You could be forgiven for thinking that the world has enough self-improvement podcast series, but this new offering from former First Lady Michelle Obama and her brother Craig Robinson proves there’s space for at least one more. In a new series launched this month, the duo blends personal insights and relationship advice with deeper discussions on social issues and mental health into hour-long conversations, with a celebrity guest in tow. The result is a refreshingly candid and relatable show and that is what makes it stand out in a crowded space. Amongst a sea of hard news, this is an unashamedly comforting and easy listen. And for that reason alone, it’s one to make some time for.
Lucy McNulty is editor of Following the Rules podcast