September 09, 2017

Why would someone look in the drawer for the whole set of cutlery he wants, if he only purchases spoons?

Sir, Tim Harford discusses the need for diversity and the difficulties of ascertaining the right one. “Looking for a knife in a drawer full of spoons” September 9.

As one who had never worked in the public sector, but got still dropped on the World Bank as an Executive Director, I found there numerous occasions to scream out for more diversity.

For instance, when the search for a new Chief Economist for the World Bank was announced, we were told that although it was obviously quite a delicate task, it should not take too long, as the search had to be carried out within “quite a small and exclusive community of development economists.”

Naturally, most of my arguments, like when trying to explain to my fellow board directors that substituting, with a plumber or a nurse, two of us directors selected by lottery, would make us a wiser board, fell on deaf ears not a iota interested in rocking the comfort of sameness.

How could we get more diversity? Perhaps by requiring some boards to document why they think they are sufficiently diversified. Of course that does not mean accepting as an explanation, the existence of a racially and gender diversified group in which all members have pursued the same academic degrees and the same type of jobs.

Of course where we most need diversity is among our bank regulators. The fact they can live with 20% risk weights for that which could generate dangerous excessive exposures, like to the AAA rated, and one of 150% for what is turned so innocuous by being rated below BB-, only evidences the existence of a mutual admiration club with members engaged in very incestuous group-thinking.

Sir, isn’t it ironic that those regulators supposed to make our banks safe, are especially endangering our bank system?