‘I’ll be gone, you’ll be gone.’ That supposed shibboleth of the turn-of-the-century captains of finance, whose unrestrained pursuit of profits led western economies to the brink of collapse less than two decades ago, provides a suitable refrain to this review of the financial services industry.

If, like me, your understanding of the world of finance doesn’t extend much beyond trading cows for magic beans, this book does a decent job of explaining how this ‘industry’ developed, how it became so dangerously interwoven, and ultimately so seemingly detached from reality. Taking at its core the questions of what finance is actually useful for – facilitating payments, mediating between loaners and lenders, managing finance between generations, dealing with risk – Kay is fairly ruthless in taking to task the young scions whose gigantic balance sheets represent little more than houses of cards built by other players of the same game.

Many of the general tenets in the book are fairly logical and unsurprising. Why should a person with no skin in the game care very much about the risks of a transaction? Why shouldn’t traders adopt a nach uns die Sintflut mentality, when the likelihood is that failure will be borne by someone else? How should a person with no links to a community have any inkling about the actual financial situation of their customers (in contrast to Kay’s idealised bankers of yore in Captain Mainwaring or George Bailey)? Why should the sector reform when banks can afford to accept eye-watering fines as a minor inconvenience of carrying on as normal? When the system becomes so complex, how can it be possible to prosecute any but the most egregious of rogues? Why should we be surprised that bankers receive such stark opprobrium in contrast to similarly well-remunerated footballers or businessfolk, when their contribution to society appears to amount to little more than increasing our tax burden and giving our economies the wobbles every couple of decades? And what is the point of having some of the more intelligent minds of our generation spend their energies developing algorithms to outperform the algorithms of other intelligent minds for Mammon’s purpose?

The latter third of the book deals with potential reforms and – for a layman who otherwise only ever hears the word ‘regulation’ as some kind of financial thermostat for keeping these ills from boiling over – interestingly this isn’t the core of Kay’s message. In fact, increasing layers of regulation only make the loopholes more convoluted and difficult to police; and when those investigating potential wrongdoing are funded to a microscopic level in contrast with their charges, while wrongdoers can afford to pay the fines anyway, making their jobs more difficult only adds to the problem. However well-intentioned the regulatory framework, ‘money will find a way’, as some visitors to a dinosaur theme park famously never said.

So what’s the solution? Honestly, I’m too thick to understand. But the overall tenor of the book seems to be one of pessimism. It isn’t more regulation but better regulation that is needed. And while there are potential ways to improve the system, they are politically unworkable without collaborative effort. Since the only people in whose interest that would be are in the bottom 99%, it seems an unlikely prospect. After all, the 99% managed two months on Wall Street, before having to go back work. We successfully survived the last crisis by hoofing the can down the road. May our future selves deal with it the next time the house of cards threatens to come crashing down, and the queues at Britain’s foodbanks can breath a collective sigh of relief that the cap on bankers’ bonuses aren’t coming back any time soon.

If you know what you’re talking about, Athan Tolis’ review seems like a fair and balanced critique of this book which suggests Kay’s proposals and conclusions often miss the mark, but for the rest of us, the book is digestible enough to provide some meagre understanding of an opaquely complex system, its origins, problems, and potential solutions.

[Photo by Pixabay from Pexels]