John Kay is one of Britain’s leading economists. His interests focus on the relationships between economics and business. His career has spanned academic work and think tanks, business schools, company directorships, consultancies and investment companies. For more details of John’s biography, see the About section.
John Kay chaired the Review of UK Equity Markets and Long-Term Decision-Making which reported to the Secretary of State for Business, Innovation and Skills on the 23rd July 2012. He is a visiting Professor of Economics at the London School of Economics, a Fellow of St John’s College, Oxford. He is a Fellow of the British Academy, a Fellow of the Royal Society of Edinburgh. He is a director of several public companies and contributes a weekly column to the Financial Times. He is the author of many books, including The Truth about Markets (2003) and The Long and the Short of It: finance and investment for normally intelligent people who are not in the industry (2009), Obliquity (2011) and his latest, Other People’s Money was published by Profile Books in September 2015. Some of his most influential, recent work has been on banking regulation, and you can read about his vision for the sector in his 2009 essay, Narrow Banking.
Other People’s Money: Masters of the Universe or Servants of the People?
Out now! Order your copy from the Books page. For dates of John’s book signings and talks check the NEWS section.
We all depend on the finance sector. We need it to store our money, manage our payments, finance housing stock, restore infrastructure, fund retirement and support new business. But these roles comprise only a tiny sliver of the sector’s activity: the vast majority of lending is within the finance sector. So what is it all for? What is the purpose of this activity? And why is it so profitable?
Industry insider John Kay argues that the finance world’s perceived profitability is not the creation of new wealth, but the sector’s appropriation of wealth – of other people’s money. The financial sector, he shows, has grown too large, detached itself from ordinary business and everyday life, and has become an industry that mostly trades with itself, talks to itself, and judges itself by reference to standards which it has itself generated. And the outside world has itself adopted those standards, bailing out financial institutions that have failed all of us through greed and mismanagement.
We need finance, but today we have far too much of a good thing. In Other People’s Money, John Kay shows, in his inimitable style, what has gone wrong in the dark heart of the finance sector.
“Thanks for writing this book. Only [John Kay] could have done it. This is going to be a classic.” —Frank Partnoy, Professor of Law and Finance, University of San Diego School of Law and bestselling author of F.I.A.S.C.O. and WAIT
Anyone speculating on the result of the EU referendum can refer to either opinion polls or prediction markets. On the morning of June 20, polls put the probability that Remain will win at 52 per cent, while prediction markets estimate 75 per cent. That is a big difference. What then do these figures mean?
Many visions of Europe are driven by rivalry the United States of America. In this article I describe one which welcomes European integration, sees a European identity as a complement to national identity, not a substitute for it, and does not equate ‘ever closer union’ with additional powers for supra-national institutions in Brussels and Strasbourg.
When a corporation is unable to meet valid claims, control passes to the holders of these claims in a legally defined order of priority. But, as finance has grown more complex, these rules have come to look more shaky; they can falter dangerously in modern banking or in the case of a struggling retail business such as BHS.
The Europe worth campaigning for recognises multiple identities and the changed nature of the state. If government is a provider of services rather than a monopolist of force, its powers can be, and inevitably are, shared. The rational debate is not over sovereignty, but about which unit of government is best fitted to deliver which services.