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) and his latest book, Obliquity was published by Profile Books in March 2010. 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?
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.
Other People’s Money will published in the UK by Profile Books as hardback on September 3rd, and in the US by PublicAffairs on September 22nd. For dates of John’s book signings and talks check the NEWS section.
“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
Technology has made it less important to know, and more important to know what is known. That is why the widespread belief that education should be focused more on the acquisition of job-specific knowledge is especially misconceived in the 21st century.
Both the leading candidates for the leadership of Britain’s opposition Labour party have now committed themselves to renationalising the country’s railways. But the state-owned British Rail was one if the most reviled institutions in the UK, and privatisation has delivered many relative benefits.
The technological changes that have occurred in the past decade have, from an economic perspective, increased at virtually no cost the efficiency of household production. Trying to account for this kind of development is the considerable challenge being undertaken by Sir Charles Bean’s review of the UK’s national statistics.
We all have a tendency to interpret evidence, whatever its nature, as demonstrating the validity of the views we already hold. It requires intellectual magnanimity to acknowledge that additional information might lead us to a different conclusion.