John Kay

As the commercial market is being transformed, anyone who thinks that the policy challenge is to restrict internet piracy has missed the point.

Market economies are always vulnerable to chancers and spivs who sell overpriced goods to ill-informed customers and seem to promise things they do not intend to deliver.

John reviews the interim report of the Independent Banking Commission. The direction of travel is right but the devil is in the detail

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.

John explains (again) why structural reform is preferable to behavioural regulation in the banking sector, and applauds Sir John Vickers’ observations on the work of the Banking Commission.

In the regulation of business affairs, from dress codes to rules on takeovers, it is always tempting to try to translate general principles into specific rules. But the world is rarely sufficiently clear and certain for this to be possible, and if it seems so today it will have ceased to be so tomorrow.

The value of Modigliani-Miller – like any good model in physics or economics – lies as much in the questions it raises as in the truths it reveals.

The dynamism of a market economy comes from innovation in products and processes, and radical innovation in products and processes often – in fact usually – comes from outside the existing market structure.

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.