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In this talk, John describes some of the differences between an economic approach to regulation - concerned with indentifying market failures - and how markets mechanisms can be best adapted to deal with them. He contrasts this with the legal style of regulation which has been the historic basis of monitoring financial services. The conclusion is that we might manage our financial services better if, in inventing the regulation, the role of economists were greater.
Most businessmen think that the role of economists is to produce macroeconomic forecasts. Since modern business strategy is, however, increasingly based on economic foundations - largely through resourced based theories - it might be time they reconsidered.
John recalls his experience in setting up the Institute for Fiscal Studies, one of the UK's most respected economic think tanks.
Since the time of Aristotle, and perhaps before, business has been widely regarded as an activity of inferior moral status. The critics...