$USD4.6 trillion and still counting

What's the cost of not listening?

Saturday August 27, 2005 was glorious clear, crisp and sunny day in Jackson Hole Wyoming. Jackson Hole is a steep valley between two mountain ranges and the setting of a steep drop on either side of a mountain range would be prophetic. The views are spectacular across the forests, lakes and valleys for the meeting hosted by the Federal Reserve Bank of Kansas City - Economic Policy Symposium Proceedings[i]. which draws together the most senior central bankers in the United States and around the world. The annual gathering allows academics, the banking industry and policy makers to come together to discuss the future of the global financial system.

At 10am, a 42-year-old vegetarian who reads Tolkien and Tolstoy with a bachelor’s degree in electrical engineering is about to deliver one of the most important presentations in the 27 year history of the Economic Symposium.

The presentation by Professor Raghuram Rajan from the University of Chicago and the Chief Economist at the International Monetary Fund (IMF) titled “Has Financial Development Made the World Riskier?[1]" In his presentation Rajan argues that financial engineering and banking rewards means the worlds banking system was riskier that it had been in the past. Rajan later would explain “we were living in well-run houses where the plumbing was not a problem. And the reality was the plumbing was actually getting corroded by poor incentives in that system, and we didn’t realise it until it backed up in a really big way, and we said, “What is that smell? [2]”.

The smell Rajan was referring to would cost $USD4.6 trillion [3] or $USD70,000 for each American.

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This is just the cost in the United States, their numbers are mirrored and amplified around the world. Rajan paper was a warning about the “probability of a catastrophic meltdown.” as a result of “altered managerial incentives, which in turn have altered the nature of risks undertaken by the system.[4]”.

In a room full of the who’s who of global banking and policy making leaders– who was listening?

The youngest ever IMF Chief Economist and the first one from India. drew heavy criticism for speaking out against the prevailing dogma of the period.

Who took notice of the dissenting voice in a room full of academics, bankers and journalists?

Larry Summers US Treasury Secretary was reported in the Wall Street Journal saying “"the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be misguided." and “a wide variety of misguided policy impulses.[5]”

 Could the global financial crisis been avoided if people had listened to Rajan’s presentation – maybe or maybe not – yet we will never know as his presentation was either ignored or criticised.

There were other dissenting voices prior to 2008 making a similar point. Michael Burry a hedge fund manager who trained as a doctor. Through his organisation Scion Capital, Burry commenced researching the sub-prime market in 2005. Through detailed and painstaking research, he came to understand the magnitude of the issue and despite telling the largest and most sophisticated investment banks from around the global of the impending issue, Burry would be ignored because his approach was distinctly different and detailed.

Whether it’s someone we meet, someone we hear in a group setting or read about – we tend not to listen to views and perspectives that differ with our own.

For most of us, it’s difficult to believe that the conversations we lead or participate in will have an impact as large as trillions of dollars. Yet to each of us, the impact is always significant.

How quickly are you dismissing opinions in our organisations because they don’t have the same professional background as the prevailing wisdom of the crowd.

The cost of NOT Listening to Rajan and Burry over $4 trillion.

Dismissing opinions lacks curiosity and the consequences can be just as devastating and disastrous for individuals, teams and organisations.

Learn more about the what's getting in the way of your listening - Download The Five Myths of Listening

Oscar Trimboli is on a quest to create 100 million Deep Listeners in the world. He is an author, Host of the Apple Award winning podcast—Deep Listening and a sought-after keynote speaker. He is passionate about using the gift of listening to bring positive change in workplaces and the world.

Through his work with chairs, boards of directors and executive teams in local, regional and global organisations, Oscar has experienced first-hand the transformational impact leaders and organisations can have when they listen beyond the words.

He consults to organisations including Cisco, Google, HSBC, News Corp, PayPal, Qantas, TripAdvisor helping executives and their teams listen to what’s unsaid by the customers and employees.

Oscar lives in Sydney with his wife Jennie, where he helps first-time runners and ocean swimmers conquer their fears and contributes to the cure for cancer as part of Can Too, a cancer research charity.

[1] “Has Financial Development Made the World Riskier? https://www.nber.org/papers/w11728

[2] This Economist Predicted the Last Crisis. What’s the Next One? https://freakonomics.com/podcast/rajan/

[3] The Social and Political Costs of the Financial Crisis, 10 Years Later https://hbr.org/2018/09/the-social-and-political-costs-of-the-financial-crisis-10-years-later

[4] The Greenspan Era: Lessons for the Future, Speech by Raghuram G. Rajan, Economic Counsellor and Director of the IMF's Research Department https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp082705

[5] After the Blowup – The New Yorker https://www.newyorker.com/magazine/2010/01/11/after-the-blowup

[i] If you are wondering why Kansas City hosts an event in Wyoming. In 1982 – Federal Reserve Chairman Paul Volcker loved fly fishing and Jackson Hole is one of the best summer locations for this pastime and decades later bankers still make the pilgrimage to rustic lodge called Jackson Lake Lodge because on Volcker fly fishing obsession