HBOS report yields three important lessons for all businesses

British regulators have finally published their report into HBOS, the bank formed from the merger of Halifax with Bank of Scotland, more than seven years after its collapse. The 600-odd pages contain much detail on events and personalities. But there are general lessons for all businesses. Avoid the diversifier’s fallacy. Beware the winner’s curse. Fear adverse selection.

Liquidity helps financial market participants, not businesses and households

Finance professionals bemoan a decline in liquidity, blaming the global crisis and the subsequent intensification of regulation. In markets such as corporate bonds, they report almost no liquidity at all. But while the ease of exchanging one asset for another matters to traders, that is not the measure of liquidity that matters to savers.

Is it meaningful to talk about the ownership of companies?

Who owns a company? The answer is that no one does, any more than anyone owns the river Thames, the National Gallery, the streets of London, or the air we breathe. There are many different kinds of claims, contracts and obligations in modern economies, and only occasionally are these well described by the term ownership.

Uncertainty, cost and noise undermine the case for a new runway at Heathrow

The Airports Commission reported in July, with a clear recommendation to build a new runway and terminal at Heathrow. It relied heavily on an elaborate modelling exercise that calculated costs and benefits for the next 50 years. Little weight should be attached to these calculations. And more consideration should be given to the Gatwick proposal.

If tax credits are revised it needs to be done gradually

The primary objective of George Osbourne’s revisions is to spend less — but at the same time to shift part of the burden of supporting poor households from the state to business; and to redistribute from households with children to individuals who work. A valid aim, but it must be done gradually to succeed.

Organisations advance by asking “what went wrong” rather than “who is to blame”

Bad events in organisations are generally the product of bad systems rather than bad people. So, while it is right to place responsibility for the VW scandal with the chief executive rather than the individuals who falsified emissions tests, we need to go on and ask what it is about modern corporate life that has made such misbehaviour not only possible but appear increasingly common.

The case for a new runway at Heathrow is overstated, Prime Minister

If the capital costs of Heathrow expansion could be substantially reduced and its actual financing costs were also trimmed, that project would merit further consideration. Otherwise, a second runway at Gatwick appears simpler, cheaper, less risky and less politically unpalatable.

Lower business rates would benefit property owners not retailers

Retailers have recently complained about the level of business rates. However, were this property tax is reduced their joy will be short lived. Business rates are both a tax on land and a tax on structures, and in the longer term all we would see is higher property values and rents, especially in prime locations.

Beware “mathiness”: The use of algebra and data to reinforce ideological preconceptions

It is characteristic of science to give precise meaning to concepts and the basis of their measurement. Economics is genuinely harder. Yet it is all too easy to write a mathematical symbol without giving thought to what observable fact in the real world corresponds to that symbol.

Let’s challenge our fixation on the principle of one share, one vote

The Savoy Group and Google both adopted share structures that give individuals disproprtionately greater voting rights than their diverse set of shareholders. It has worked well for these companies and their investors over the long run. Perhaps we should reopen the debate over share structures?