Are there lessons from the success of the Games for the British economy? I’d take three from the experience of the past fortnight.Time on task, focus, deferred gratification.
First, and most important, we have been reminded that an objective that is worth attaining, like a gold medal, requires years of hard work. Success does not come overnight. That is as true of our economy as it is of sport.
The success of our economy in the years ahead depends on the foundations we lay today. That means focusing on improving education and skills so that we are equipped to face the challenges from competitors around the world. And it means reforming our banking system so that banks focus less on making money in the short term, and more on building businesses to serve their customers’ interests over the longer term.Whether a more regulated banking environment, or one subject to more market tests, remains for a subsequent paper. I don't know how deposit insurance works in the U.K. I am sympathetic to the hypothesis that regulation plus deposit insurance gave bankers a put option to insure their more outrageous products.
Yes, for many years, our financial sector sustained the illusion that it was possible to become a millionaire overnight by buying and selling pieces of paper. But we have seen how paper fortunes in financial markets can disappear overnight. Things need to change. The Government’s plans to build a wall between banks’ risky trading on one side, and their lending to businesses and families on the other, will help. As will the injection of new competition into our banking system. And, as recent scandals have shown, banks could learn a thing or two about fair play from the Olympic movement.The accusations of doping will trickle out. The greater challenge, however, is in introducing competition in such a way that regulatory arbitrage doesn't occur. In the States, disintermediation of assets from regulated banks into money market funds diffused as a way to offer small investors higher returns on their investments, and the path to repeal of Glass-Steagall had a certain logic to it.
The second lesson is that motivation does not come from financial incentives alone. Again, the financial sector has done us all a disservice in promoting the belief that massive financial compensation is necessary to motivate individuals. Look at the success of the volunteers whose presence at the Olympic Park and around London did so much to create the atmosphere of happiness that pervaded the Games, and who represented all of us so well when greeting and helping the many visitors from overseas.True, up to a point. The athletes might all be inspired by the shot at a medal -- akin to a big bonus -- and the theory of tournaments applies to the sports arena and the trading floor alike. And I hope in those paragraphs is not a plan by the head banker to cut staff wages. Yes, a lot of people did pro bono work well. The timer at the fencing matches was a 15 year old volunteer. That didn't work out so well.
Motivation is more than mere money. Over the years, the people who have impressed me most in business have been those motivated primarily by the desire to show that their products are the best. By being passionate about what they produce, and the customers whom they serve, they achieve success, and, in so doing, they make money, almost as a by-product. There is no substitute for passion and commitment to one’s sport or business.
The final lesson from the Olympics is that competitive team sports – and all the athletes in London belong to a team – are an essential part of children’s education. Learning to play in a team, the importance of trusting others in order to find success, how to cope with victory and defeat, are all preparation for the world of work.Also true, up to a point. I was struck by how many mentions of U.S. universities came up during the Parade of Nations. Perhaps other countries outsource their sports development to the NCAA, and the downside of athletic competition -- the double standards, the courtesy courses, the brain coaches -- are invisible and therefore irrelevant.