Saturday, May 26, 2007


Sydney, Friday, May 26, 2007

Brendan has asked me to say a few words sharing my background and experiences and what I’m really passionate about these days, and I’m happy to do so.

To understand me you have to know that I come from an extended family of Salvationists and that both my father and my mother were Salvation Army officers - ministers - making me a member of a strange group known to the Sallies as OKs - officers’ kids. My father was the minister of a long succession of very small congregations in NSW and Queensland. The Army moved him every two years - sometimes after only one year - and when he moved, we did too. In consequence, I went to five primary schools and three high schools around NSW and one in Brisbane. These days I’m what the Sallies call a ‘backslider’, but I think you can see pretty clear evidence of my upbringing in the things I write and the attitudes I take in my columns.

Both my parents came from big families in Queensland and I’m the only one in the family who’s not a Queenslander. Since I was born in Newcastle and ended my education in Newcastle I’m happy to tell people I’m from Newcastle and proud to say I was educated at the now-defunct Newcastle Boys High. Only when I’m trying to impress people do I say I went to Fort Street - and omit to mention it was only for a year. I did a commerce degree at Newcastle University, majoring in accounting but also doing a lot of economics - which I couldn’t see the point of and struggled to pass. In 1969 I left Newcastle, got a job working for the national auditing firm of Touche Ross (now merged with KPMG) and eventually qualified as a chartered accountant.

Not long after I qualified I took a year off to go back to uni and ended up stumbling into journalism. In 1974 I started at the bottom as a cadet journalist, at what was then considered to be the very mature age of 26. The editor who hired me said he couldn’t believe a qualified accountant would take to being a cadet reporter, but it was worth a try. A Kiwi mate was amazed and appalled that I’d consider giving up the status of being a chartered accountant to become a lowly reporter.

That was 33 years ago and I’ve been at the Herald ever since. I did a bit of reporting from the press galleries in Macquarie Street and Canberra, and wrote a fair few of those unsigned editorials on the same page as the readers’ letters. But I’ve been the Herald’s Economics Editor for 29 years, I’ve been a Herald columnist for 30 years and I’ve been doing exactly the same job I’m doing now for 24 years. I know I should have left the Herald and gone to another paper years ago, but my problem is that my ambition was to become the Herald’s Economics Editor, I achieved that ambition at the age of just 30, and in all the time since then I haven’t been able to think of a job I’d more like to do or a paper I’d more like to work for. I have the best job in the world: I’m paid a fat salary to sit in an armchair and pontificate three times a week. Bernard Levin, when a columnist on The Times, said he could never understand why they paid him for the privilege of publishing his opinions rather than making him pay them - and that’s how I feel (but don’t tell David Kirk I said so).

You should know that a great part of my success in journalism - certainly, my rapid rise to prominence - comes from being in the right place at the right time. The year I joined the Herald, 1974, has since been identified by economists as the great turning-point in the post-war economic history of Australia and the developed world. It was the year we felt the destabilisation of the first OPEC oil shock, the year the post-war Golden Age ended with the advent of stagflation, the year our economy entered a period of high inflation, high unemployment and general economic dysfunction that we didn’t start to emerge from until the mid-1990s, the year the Whitlam Government didn’t have any idea what had hit it, and the year it first dawned on the editors of Australian newspapers that the dominant, unending political story of their times was actually the economy. In such an environment there was a sudden, strong demand for the services of journalists who were capable of writing about the mysteries of economics. There weren’t many takers, so someone with my background was quickly pressed into service and promoted up the line. But I confess I’ve had to learn or relearn most of my economics on the job.

People often refer to me as an economist, but I’m not, and no true economist thinks I’m one. I used to say I was an accountant pretending to be an economist, but I can’t say that any more because, these days, I’d only be pretending to be an accountant as well. So now what I prefer to say is that I’m a journalist who writes about economics. This fits well with my changing views about my role. I’ve always been on about explaining economics and for a long time I saw my role as convincing my readers of the truth of economics. I was an early salesman for economic rationalism. But experience and wider reading has helped me see the limitations of conventional economics, so now I see myself as someone paid to provide my readers with a critique of economics, just as a theatre critic provides his readers with a critique of the latest plays. Economics has strengths and weaknesses and it’s my job to point them out.

As for something I’m feeling passionate about, I been thinking a lot lately that there’s a contradiction at the heart of the capitalist system. The system includes many people who make their living by tempting you to buy things and do things which are fine if you do them only in moderation, but which can bring you down if you do too much of them. So the key to being a winner - a master - in the capitalist system is to possess the self-control to resist the temptations it continually throws at you. If you oblige the capitalists and always buy what they’re pushing, you’ll help to make them rich but, paradoxically, you’ll become a loser - a victim - of the system.

What are these temptations? They’re manifold. The one we’re most conscious of these days is the temptation to eat too much. But there are many more: to get too little exercise, to smoke, to drink too much, to watch too much television, to gamble too much, to shop too much, to save too little and put too much on your credit card, to work too much at the expense of your family and other relationships.

All of those things are being pushed on us by the system. They’re what the capitalists are trying to sell us. A lot of highly paid advertising people, marketers and merchandisers make their living finding ever-more effective ways to persuade us to indulge. In the case of exercise, no one’s selling the lack of exercise, but lots of people are selling ways to avoid exercise - whether it’s going everywhere by car, using the remote or watching sport on telly rather than playing it. Admittedly, people are also selling ways to get fit - from exercise bikes to gym subscriptions and all the right gear to wear - but then you’ve got to make sure you don’t get hooked on being underweight or using steroids to bulk up.

OK, so we need to demonstrate a bit of self-control in our lives. What’s so new and surprising about that? Two things.

First, research by psychologists, neuroscientists and behavioural economists has shown that humans have a great problem exercising self-control. We think it’s up to us to decide how much to eat or how much TV to watch but, in fact, many of us find it very hard to restrain ourselves in the way we know we should. This is because our brain is a complex mechanism, which evolved over millions of years. The older, more primitive part of our brain tends to make instant decisions on an instinctive, emotional basis. The newer, more rational part of our brain tends to make more reasoned judgements, but to be a lot slower off the mark. Experiments with people who’ve had the two sides of their brains severed in some accident show that the reasoning part of our brain often doesn’t know why the faster, more instinctive part of our brain decided to do what it did, but is adept at thinking of plausible explanations for its behaviour. Psychologists call this process ‘confabulation’ - others call it ex-post rationalisation.

It’s as though we have two selves, an unconscious self that’s emotional and short-sighted and a conscious self that’s reasoning and far sighted. We have trouble controlling ourselves in circumstances where the benefits are immediate and certain, whereas the costs are longer-term and uncertain. When you come home tired from work, for instance, the benefits of slumping in front of the telly are immediate, whereas the costs - feeling tired the next day; looking back on your life and realising you could have done a lot better if you’d got off your backside and played a bit of sport, sought a further qualification at tech, studied harder for exams, spent more time talking to your kids etc. Similarly, the reward from eating food is instant, whereas the costs of overeating are uncertain and far off in the future - being regarded as physically unattractive, becoming obese, becoming a diabetic, dying younger etc. As everyone knows who’s tried to diet, give up smoking, control their drinking, save or get on top of their credit card debt, it’s very hard achieve the self-control our conscious, future selves want us to achieve. Many of us may have no trouble controlling ourselves in most of the behaviours I’ve listed, but I doubt there’s anyone much who can claim to have themselves perfectly under control in every area.

The second reason for getting so excited about the problem of self control is the likelihood that the very success of the capitalist system in making us more affluent is serving to heighten our self-control problem. Our brains work the way they do as a result of our evolution. We are what we are because it contributed to our reproductive fitness. We evolved the way we did to protect us from the risk of death, for instance, and to cope with the problem of scarcity. As it happens, economics is all about coping with the problem of scarcity. But human ingenuity - including the development of the capitalist system - has increasingly overcome scarcity. These days, most of us in the developed economies have a greater problem coping with abundance than scarcity. For instance, we’ve evolved to eat everything that comes our way, because nutrition was scarce on the African savanna, but now food is abundant and, hence, cheap. So we’ve lost the natural control that, until relatively recently, stopped our instinct to overeat from making us overweight. Similarly, the huge growth in our real incomes over the past century has made it easier for us to afford to overindulge in many of the other vices I listed. Credit is another thing that’s become readily available and relatively cheap.

So I’m beginning to think that overindulgence and difficulties in self control are the big problem of our age. Even the worries we have about our despoiling of the environment and our excess emissions of greenhouse gases can be seen as problems of abundance. Too much unguided economic activity - which has also led to too much population growth - is upsetting the earth’s natural balance.

There are solutions to the problem of self control - at the government policy level and at the level of individuals controlling their own behaviour (the latter involving subtle ways of tricking our unconscious selves) - which I suspect will become an increasing focus as the 21st century progresses.