IN AESOP’S fable of the boy who cried wolf, the sting in the tail is that when the wolf actually appears, the young shepherd has lied so many times that no one comes to his aid even when the wolf is devouring the flock (and, in some versions, the boy himself). No one would actually want him – or the sheep – to suffer that fate, but if he does, we understand that he has brought it on himself.

Hearing the deafening cacophony of wolf warnings echoing around the Square Mile last week, it’s hard to resist the idea that the City of London is similarly preparing its own downfall. The roll call of businesses blindly asserting their right to go on doing the things that will eventually kill them is long: car companies resisting limits on CO 2 emissions, chemical firms contesting controls on toxic substances, energy firms fighting regulation every step of the way. The City’s insistence on its right to evade responsibilities that apply to everyone else is just the latest in this cautionary line, but taken to a new level.

In fact, given similar predictions of doom following the tax treatment of non-doms and foreign company earnings last year, anyone listening to the howls of protest that a 50% tax rate, regulation of hedge funds and curbs on bankers’ pay will trigger an exodus of ‘the brightest and best’ from London must be surprised that there is still anyone in that dubious category left to drive away.

The breathtaking sense of entitlement, and contemptuous dismissal of those who labour in the lower strata of the real world, can be gauged by the weirdness of the arguments attacking the measures. One is that the rich will take steps to avoid paying some of the tax (well, blow me). Another is that, by using cars, private medicine and schools, they are proportionally less reliant on public services. Or try this: cutting tax relief on pensions contributions from 40% to 20% will encourage outraged high earners to cut off their noses to spite their faces by closing down company pension schemes, as well as (of course) emigrating to more favourable legislations.

Indignation at proposals to get companies to publish gender pay comparisons, or the ratio of senior to average pay, similarly seems to come from another world. Good firms aiming to attract the best (as opposed to the most mercenary) talent would want to show they have a fair – that is, equal – pay policy anyway. And firms arguing that what they pay their chief executives is irrelevant to the rest of the company are simply demonstrating that they still don’t get it.

These fractures and disconnections – of the City from the rest of the economy, of the astronomically wealthy from the lower orders, of the boss from the humble employee – are both part symptom, part cause of the bubble that has blown up in our faces over the last year. Top and bottom, finance and factory, are interconnected parts of the same system, whether the unit is a company, an economy or, as we are now learning, the planet as a whole. As we also now know, while the wealth of the rich has shrunk dramatically, the millions who have lost jobs and homes are paying a much heavier relative price than those who are down to their last couple of million.

Which is why the recent, hesitant measures are important. We can regret that in relation to both pensions and tax they are tardy and ill-thought-through – indeed, they give every impression of being narrowly political rather than strategically motivated. But they are still welcome to the extent that they begin to call the City’s preposterous bluff.

For a start, we can begin to query the facile identification of ‘top talent’ with ‘top pay’. In many professions – in fact even in the pre-Big Bang City – the idea that the best were automatically the most attracted to money would cause outrage. Since in any case we shall need fewer, as well as less well-paid, bankers as the financial sector shrinks back to sustainable size, we don’t need to cave in to hollow blackmail. Every other country is in the same boat where exactly would they go? We can stop the regulatory and tax race to the bottom and think more clearly about what we do want – and the incentives that might encourage it.

The irony is that we need a functioning, creative City playing its important original role of serving the rest of the economy: helping companies to raise money, trade, insure themselves and invest wisely. As for the other City, the ‘big end of town’, as it came to be known in New Labour circles, it has cried wolf too many times for the warnings of disaster to be believed. It lied about its ability to manage risk, the necessity for light-touch regulation and the need to be free to pay its practitioners any money they asked for. It will, accordingly, get the regulation it deserves. If City professionals decide in consequence to depart for Hong Kong or the Channel Islands, it won’t be because someone else has driven them out. They’ll have done it to themselves.