John Kay

Modern titans derive their authority and influence from their position in a hierarchy, not their ownership of capital.

Thirty years before Havel, George Orwell identified the corrupting influence of discourse based on the repetition of pre-packaged phrases. A corrupting influence not just on language but on society itself.

A semantic confusion leads us to use the word market to describe both the process which puts food on our table and the activity of gambling in credit default swaps. That confusion has enabled people to claim the virtues of the former for the latter.

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

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?”.

Probabilistic thinking requires us to recognise both that something might happen and that it is unlikely that it will. Because this is difficult, we are always surprised, shocked, and inadequately prepared for extreme events.

We will succeed in managing financial risk better only when we come to recognise the limitations of formal modelling. Control of risk is almost entirely a matter of management competence, well-crafted incentives, robust structures and systems, and simplicity and transparency of design.

Britain is a small island, dependent on frequent and reliable air travel. From the distribution of its population, its biggest airport would ideally be north-west of London.

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.

The defining characteristic of civilisation is the complexity of its organisation. But complexity breeds complexity, and is subject to diminishing returns. Eventually the costs of increased complexity exceed the benefits.