Name: John Kay
John Kay is one of Britain's leading economists. Amongst other achievements, John was the founding director of the Institute for Fiscal Studies, chair of the London Business School, founder of his own economic consultancy (London Economics), and was responsible for establishing the Said Business School at Oxford University. John is now a regular contributor to the Financial Times and author of several books, whilst overseeing the Kay Review of UK Equity Markets for the Government.
I got into economics because I was very good at maths and interested in politics and everyday affairs. It was a good (if not the only possible) combination for that. It’s still a good background and motivation for a career in economics.
Were you encouraged to study economics?
Not at school no. Economics wasn’t on offer there, and I ended up studying maths at university in Edinburgh. Even by this point economics hadn’t crossed my mind. But while I was at university I discovered economics, and ended up changing my degree, completing my degree in economics. Having done a decent degree at a decent university, I would say my education was very important.
You don’t learn economics in life.
Where did you decide to start?
I then went down the academic route. When I became an economist there weren't loads of city jobs for economists. I’m actually very glad the option didn’t present itself. My first job was as an academic, teaching at Oxford University. I spent a few years there and realised this was a job I could do for the rest of my life. But when I thought of it in that way I realised I didn’t fancy that. So I left to set up and act as Director of the Institute for Fiscal Studies (IFS), establishing it as one of Britain’s most respected think tanks.
How do you go about setting up a think tank?!
The IFS came about because a group of business people thought there was a need for it, and they found me to get it going. It was fun and successful, and I learnt that I was good at economics which was fairly serious but communicated for a popular audience.
A few years doing any job was always enough for me. I took to thinking that there should be a private sector demand for this sort of thing. There was at the time a rapidly growing city demand for economists, but I knew people doing that and knew I didn’t want to do it.
I moved on to take a chair at the London Business School, and set up an economic consultancy firm (London Economics), which I felt confident enough to do. The IFS was like setting up a business, so I had learnt a great deal in doing that which enabled me to set up London Economics. Setting up a consultancy there are two requirements, finance and logistics. What I had already done had taught me this side of things, and I had met enough people and made enough contacts to get the business in. I spent 10 years there.
In 1996 I made the move back to Oxford University, to establish the Said Business School there. I enjoy building things. I’m a bit old for that now, but that was the positive side of that for me. The frustrating part was doing this in an environment which wasn’t supportive of doing things, so it wasn’t an entirely happy three years spent there.
After three years I felt I’d done enough of that. I became ill and was wrongly told that I wasn’t going to live much longer. Thankfully that turned out not to be true, but something like that does focus your mind. Since then I have vowed to only do things I like.
More recently, I have focussed on more popular writing, contributing a weekly column to the Financial Times and writing several books. With a phase of my career focussed on public sector issues, and one concentrating on business economics, my concerns today are principally with the area in between, the relationship between government and the private sector.
I still have a fair degree of business involvement in non executive roles, but I’m no longer individually responsible. I don’t have to worry about paying people’s salaries at the end of the month. Being responsible for people in that respect is exhilirating and rewarding but also stressful. Small businesses are much more stressful than big businesses. You have to run everything. My world is lower stress now. With the one qualification that journalism is one of the very few things where the deadline is real, if you don’t submit your piece then it’s not going in the paper.
You have been doing some work recently for the Government...
Yes, the Government recently approached me individually for my report for The Department for Business, Innovation and Skills (the Kay Review of UK Equity Markets and Long Term Decision Making). It wasn’t something I’d done before, and was definitely something I knew I wanted to do. I have directed the review, partly research and also a consultation. It’s gone better than I had thought.
How much does an economist have to work then?
I work a lot. More than I want.
Going back to my rule of only doing things I enjoy, there are more things I enjoy than I want to be doing.
I have an office, a secretary and a research assistant, but I’m in the office very rarely. I’m based in the country, in the UK and France, and a high percentage of my time is spent there. My focus is on writing, so I don’t need to be in my office doing that.
The defining achievement of my career is having communicated serious ideas in a serious way to a general audience. I would also say institution building.
What's the industry like?
In terms of economics, the academic world has turned in on itself, and city type activity is very superficial. It’s concerned with things that don’t really matter much. I think if you’re looking at these things you can’t call yourself an economist.
The big questions are about why are some people rich and some poor, why a market economy works better than a centrally planned one.
Obviously I follow politics, and when the most recent budget came out I looked at the news but it’s wrong to think an economist would be excitedly waiting for the budget report. There was no great economics in it, and rarely is.
Since I started, the industry has changed. There are many more government and private sector jobs in economics, and vastly more city jobs. There are also lots of consultancy type jobs in economics now. In a way I helped a lot in developing that idea as a career option for economists. When I started in economics, there were two large disciplines. There was business economics, which was working as a macroeconomist in big non financial firms (thirty to forty years ago they would all have had chief economists and economics departments, which weren’t much use), then there was low level public sector economics, regulation studies. That’s disappearing, now more people are doing real economics outside of university.
There’s lots of detail I’d change, but overall I’m very happy with my career.
Biggest challenges you've faced?
The biggest challenges I have faced were I suppose the challenges of breaking out of academic life given the enormous comfort blanket of staying in any career in which you have a job for life. It’s also challenging having responsibility for other people’s salaries and their jobs. That's a huge stress as well as a great opportunity.
There was no long term planning about my career at each stage. I just made the next move, like a game of chess, I had no idea what it would look like 20-30 moves on, just the next 2-3.
Tell me how I can be an economist.
In economics, I would suggest just going where it takes you. Economics is above all a practical subject, like engineering or medicine, rather than philosophy or literature. If you can’t point to what’s specifically useful about what you’re doing you need to question why you’re doing it. Lots of academic and city activity in economics has a big question mark over it.