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The Rationale of the Market Economy: a European Perspective

The fall of the Berlin Wall in November 1989 was the defining economic event of our lifetime. It marked the end of the most extensive controlled experiment in the history of social sciences – the division of Germany into two economic zones, one centralised and planned, the other a market economy. After forty years, the gap in living standards between the two was so extreme that the experiment was terminated.

No need to own the road: buy the tollbooth

Mr Buffett’s success demonstrates the weakness of one economic theory, the efficient market hypothesis, and the strength of another – the central role that the pursuit and defence of economic rents plays in modern corporate life.

How private equity revamped a London high street

Christmas shopping in Marylebone High Street provides insight into the internalisation of externalities and the relationship between corporate governance and business strategy.

Arguments for private equity are not always convincing

Private equity promoters propose layer upon layer of debt, leveraged by non-recourse finance. But the same finance theory also tells us that you do not increase the value of an investment portfolio by increasing gearing.

Musicians’ demands for copyright extension are off key

Intellectual property rules are an attempt to strike a balance between conflicting public interests and the need to provide economic incentives. However, companies should find commercial success through new products, not new legislation.

The past is a poor guide to future share earnings

An average long run value of the equity premium of up to 8% is arithmetically unsustainable: within a few decades, profits and dividends would absorb the whole of national income.

Talk of raising the corporate burden taxes logic

Determining the incidence of a tax – the people who are ultimately out of pocket as a result of its imposition – is a complex process. But we should be concerned about the overall distribution of the tax burden – which people pay what. And this is best examined by looking at the tax system as a whole rather than its individual component

Copyright law has a duty to creativity

We are often told that the best way to protect artistic innovation and creativity is to extend copyright. But it is not usually the budding novelist or musician that pushes the argument.

On John Kay’s Bookshelf – Archive page

Books that John has reviewed in the past...

Buyers must master art of the particular

If stock-picking fails to beat the index, why should picking companies? It won’t, unless mergers carefully match the firms involved.