John Kay

Rational expectations fail for the same reason communism failed – the arrogance and ignorance of the monopolist.

Is there such a thing as a business genius? It is a moot question this month, because in modern times Apple’s Steve Jobs, who died last week, was probably the individual with the strongest claim to that title.

The skill of the statesman is to distinguish situations in which ambiguity makes coexistence possible from those that will make the future more troublesome. In this respect, politicians who have steered world affairs through the financial crisis have not served us well.

Few voters were ever much interested in the old rhetoric of socialism, and they have equally little interest in the new rhetoric of rights.

Since there are many issues in public debate, attention to any one is necessarily transient. The attention of vested interests to their own concerns, however, is permanent.

The jobs and growth the bankers claim will be in jeopardy are their own: the pressing needs of the real economy point not to delaying change, but to implementing it as speedily as possible.

A few failed components may bring about collapse in a complex interdependent system. As in the Gulf of Mexico spill, or at the Fukushima disaster, or in the credit market in 2008.

Trams were phased out because they were inferior to buses as a means of public transport. They still are.

Always ask of data “what is the question to which this number is the answer?”. “Earnings before interest, tax, depreciation and amortisation on a like-for-like basis before allowance for exceptional restructuring costs” is the answer to the question “what is the highest profit number we can present without attracting flat disbelief?”.

Rousseau was an early and incisive critic of the idea that self-interested behaviour would necessarily work to the benefit of all. If the hunt were to catch a deer, it would need to establish shared values, and probably impose them through some sort of hierarchy. Without such a structure, there would be no more for supper than the occasional hare.