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Kay, Other People’s Money

John Kay, a British economist and columnist for the Financial Times, has written a first-rate book about the path the finance industry followed from the 1970s until the crisis of 2007-2008 and the path it should follow in the wake of the bank bailouts. Other People's Money: Masters of the Universe or Servants of the People? (Public Affairs, 2015) is not, the author is quick to point out, yet another book about the financial crisis. It is instead an exposé of financialization, in which personal relationships were replaced with an anonymous trading culture that mistakenly thought it understood risk and liquidity. And it is a call for “a finance sector to manage our payments, finance our housing stock, restore our infrastructure, fund our retirement and support new business.” Such a call is necessary because “very little of the expertise that exists in the finance industry today relates to” any of these. “The process of financial intermediation has become an end in itself.”

If this sounds familiar, I can...


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