IN OPEN SEAS: PART III: Paddling (1986- )

Brian Easton (Journalist) Interviews Brian Easton (Economist)

Part I is IN OPEN SEAS: PART I: On the Seashore: (1943-1970);  Part II is IN OPEN SEAS: Part II: Launched (1970-1986). Part II and Part III were  going to be published as a companion pieces in Asymmetric Information but there have been no issues since August 2021

Why did you not go back into a job in a university after you left the Institute?

I applied but was never accepted. In one case I was told that I was ‘too controversial and published too much’. A strange response from a university. No New Zealand university ever made me a tenured job offer. A high-status Australian one did, but I declined because I wanted to stay in New Zealand. I have since thought that taking it would probably have been better for my wellbeing and pocket; whether New Zealand would have been better off can be debated.

So you became a consultant?

For over 30 years. Professionally, it has been an interesting life compared to being isolated in a university. But it has its limitations. You have little control on what you do; many consultants have a reputation for delivering what the client wants. Consulting can compromise your independence. During the flat-tax debate in 1988 – a crucial part of the collapse of the Fourth Labour Government – I had been commissioned to write a Listener feature on it. (Them were the days.) The client for whom I was working asked me to hold off because they thought it might undermine the standing of the work I was doing for them.

What happened?

I had already filed the story.

What do you think of being a consultant instead of an academic?

It is a matter of taste, but probably not mine. I missed colleagues. One of the joys of being an economist has been a robust debate with them – lots of disagreement, much learning, some convergence and ongoing friendships. My impression is that open debate largely died with Rogernomics and has not revived. (I have recently joined a group which meets once a fortnight for a lively discussion.)

            I missed the institutional support including the research infrastructure like libraries and computers. I missed the salary and also the status. One should not underestimate how a position in an institution gives a person a public role. New Zealand operates on the basis of ‘who you know, rather than what you know’– status over competence. Most of all, I missed working with lively young student minds, watching them develop into members of the profession.

I thought consultants were well paid?

They may be, but I chose to make just enough to support my family and use the free time to maintain the research program which I had hoped to run when I was at the NZIER.

Tell us about some of the highlights of your research programs.

I have already mentioned distributional economics. My first major discovery was that poverty mainly occurs among families with children. The basic paradigm I developed remains the standard way we measure poverty almost fifty years later (although there is an evolving one directly assessing households’ experiences and consumption which I discussed in the late 1970s). That revolutionary finding is now the conventional wisdom to the point that the initial research work is forgotten.

            A lot else came out of my distributional research. While trying to explain poverty I had to think about non-market economic activity. This was well before the popular, but uninformed, fashion to criticise GDP. It has led, among other things, to the exceptionally innovative Chapters 29 and 38 on the role of nonmarket household activities in economic developments in Not In Narrow Seas, in a book with many innovations. Another dimension will be seen in the central role the environment plays in the book.

            One stunning discovery was that I found a structural break in many economic series around 1966 or 1967. I eventually identified this as the wool price collapse in December 1966. The mechanism involves a thorough grasp of distributional economics including the terms of trade and the real exchange rate and how regulation transfers rents. Get your head around that and you begin to understand why the period after 1966 is so different from the first two decades after the Second World War.

            The economics is described in In Stormy Seas, which sets out the model of the Small Open Multi-sectoral Economy we were developing at the Institute a decade earlier. (The political ramifications are detailed in Not In Narrow Seas.) Later I enjoyed working on Treasury panels on short-term and long-term forecasts; they told me they appreciated my contribution.

            As well as working on the macroeconomics framework under Rogernomics, I got drawn into evaluating its microeconomics. That led to The Commercialisation of New Zealand. We have never worked out a coherent regulatory framework. Hence the ‘leaky buildings’ saga. We are better at providing ambulances at the bottom of the cliff than fences at the top. Even then, the ambulances are often late.

            Inevitably, much of my consultancy was about market regulation. Particularly satisfying was the work I did on tobacco and alcohol. On one occasion, working on alcohol taxation, I identified an anomaly which meant that light spirits – flavoured raw alcohol – could be sold so cheaply that an hour’s wages provide enough liquor to kill oneself; as happened to two young men while I was investigating the issue. I took the finding to the Treasury who were aghast at the tax loophole. Within months they removed it and light spirits disappeared from the shelves. The Alcohol Advisory Council said they never had a such a quick turn around on a policy.

            Devising a health system is a challenge of advanced regulatory design. I got involved because I was teaching medical students at the Wellington School of Medicine. I am proud of my contribution as economic adviser to the Campaign on Public Health, which successfully resisted the proposed privatisation of the public health system in the early 1990s.

            I also evaluated healthcare delivery. The greatest achievement may have been my contribution to the WHO report International Guidelines for Estimating the Costs Of Substance Abuse, which anchors social-costs studies into cost-benefit analysis and microeconomic theory. It has not had a lot of impact in New Zealand where some of the cost-benefit, social-cost and social-investment studies stray a long way from orthodox economic theory.

            On the basis of my Commercialisation book I was asked to teach public policy to political studies students at Auckland University. This led to the updating The Whimpering of the State; Policy After MMP. (I am just publishing a related paper twenty years later.) I have a distinctive approach to policy studies which focuses on how policy is made – the policy process as political economy. I don’t think studying it is popular, here in Wellington anyway, because it involves assessing what actually happened and usually the process is – as Bismarck described it – like making a sausage. So the kudos goes to those who focus only on the end product. Outside Wellington, it is hard to get a grasp of the details. (You can see this by comparing my later work with Social Policy and the Welfare State, which I wrote when I was still in Christchurch, although Pragmatism and Progress: Social Security in the Seventies, published about the same time, is a precursor of the political economy approach.)

            Another consultancy area was working with Maori, especially over Treaty claims. I really enjoyed that. It also opened me up to different parts of New Zealand’s regions and history which economists don’t usually come across. I even published a scholarly paper on Te Tiriti o Waitangi which came out of wrestling with the property rights involved in one claim. My latest contribution to Maori development is Heke Tangata: Maori in Markets and Cities.

            On reflection, I am surprised how involved I was in historical research; there are over 300 items on my website with a ‘history and political economy’ tag. It comes from my general interests, from an applied economist using history to test theories but also from the recognition that if you want to understand anything you need to understand its origins. So most of my studies include a historical dimension. For instance, Policy and Pragmatism goes back to the 1890s (because of recent scholarly work I’d now go back even earlier).

            I also wrote The Nationbuilders, trying to understand how New Zealand thinking evolved up to 1984. It later led to my curating a New Zealand Portrait Gallery exhibition, 60 Makers Of New Zealand: 1930-1990, covering much the same period but with a wider remit.

            The Marsden Fund awarded me a grant which enabled the writing of Globalisation and the Wealth of Nations. (I learned some new bits of economics in the process: the power of the economies of agglomeration and the bizarre way they work. They are not yet central in New Zealand’s economic thinking, although the Treasury picked them up in the late 1990s when they were focusing on the future of Auckland.) International experts who read the book said it was an important contribution, but the Marsden Fund did not extend the grant – apparently they had higher priorities than the New Zealand economy in an international context – so I was unable to continue the analysis or promote it.

            I looked around for an alternative project which would not be so expensive – not involving overseas travel. Perhaps it was inevitable I would write a history of New Zealand; I had been reading about it since I was in primary school. By picking up bits of funding here and there – I am very grateful to all of them – I wrote Not in Narrow Seas: The Economic History of Aotearoa New Zealand. It is a huge book starting 650 million years ago and it draws on most social sciences. It also contains a lot of economic theory. The publisher’s blurb on the back cover says that it is ‘my greatest work, the fruit of a lifetime of research and reflection’.

            In a way, I hope that is not true. As my Pundit columns indicate, I am still researching, learning and reflecting. Currently I am working on my next book In Open Seas, which is forward looking.

            I suppose I should finish a list of major achievements by mentioning my columns. There are over a thousand of them. I was greatly touched by a scholarly historian who went through them over his period to get a feel about what was going on. They show developments in my thinking, say, about wellbeing which goes back to the 1960s, and on the changes in public administration, which begins with my identification of generic management in the early 1990s.

Whew, Is That All?

The highlights. I left out many other things I have done including some theoretical innovations. I am very proud of many items on that list, even if I have had to omit them here. Most are listed on my website and on but both are bits of rabbit warrens, I’m afraid.

In Summary?

While I’d like to think that my writings have already made a difference, and will make a difference, to New Zealand long after I am gone, I am not optimistic. We have painted ourselves into a problematic development corner; that is a message of my latest book, Not in Narrow Seas.

That is a downbeat to finish on. Can you end a little more cheerfully?

Bruce Jesson, reflecting on his life said ‘[i]f you had said to me, when I was 17 or 18, “you’ll spend your life writing, you won’t make any money, you’ll publish magazines, you’ll publish books,” I’d have thought: “Wonderful. What better a way to spend your life?”’ My sentiment too.