John Kay

Profile: Full name: John Kay Area of interest: Relationship between economics and business Journals/Organisation: Financial Times Email: johnkay@johnkay.com | http://www.johnkay.com/contact-us | John.Kay@ft.com Personal website: http://www.johnkay.com/ Website: http://www.ft.com/comment/columnists/john-kay Blog: Representation: Leigh Bureau Networks:

Biography: About: http://www.johnkay.com/about Education: Royal High School Edinburgh University: Mathematics/Economics Nuffield College Oxford: Economics. Fellow of St John's College, Oxford since 1970. Lecturer in economics at Oxford University 1971–78 Career: http://www.johnkay.com/about/john-kay-biographical-note Current position/role: also writes/has written for: Other roles/Main role: Other activities: visiting professor at the London School of Economics Disclosures: Viewpoints/Insight: philosophy Beware fat cats and dreamers interview by Larry Elliott, The Guardian, 3rd May 2003 Broadcast media: Video: Controversy/Criticism: Awards/Honours: Scoops: Other: Research fellow at the Institute for Fiscal Studies

Books & Debate: The British tax system OCLC 3770519, 1978 (with Mervyn King) The economy and the 1983 budget OCLC 10362411, 1983 The state and the market: the UK experience of privatisationOCLC 16801003, 1987 Privatization and economic performance OCLC 30072727, 1994 (with Matthew Bishop, C P Mayer) Why firms succeed OCLC 30815141, 1995 The business of economics OCLC 35008288, 1996 The economics of business strategy OCLC 51983209, 2003 The truth about markets: their genius, their limits, their follies OCLC 51622571, 2003 (more info) Everlasting light bulbs: how economics illuminates the world OCLC 249495335,2004 (with Roger Beale) The hare and the tortoise OCLC 156800985, 2006 Latest work: The Long And The Short Of It, January 2009 - "This book provides a guide to the complexities of modern finance. It describes the basics of investment and the sophisticated innovations of the modern financial system. It explains how twice in the last decade - in the new economy bubble and the credit crunch - the follies of finance have threatened the stability of the world economy" see John Kay.com: bookshop Speaking/Appearances:

Financial Times: Column name: Remit/Info: Economics and business Section: Comment Role: Commentator Pen-name: Email: johnkay@johnkay.com Website: FT.Com / John Kay Commissioning Editor: Day published: Wednesday Regularity: Weekly Column format: Average length: 800 words

Articles: 2013 Don’t blame the havens for tax dodging - Authorities have preferred to cut deals with big companies rather than pursue costly legal action - 19th June A tyranny of the few in a single-issue age - These days small groups with a strong motivation exert undue influence - 12th June Directors’ duty is not just to investors - Too much attention to noise in markets and not enough to operational performance - 5th June Lessons from Rothschild’s carrier pigeon - In an era of high-frequency trading, it is differences in perception that offer opportunities - 29th May Prosecutors should not cut deals - A convenience for the legal establishment does society a grave injustice - 22nd May Business finds capital markets capital - Apple borrowed not to raise funds for business but to return cash to shareholders - 15th May Protest politicians are united in grievance - The failure of democracy to handle the aftermath of the global crisis threatens to undermine Europe - 8th May Fannie Mae is the wrong model for UK - Plans to replicate a failure show an important lesson has not been learnt - 1st May Sovereign Scots may have to drop sterling - Edinburgh should try to secure monetary union with England, but it would probably fail - 24th April Fair value is not the same as market price - The belief that the only measure of value is what someone is willing to pay is wrong - 17th April Prosperity requires more than rule of law - The requirements for a stable and wealthy economy requires go beyond property rights - 10th April Cyprus bailout heralds shift in attitudes - Effective regulation demands recognition that the normal fate of failed institutions is to be wound up - 3rd April New York’s wonder shows planners’ limits - Unplanned social interactions are the key to vibrant cities and companies - 29th March On the brink of a shadow drink industry - Moral legislation has a tendency to do more harm than good - 21st March Politicians bow to pressures to bend data - For a time, the coalition seemed willing to let figures tell their own story - 13th March Even a subpar Sage is pure genius - Berkshire Hathaway owes its stellar success to a model that is sustainable and simple - 6th March A story can be more useful than maths - The term ‘balance of probabilities’ has different meanings in law and statistics - 27th February Labour’s new tax policy is an old mistake - A reduced starting rate has been tried and abandoned before - 20th February For a stimulus, boring is best - The objective of monetisation has been to put money in bank vaults - 13th February A ballboy, a union and bankers’ duty - The reputation of finance has been degraded by the actions of a few - 5th February Given a choice voters opt for safety - If David Cameron’s EU referendum goes ahead, he too will benefit from the fear factor - 30th January The limits of what money can buy - What criteria determine which goods are properly valued and which not? - 23rd January London’s rise from sewer to spectacle - The Victorian legacy provides a timely lesson in grand vision and design - 16th January Leveson failed to learn from credit crisis - The problem lies not with rules and processes but with the political context in which they are applied - 9th January Only fools claim to know the future - There are few certainties about the future other than that it is uncertain - 2nd January

Articles: 2012 To understand Christmas, go to the pub - With gift-giving as with finance, it takes an eclectic approach to understand human behaviour - 19th December Starbucks shows need for tax change - The world the principle envisages could not generate the profits the principle seeks to tax - 12th December The allies who moulded the welfare state - A Briton and an American had deep influence on modern social policy - 5th December Corporate tax should be fair and shared - It is not difficult to understand why mere mortals are angry - 28th November The monumental folly of rent-seeking - The success of market economies is not achieved by policies that encourage greed - 21st November Fetish for making things ignores real work - Only a small proportion of the value of goods is represented by manufacturing and assembly - 14th November London’s new airport held to ransom by folly - Travellers from emerging economies will prefer to land at Paris and Frankfurt - 7th November Scotland’s debate lacks seriousness - What would an independent Scotland actually be like? The answer is that no one really knows - 31st October The wrong sort of competition in energy - Mechanisms that should protect consumers are found wanting - 24th October The brashness and bravado in big deals - In M&A these days, doing the deal is what matters; justification comes afterwards - 17th October How do skirts differ from computers? - The structure of indices makes a big difference to pensions, tax allowances and index-linked debt - 10th October Higher pay boosts economics and politics - Policy to give the low-paid more money rather than benefits is worthy of debate - 3rd October The welfare state is a Ponzi scheme worth backing - Social security costs would be a problem even if wasn’t for Bismarck and Beveridge - 26th September Take on Wall St titans if you want reform - It is futile to expect stability in a system that is driven by volatility - 19th September The law that explains the folly of bank regulation - Complex safeguards failed because failure is intrinsic to that style of oversight - 12th September Why Sony did not invent the iPod - Industries with the power to hold back economic growth open the door to outsiders - 5th September How I learnt the power of checklists - Forgetting my goggles has helped me marvel at organisation - 29th August Why do we need to pay billions of pounds for big projects? - The explosion of the cost of mega projects appears to be a phenomenon of the past 50 years - 22nd August The other multiplier effect, or Keynes’s view of probability - For the economist, probability was about believability, not frequency - 15th August When storytelling leads to unhappy endings - The best means of making sense of complexity - 8th August Media frenzies are no basis for sound laws - The press has a special responsibility in reporting crime such as the Aurora massacre - 1st August The parable of the ox - Or why it is hard to castrate a bull market - 25th July Finance needs stewards, not toll collectors - The chain of intermediation should be shorter and simpler - 23rd July Why elitism will bring Britain Olympic joy - ‘Select, train, focus’ is a cost-effective way of winning national pride and global standing - 18th July Corporate values are not just a calculation - We are not interested in whether the companies made good or bad calculations - 11th July ‘Not on my watch’: applies to banks and the navy - The corollary of unquestioned authority is unquestioned responsibility - 4th July Rent-seeking lessons from Mubarak to Louis XIV - We will never know how much Hosni Mubarak might have stolen - 27th June Our poor excuse for an understanding of poverty - Distortion arises when a single metric is used to describe a multifaceted complex phenomenon - 20th June Notes on a divided Europe from the Finnish frontier - The watchtowers on Russia’s border remind us of the fragile stability we take for granted - 13th June Only market evangelists reconcile Jekyll with Hyde - There is a transatlantic divide over the scope and merits of financial innovation - 6th June Scrap the jubilee? Why not Christmas too? - A think-tank claims that breaking the bank holiday habit would boost the economy - 30th May Some euros are more equal than others - The issue is the status of loans, wages and prices - 23rd May The dogma of ‘credibility’ endangers stability - The credibility the models describe is impossible in a democracy - 16th May It is time to end the oligopoly in banking - Co-op illustrates blinkered approach by authorities - 9th May France’s choice: naughty child or colourless adult - The presidency is a job designed for Charles de Gaulle and no one else has filled it with distinction - 2nd May Fewer ingredients will best serve the VAT on food - We need legislation to distinguish a pasty from a sandwich - 25th April Beware of Franklin’s Gambit in making the big decisions - The process of making or finding a reason for what one already has a mind to do - 18th April ‘Give me liberty or £500’ is no rallying cry - Readers outside the UK must wonder whether the debate over Scottish independence is serious - 11th April Lessons from the house that Lewis built - We need more pluralism in corporate structures - 4th April My generation should repay its good luck - It is not that we can’t pay, but that we won’t pay - 28th March Building can help Britain balance the books and boost jobs - Repairs and minor public works are as important as new construction - 21st March Of badgers, business, budgets and the evils of expediency - Heretics had to die before science won out over assertion rooted in experience - 14th March Why the Pembury road matters more than the Olympics - Time to shift the focus away from grand projects - 7th March Investors sould ignore the rustles in the undergrowth - Information overload and the tyranny of quarterly earnings - 29th February Why lashing governments to the mast will always prove futile - There are lessons from Greece – ancient and modern - 22nd February Basketball shows high banker pay not a slam dunk - When it comes to remuneration, the power structure is the key - 15th February Money, like hat-wearing, depends on convention, not laws - Legal tender is a concept free of practical relevance - 8th February The pound is a poison pill for an independent Scotland - A currency union exists when people believe it does - 1st February When capitalism and corporate self-interest collide - IBM’s engineers changed the world but nearly destroyed the company - 25th January A real market economy ensures that greed is good - Our intuitions about scale and centralisation are generally wrong - 18th January Let’s talk about the market economy - Our economic system is no longer capitalism in its original form - 11th January Avoiding fluff is surest route to success - To understand business talk to those involved in day-to-day operations - 4th January

Articles: 2011 In love as in equities, we are fooled by randomness - Men thought about sex 19 times a day. So should we correct ‘every seven seconds’ to ‘on average, once every waking hour’? - 28th December Spontaneity or slogans: the lessons of Václav Havel’s greengrocer - Vacuous rhetoric traps the leaders as well as the led. They are inhabitants of a world whose assumptions are false - 21st December Taverna talk of fiscal union will remain just that - Markets cannot easily be bullied or lobbied, and their threat is effective - 14th December Horses for courses: picking market models - These methods provided a misleading account of events - 7th December A wise man knows one thing – the limits of his knowledge - Good models are simplifications, not black boxes whose workings are incomprehensible - 30th November We need a fox to see the snares and a lion to scare the wolves - I should not be prime minister, but I imagine I could be useful to someone who was. (Sorry David Cameron, I am otherwise engaged) - 15th November What Bob Diamond really tells us about the City - UK indigenous investment banking has all but disappeared - 9th November Capitalism need not be about greed and gambling - Protesters today know capitalism delivers their mobile phones - 2nd November Europe’s elite is fighting reality and will lose - Neither the European Commission nor the German government can put tanks on the streets of Athens - 26th October The random shock that clinched a brave Nobel prize - In a brilliant linguistic coup, Sargent applied the term ‘rational expectations’ to the study of macroeconomic relationships - 19th October Genius can change the world - We do not remember Mozart for the fortune he made. When Apple enriched shareholders, it was by the way - 12th October What Europe can learn from Kissinger-style ambiguity - To expect that one entity will underwrite another’s debts is a dangerous ambiguity - 5th October Dickens, Mrs Duffy and a big dilemma for the left - Voters were never interested in the old rhetoric of socialism, and have little interest in the new rhetoric of rights - 28th September Don’t listen to the lobbyists: they never go away - Public attention to any one issue is transient. The attention of vested interests to their own concerns is permanent - 21st September Taming the banks: long overdue or utter folly? - For: Without ringfencing it will soon be a case of ‘here we go again’ - 14th September. See also: Taming the banks: long overdue or utter folly? - Against: Beware the paradox that a system to limit risk invariably increases it, writes Martin Jacomb Economics fails to resolve exceptions to the rule - Unpredictability applies to the actions of fools, such as those who believed securitisation conjured wealth out of thin air - 7th September Why trams belong in museums and not on city streets - You can buy 10 modern, environmentally friendly buses and still have change from the cost of one of Edinburgh’s trams - 31st August Economics: Rituals of rigour - After mistaken claims made ahead of the global crisis won much academic support, long-held assumptions were called into question – but the real world often remains overlooked or ignored - 26th August Sex, lies and pitfalls of overblown statistics - How did the researchers find out that men on average think about sex every seven seconds? - 24th August Why the rioters should be reading Rousseau - Power theory states people get what they grab: from the forest, markets or shop window - 17th August Loans to a king do not always pay - The issue is not government capacity but its willingness to repay - 10th August High-speed vanity projects unfit for an austere age - Despite the detail underpinning the economic case, there are no answers to the questions any investor would pose to the most modest of start-ups - 3rd August Kipling’s game theory lessons for Greece - As in the dollar bill auction, so it is in business, politics and finance: the underbidder always comes back - 27th July American lessons in how to run a single currency - When New York crassly mismanaged its financial affairs, the president’s response was ‘Ford to City: drop dead!’ - 20th July Lessons in history for Rebekah Brooks - Ministerial accountability has been replaced by T.S. Eliot’s cat: ‘When a crime’s discovered, then Macavity’s not there’ - 13th July The $10 minibar beer is no basis for capitalism - Most of us have better things to do than undertake a discounted cash flow calculation of the lifetime cost of a £50 printer - 6th July A flawed approach to better consumer protection - Fraudsters are called confidence tricksters, and part of the job of regulators is public disillusionment - 29th June Why banks’ ringfences risk being Chinese walls - The core problem is that banks have no intention of abiding by regulatory rules’ spirit - 15th June New rules to protect the many from the few - General insolvency rules are inadequate when a vital service fails - 8th June There is no alternative to agreeing how we tax companies - It is time to look at the economics underlying corporation duty - 1st June Publishers badly need a new Sir Thomas Bodley - British companies are bit players in a play staged across the Atlantic - 25th May Punish the directors and let the train driver go free - Those who destroy an organisation by filling their own pockets commit a crime similar to a dangerous driver - 18th May Banks need to value their reputation once again - New rules will ban the marketing of payment protection insurance at the point of sale of credit. But this remedy is far from ideal - 11th May Time for Scotland to move from infancy - Independence today concerns symbols not substance. Bannockburn’s issues no longer arise - 4th May A voting system fit to bar Le Pen from power - Even if the alternative vote is not the official system, voters will tend to behave as if it were - 27th April Consistency depends on the context - What we do depends on the social context in which we receive information and make decisions - 20th April Why economists stubbornly stick to their guns - The lesson most people have learnt from the financial crisis is that they were right all along - 16th April The nightmare of taking on ‘too big to fail’ - There are no adequate answers. The UK banking commission’s view of core technical issues is disappointingly thin - 13th April The beauty is in the data - The share of ICT spending has risen less than you might expect because the prices of these services have been falling - 6th April Wayne Rooney and Ricardo forge dream team - Economic lessons inspired by the Man Utd striker - 30th March The difficult balance of intellectual property - It is unjust that van Gogh received so little financial reward in his short lifetime, but we cannot make it up to him now - 23rd March Why we struggle with our roulette wheel world - Someone asked me to identify four or five ‘black swans’. He had missed the point - 16th March Turning back the clock to ‘Hovis banking’ - If there was a bubble in the UK housing market the only evidence of it – that it bursts – has yet - 9th March Don’t blame luck when your models misfire - We will manage financial risk only when we recognise the limitations of modelling - 2nd March Time for the Big Society to get down to the nitty-gritty - Hybrid organisations often end up being run for the benefit of some particular group - 23rd February Public projects obscured by private finance- The UK government should adopt simpler outsourcing structures - 16th February Drugs companies have lost far more than their health - Profit margins will reflect pharma’s new nature - 9th February Those at the nucleus may not have the best view - When someone tells you something is too complex for you to understand, it usually means they do not understand it - 2nd February The war on moral hazard begins at home - The mobility of capital, and even bank headquarters, does not prevent unilateral action to protect domestic depositors and national taxpayers - 26th January How trust in finance was carried off by the carpetbaggers - The decline of partnership and mutuality sowed the seeds of a crisis - 19th January A smart business is dressed in principles not rules - People will always violate the spirit of a regulation as they adhere to its letter - 12th January Forty years of taxiing on UK runways - British government is not suited to the long horizons needed for airport planning - 5th January

Articles: 2010 Don’t expect markets to bend it like Beckham - When it comes to the economy, assumptions of perfection are dangerous - 29th December Untainted giving – and the true meaning of Santa - People who complain that the spirit of Christmas is eroded by commercialisation are not simply priggish - 22nd December Middle England should spare a thought for Modigliani-Miller - Its value lies as much in the questions it raises as in the truths it reveals - 15th December Love thebearer of bad news - Potentates of today prefer to create their own reality than to face the truth - 8th December The Scots may gripe but now, let there be light - Shifting the clocks forward would bring fewer accidents at work and on the roads. We could spend less on heat and light - 1st December Radical innovation rarely comes from within - Competition means different things to businesses and consumers - 24th November Bonds designed to leave savers bemused - Savers will find it hard to assess the risk of these financial products - 17th November Even a filthy habit deserves a fair hearing - Claims about smoking and drink-driving must be questioned - 10th November Better a distant judge than a pliant regulator - Even the best-intentioned of overseers comes to see issues in much the same way as the corporate officers he deals with every day - 3rd November How the British prefer to register displeasure - When Americans pick up their guns, and the French protest, the British agonise over whether life is fair - 27th October Why you can have an economy of people who don’t sweat - It is time for manufacturing fetishists to move beyond categories set by Stone Age man’s requirements for food and shelter - 20th October How to spot a good from a bad quango - Dislike of quangos partly reflects dislike of the people who are often in them - 13th October Barbarians at the gates of complexity - Where there is a collateralised debt obligation, there will soon be a CDO squared - 6th October The job of business secretary is to put the future first - His task is not to reward grandees with favours but to encourage a new generation - 29th September A fiscal watchdog should not need a crystal ball - Forecasting is no job for the Office for Budget Responsibility - 22nd September We must press on with breaking up banks - Pledges of co-ordinated international action to reform global finance in the aftermath of the crisis have proved empty - 15th September To rate a return, think of what you’re missing - Rewards to risk are not the same as rewards to patient waiting - 8th September Not all rights should be defended to the death - There is a difference between internet access and free speech - 1st September A bird in the hand can make a lot of sense - 'Rational' responses are often nothing of the sort - 25th August Robber barons of the Rhine - The distinction between those who add value to cargo and those who help themselves is vital - 18th August A good economist knows the true value of the arts - You can't measure the value of a play by how much it costs to clean the theatre - 11th August Wall Street play for which we pay - Much has changed since Shakespeare’s day yet for many of us much remains the same - 4th August Banking needs more robust stress tests than these - Financial regulators have much to learn from engineering - 28th July It may be a Rembrandt to you, but markets can beg to differ - Differences in perceptions and beliefs make the business world go round - 21st July Mr Market should sometimes get his way - Speculators command authority from the money they put behind the views they express - 14th July Finance spread its own risks but left ours alone - The risks that the financial sector has devised techniques to manage are not the everyday risks of an uncertain world - 7th July A chance to restore confidence in Britain’s official data - Government documents should treat information and citizens with respect - 30th June Cutting costs so often leads to cutting corners - Managers have to strike a balance between expenditure and efficiency and between the cost of anticipation and that of repair. Sometimes they will get this wrong – as they probably did at BP - 24th June We should all have a say in how banks are reformed - The value of banks lies in what they do for the rest of the economy, not for themselves - 16th June Beware the cult of the heroic chief executive - Among the catastrophes are smaller disasters - 9th June How to stay ahead of the angry brigade - For both consultants and the Socialist Workers the objective is the process of change - 26th May A royal invitation to raise the debate on finance - We need to increase the scope for authoritative independent inquiry - 19th May Brace yourself, Britain, for higher taxation - The British have no appetite for fewer public services - 12th May The left is still searching for a practical philosophy - What happened to the intellectual revolution we were promised in 1997? - 5th May When a bonus culture is just a poor joke - Why teachers and doctors oppose importing the culture of assembly lines - 28th April How our leaders get to grips with a scare story - The political incentives are either to downplay risks or exaggerate them – or to do each at different time - 21st April Economics may be dismal, but it is not a science - New economic thinking must necessarily be eclectic - 14th April Of cows, communities and credit default swaps - Why gambling with CDS should be banned - 7th April Bankers can’t blame the UK housing market - There was no UK housing bubble and banks had little to do with mortgage losses - 31st March How to make money without trying - Complex goals are often best achieved indirectly - 24th March Think before you tear up an unwritten contract - In many cases, the formal contract is necessarily incomplete - 17th March Regrets? Everyone should have a few - The capacity to acknowledge mistakes is too rare - 10th March Leaders who pander to public opinion lose respect - The relationship between politicians and the public has changed. And not for the better - 3rd March Iceland should stand up to shameful bullying - Depositors in Icelandic banks have no claim on ordinary people - 24th February True and fair values melt under a spotlight - No accounting principles will cover all conceivable situations - 17th February Sex, profits and rock ’n’ roll - Media moguls have no focus on the bottom line - 10th February Why ‘too big to fail’ insurance is the worst of all worlds - As well as leading to greater potential calls on taxpayers, it would mean less public control of risk and entrench the position of incumbent institutions - 3rd February How political ideology found a new world - In Europe, the collapse of socialism removed the main issue that divided the political parties. In America, it removed the main issue that united them. That is why European politics was more ideological than US politics then, and US politics is more ideological than European politics now - 27th January Tailgaters blight markets and motorways - Self-delusion is possible because cognitive dissonance separates the occasional accident from the frequent success - 20th January Google’s books drive needs a wider debate - It’s too important for the present court case - 13th January The cause of our crises has not gone away - Public support of markets provides the fuel - 6th January

Articles: 2009 Look back in anger at the spirit of the age - The comment that best captures the past decade must surely be Chuck Prince’s “We’re still dancing”. but the Citigroup chief executive’s folly is repeated in every age of excess - 29th December Innovation is not about wearing a white coat - Pioneers are routinely pushed aside by rivals whose skills are in the marketplace rather than the laboratory - 16th December A reality check for fiscal Pollyannas - Almost without exception, forecasts of Britain’s public finances have been unduly optimistic. To depoliticise the presentation of data, we need an independent fiscal policy commission - 9th December The real cost to business of government guarantees - Instead of renewing self-regulatory mechanisms, we have effectively abolished them - 2nd December Labour’s digital plan gets in the way of real progress - The market is the best progress tool - 25th November How the market proved no panacea for BT - The verdict must be that privatisation provided a route for the managed decline of a business whose historic purpose was disappearing - 18th November Powerful interests are trying to control the market - ‘Rent-seeking’ is found whenever economic power is concentrated – in the state, in large private business, in groups of co-operating and colluding firms. America has a new generation of rent-seekers: investment bankers and corporate executives - 11th November Chaotic evolution defines the market economy - Markets are not a well-oiled machine: they are a constantly changing, adaptive biological systemn - 4th November ‘Too big to fail’ is too dumb to keep - While regulators may be at fault in not having acted sufficiently vigorously, to say they caused the crisis is as ludicrous as saying that crime is caused by the indolence of the police - 28th October True survivors do not clutch at straws - We are all inclined to believe we have more influence over events than we do. The answer is to maintain a sense of our long-term objectives while acknowledging the limits to our freedom - 21st October How the skies proved the limits of regulation - The experience of the airline industry illustrates the phenomenon of regulatory capture – the tendency for regulators to see through the eyes of the industry they regulate - 14th October Markets after the age of efficiency - Warren Buffett said most of what you need to know about efficient markets. “Observing correctly that the market was frequently efficient, they [academics, investment professionals and corporate managers] went on to conclude incorrectly that it was always efficient. The difference between the propositions is night and day.” - 7th October Evolution is the real hidden hand in business - Large and complex corporations, like biological organisms, could only be the product of incremental change and adaptation. Their common essential characteristic is inexact replication - 30th September Do not discount what you cannot measure - Bogus measures add nothing to our understanding – they attempt to compress complex problems and analyses into single observations - 23rd September Everyday banking with no bill to the taxpayer - Deposits need to be backed by safe assets otherwise the mismatch of risk provides an unjustifiable public subsidy - 16th September ‘Tailgating’ in financial markets puts us all at risk - Carry trades offer transitory profits and these are entirely offset by unrealised, but inevitable, future losses - 9th September In magic or in markets, it is never rational to be wrong - Consistency is a characteristic to be prized in a world simpler, more predictable and better understood than the one that we live in – the world described by certain kinds of economic model - 2nd September Banks brought down by new Peter Principle - Companies diversify too much - 26th August George Eliot wrote the book on moral hazard - John Kay turns to Middlemarch for lessons on how to teach feckless gamblers to behave responsibly while minimising future expenses - 19th August First-class driving makes little economic sense - On Britain’s M6 toll road you pay for the sole privilege of sharing the road only with other drivers who have paid the toll, making it an unusual luxury - 12th August It may be dismal but economics flies off the shelves - Not long ago it was impossible to get a publisher interested in a “popular book on economics”. But in less than a decade ‘tipping points’, ‘nudges’ and ‘black swans’ have become staples of dinner table conversation - 5th August True democracy is not just about taking part - Technology brings superficiality - 29th July Too big to fail? Wall Street, we have a problem - We should learn from modular design. In the business context, modularity means that different activities are conducted through different corporate vehicles, so are less likely compromise the whole - 22nd July Managers doomed to repeat the mistakes of history - Running companies or countries by the numbers has failed, but few are learning from past errors - 15th July Our banks are beyond the control of mere mortals - We would be wiser to look for a simpler banking system, more resilient to human error and inevitable misjudgments - 8th July Britain has sunk itself deep into a fiscal black hole - Even if economic recovery is rapid, there would still be a large deficit. At least half the current deficit will need to be eliminated by cuts in public expenditure and increases in taxes - 1st July Let’s throw the book at our crazy television market - Broadcasting’s competitive genie is out of the bottle and is not going back in and although a liberalised market will initially be flooded with dross, the licence-fee-based BBC is outdated - 1st July How a television monopoly ended in mediocrity - Broadcasting’s competitive genie is out of the bottle and is not going back in and although a liberalised market will initially be flooded with dross, the licence-fee-based BBC is outdated - 24th June Counting errors: from the fat cats to long tails - Extreme adverse events happen much more often than they are supposed to in the world of classical statistics. This explains why it is so damaging to be out of the market even for a few days, if they happen to be the wrong days - 23rd June The slow drip of the ‘faster’ payments system - We have just passed the first anniversary of the introduction of a ‘faster payments system’ by British banks, but it is still only partly operational - 17th June Beauty in markets is best judged by the beholder - John Maynard Keynes likened the processes of stock exchanges to a newspaper beauty contest. He anticipated that professionalisation of markets would drive out analysts who focused on fundamental value - 10th June Salutary lessons from the downfall of a carmaker - General Motors, the failing giant was the iconic corporation of the 20th century and introduced many of the industrial practices that were adopted the world over. Yet the factors that had once been the company’s strengths were became its weaknesses - 3rd June Why ‘too big to fail’ is too much for us to take - Facilitating failure is better - 27th May Beware the bail-out kings and backbench barons - We may be relaxed that some people do become filthy rich, but we should not be relaxed about how they become so - 20th May Expenses have caught MPs with their pants down - Values of integrity, of public service, and of responsible stewardship of the money of others can never be replaced by rules or imposed by regulation - 13th May A boom based on little more than a bezzle - There is an interval during which an embezzler benefits from stolen money but the victim does not know he has lost it. In the past decade this has been happening on a massive scale - 6th May Box-tickers should not be the ones making decisions - When the emphasis is placed on procedure over substance the opportunity to exercise skill and judgment invariably drain away, and the proceedings become mind-numbingly boring - 29th April Labour’s affair with bankers is to blame for this sorry state - Little has changed. The UK government still sees financial services through the eyes of the financial services industry - 25th April How economics lost sight of real world - Policymakers and the public are not interested in whether models are rigorous, but in whether they are illuminating - 22nd April History vindicates the science of muddling through - An article by American political scientist Charles Lindblom about decision-making was included in a 1959 collection mainly to poke fun at those who acted on his advice. Fifty years later he doesn’t seem so wide of the mark - 15th April Do not depend on Otherland to apply the rules - The best answer would be more Europe – a pan-European regulator and a single Europe-wide scheme for protecting depositors. But this will not happen. If there cannot be more Europe, there should be less - 8th April From the fat cats to long tails: when all is not normal - Extreme adverse events happen much more often than they are supposed to in the world of classical statistics. This explains why it is so damaging to be out of the market even for a few days, if they happen to be the wrong days - 1st April The fallacy of equating economic power with influence - In the modern world, there is no observable relationship between the size of a country and its standard of living - 25th March Tax havens exist because of the hypocrisy of larger states - In the 1860s, the typical client of a haven was a patron of the entrepreneur François Blanc’s casino. In the years after 2000, the typical client of a haven was a hedge fund registered in Grand Cayman - 21st March How the ‘Madoff twist’ entices the astute - The fraudster hints at impropriety, but implies that the target will be the beneficiary rather than the victim - 18th March Lessons from a 1930s rebound that petered out - The analogue of the 1929 Wall Street crash is not the 2007 credit crunch, but the 2000 bursting of the New Economy bubble - 11th March How the competent bankers can be assisted - An interlude of nationalisation, followed by the reflotation of narrowly focused retail banks, is now the least bad route to the principal public objective - 4th March Greenspan could have found cure at pharmacy - Where Alan Greenspan went wrong. His memoirs have proved that his skills were in politics rather than in economics - 25th February Introduce professional standards for bankers - Doctors and lawyers have rigorous training and examinations. There is no such requirement for financial service employees, but there should be - 18th February Separating the buccaneers from the meticulous - The dispute over pay and bonuses is more than a focus for populist anger – it raises basic questions about the structure of the financial services industry - 11th February Unhealthy levels of ‘Great Leap Forward syndrome’ - Although the UK’s National Health Service has spent heavily on IT, the management of information remains poor - 4th February Financial models are no excuse for resting your brain - A model will tell you only what you have already told the model. It cannot replace an understanding of market psychology - 28th January Wind down the market in five-legged dogs - How can a package of loans be worth more than the sum of their individual values? The amount borrowers pay is just the same even if you call the loans an asset-backed security or a collateralised debt obligation - 21st January Weasel words have teeth to kill great ventures - Living within the lie, because it does not face reality, is the way great organisations fall into catastrophic errors - 14th January What Tesco knows and Woolies forgot - The people who succeed in business are passionate about it. And, by the way, you can make a lot of money in the process - 7th January

Articles: 2008 Kudos for the contrarian - It is mostly people who appreciate the uncertainty of our complex world who have worthwhile things to say about the future - 30th December 2008 The titans’ inability to say sorry - It would be consoling to believe these individuals know in their hearts they are at fault, but are advised not to admit it - 17th December 2008 Some companies are too powerful to fail - The larger the business, the more likely that legislators will see political advantage in being helpful - 10th December 2008 The east’s innovators are no threat to the west - The technological capabilities of China and India create more commercial opportunities than threats - 2nd December 2008 A passive approach to bank stakes is inadequate - Taxpayers have rescued these institutions for a specific purpose and we should use our stakes in them to insist that this is fulfilled - 26th November 2008 Obama is right to opt for pragmatism - The ‘third way’ of Blair and Clinton degenerated into platitude and vacuity. Can the president-elect do better - 19th November 2008 Friedman and the limits of academic pluralism - Anything does not go on campus - 12th November 2008 Equitable Life’s lessons for the bank crisis - If there was a failure of prudential supervision at Equitable Life, was there not also a failure at RBS and HBOS - 5th November 2008 Could Napoleon have coped in a credit crunch? - Our desire to see history through the lives of great men blinds us to the complexity of politics, business and finance - 29th October 2008 Surplus capital is not for wimps - In good times, you may feel you do not need it and may resent paying for it. In bad times, you can never have enough - 22nd October 2008 Banks got burned by their own ‘innocent fraud’ - The participation of banks in the recent round of follies brought humiliation. Is the deception of others more or less venal when one has also deceived oneself? - 15th October 2008 Assistance must first protect taxpayer - Experience has shown temporary public aid to get companies over a bad patch is rarely either temporary or effective - 8th October 2008 Why pain is good – in both medicine and finance - Pain is beneficial because evolution is smarter than you at deciding how you should respond in situations that hurt you - 1st October 2008 We let down diligent folk at the Halifax - The road to nemesis began, not at conversion, but on the day it was decided that treasury should be a profit centre - 24th September 2008 Taxpayers will fund another run on the casino - The next crisis will be different in origin – the rules that will have been introduced by regulators will prove irrelevant - 17th September 2008 Growth can be about better – not more - We use a lot of stuff. The average European gets through 50 tonnes a year. But the amount is not increasing - 10th September 2008 Politicians cannot be trusted to set the fiscal rules - Too many subjective issues involve people whose careers depend on pleasing ministers to make the assessment - 3rd September 2008 Sensible reasons for irrational behaviour - Analytic skills are neither necessary nor sufficient for good performance – as many barely articulate Olympians show - 27th August 2008 Teaching demands a warm heart and a cold eye - The desire to give people chances they may not deserve is admirable but it is not the trait you want in examiners - 20th August 2008 Statistics, damned statistics and value added - The difficulty of measuring value added is the reason financial services are exempt from value added tax - 13th August 2008 Accounting rules for public duty and private failure - The obligations of government are the product of future political expectations, not current legal duties - 6th August 2008 Scotland's sense of injustice blights its future - Why has the nation’s growth rate not matched that of other small European states in the ‘arc of prosperity’ - 30th July 2008 Brown's rules are a flawed basis for policy - The effect of the target is to focus attention on the target rather than its purpose. The target is met; the objective is not - 23rd July 2008 Fannie Mae and the limits of public obligation - Still the bills roll in. Taxpayers have already written impressively large cheques for Northern Rock and Bear Stearns - 15th July 2008 Forget the meltdown, worry about goo and asteroids - The best way of dealing with grave uncertainties, as with more banal disasters, is to buy options against them - 9th July 2008 Metaphors in free fall: the anti-bubble named - Commendations go to several readers who, even if not coming up with the best word, identified key features of our current crisis - 2nd July 2008 The strange financial physics of the inverse bubble - Bubbles are puffed up, not puffed down. That is why we need a phrase to describe the anti-bubble - 25th June 2008 There is a better way to stop bank failures - If public agencies are to supervise seriously the strategies of high street and investment banks, we might as well nationalise them; the proposal is entertained only because everyone knows it is not really serious - 18th June 2008 Rhetoric will never feed the world's hungry - We make the poor better off not by holding back technical and economic progress, but by accelerating it - 11th June 2008 Smoking, cynicism and sheer muddled thinking - The measure of the productivity of an activity is the public and private benefit from a good or service that results from that activity - 4th June 2008 Books: the good the bad and the cheesy - Ideas - even those about business - often find their best expression in fiction - 28th May 2008 Seeing is believing when it comes to inflation - Perceptions of inflation are formed, not by the ONS, but by the most salient prices - 21st May 2008 Darwin's wife and war in Iraq: a missing link - The modern world of business and politics is plagued by spurious rationality and bogus quantification. The desire to do what is right is overtaken by the necessity to do what is easy to defend - 14th May 2008 Buy as bankers move from denial to depression - 7th May 2008 A ban on touts will not fix a rigged game - The present systems of ticket allocation have much more to do with the maintenance of networks of patronage than the carefully targeted allocation of seats to “genuine fans” - 30th April 2008 An innumerate mistake haunting the government - Do not tinker with the tax system for short-term political advantage. Tax is always more complicated than you think and the results come back to haunt you - 23rd April 2008 Lennon was right about the music and the man - The notion that extending intellectual property rights in the music industry would provide pensions for ageing and impoverished crooners is an engaging fantasy - 16th April 2008 In times of complexity, common sense must prevail - Confidence in the models used for risk management in financial institutions is a casualty of the credit crunch - 9th April 2008 How I blew my money on the wrong video discs - There are historic lessons to be learnt from the recent high definition format war: the importance of the installed base and the unpredictability of consumer markets - 2nd April 2008 More regulation will not prevent next crisis - Regulation in a market economy is targeted at specific market failures and should not be a charter for the general scrutiny of business strategies of private business - 26th March 2008 No need to own a road: buy the tollbooth - Mr Buffett’s success demonstrates the weakness of one economic theory, the efficient market hypothesis, and the strength of another – the central role that the pursuit and defence of economic rents plays in modern corporate life - 19th March 2008 Just think, the fees you could charge Buffet - Warren Buffett's emergence as the world's richest man illustrates the power of compound interest. Warren neither pays nor makes management charges. The effect is larger than you would believe possible - 12th March 2008 Sloppy talk means executives are lost in space - The corporation’s unique identity is defined by its distinctive capabilities - 5th March 2008 Sovereign wealth is a force for stability - The political consequences of international trade are different from the political consequences of international investment - 27th February 2008 No time to emphasise Scotland's fealty - Scottish banknotes are not legal tender in England – or in Scotland. What matters is not what is legal tender, but what others will accept - 20th February 2008 Bankers, like gangs, just get carried away - The analytic mind argues that those promoting incomprehensible financial products or military invasions must either be liars or fools. But neither need be - 13th February 2008 A fall in prices can often be good news - Asset prices are a measure less of our wealth than of our propensity for self-congratulation - 6th February 2008 Business lessons from chess grand masters - People who hold to a single idea, or a fixed design, generally lose in chess, as they lose in battle, in business and in economics - 30th January 2008 Christmas shopping and the chowkidar - There are many ways of interpreting the complexities of published economic statistics, with the result that commentators can find snippets of data to support any story they want to tell - 23rd January 2008

News & updates: Damning verdict on City: 'No longer fit for purpose,' Kay Report calls for an overhaul of regulation and curbs on traders chasing short-term profit. 23rd July 2012

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Links: http://www.johnkay.com/articles