| BRISTOL, England
BRISTOL, England May 21 Companies taking a
longer-term view could help reduce inequality in society and
boost economic growth over the medium term, a senior Bank of
England official said on Wednesday.
Andy Haldane, executive director for financial stability,
said short-termism at big listed companies, such as focusing on
payouts to CEOs and dividends for shareholders "front and
centre", contributes to inequality.
It has led to the interests of other potential stakeholders,
such as workers, suppliers and wider society playing "very much
second fiddle", Haldane told a Festival of Ideas panel.
But it won't be easy to get shareholders focused on the long
term when they typically only hold a stock for six months, he
"Tomorrow's growth comes from investment today... If we are
to tackle this growth inequality crisis, then perhaps not the
worst starting point might be to start looking at corporate
governance structure," Haldane said.
"We have clear evidence that inequality sows the seeds of
future financial crises. We have pretty clear evidence
inequality retards medium term growth," said Haldane, who next
month becomes the Bank's chief economist.
Citing research from the International Monetary Fund, he
said the 2007-09 financial crisis was derived from an attempt to
ease inequality - the U.S. government trying to pump credit to
expand home ownership among poorer people - which failed because
the wealth gap was too entrenched.
Haldane is known for challenging conventional views. In
2012, he addressed a gathering of the anti-capitalist Occupy
movement and praised it for suggesting new ways to fix the
shortcomings of global finance.
On Wednesday, he said central banks could be accused of
having made inequality worse by cutting interest rates and
printing money or quantitative easing in response to the
This ramped up share prices by 90 percent in Britain to
increase wealth inequality, Haldane said.
"Is that a bad thing? I don't think so," Haldane said,
adding that as shares rose, the overall financial pie expanded.
The UK economy would have been a 100 billion pounds ($170
billion) smaller had the Bank of England not taken such
extraordinary steps, Haldane said.
"Without those steps, I think that all of us collectively
would have been significantly, absolutely, worse off," Haldane
said. "The alternative would have been worse still."
($1 = 0.5925 British Pounds)
(Reporting by Huw Jones; Editing by Ruth Pitchford)