John Kay

A small fraction of the ingenuity devoted to the construction of complex financial instruments that no one should want could advantageously be applied to the construction of less complex instruments that meet the needs of the Big Society.

From the start, PFI conflated the desirable aim of exploiting private sector management skills in project supervision with the undesirable aim of obscuring public finances with complex funding structures. It created an industry of advisers with a vested interest in its own expansion.

The financial world used to have a diversity of corporate organisational forms – listed company partnership, mutual. Most partnerships and mutuals became listed companies, a change that was not usually for the better.

The theory that the right answer to the gap in information and knowledge between the investment bank’s structured products division and the person in the street is to give the person in the street more information is absurd.

There is a loss of intimacy in knowledge and understanding, and a reduction in subtlety and flexibility of approach that comes from insistence on judicable principles and rigid rules. But the prevalence of regulatory capture is such that it is often a price well worth paying.

Good quangos have specific technical expertise and their purpose is to take issues out of politics. Bad quangos have no distinctive skills and are designed to put issues into politics.

Anonymity is often the most effective means of telling truth to power: and sometimes the only one.

Government spin is especially debilitating because government is a monopoly supplier of much of the information that an informed democracy requires.

Today’s managers are victims of the tyranny of the quarterly earnings report. And that is why yesterday’s cost-savings are so often today’s corporate crisis.

The modern cult of the heroic chief executive is at the root of the problem. Greater shareholder activism may help, but the most valuable restraint would be more effective checks and balances within the company itself.