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John Pierce: Well Ross, thank you for your time to give this interview today.
I remember, it must have been more than, well nearly 30 years ago when I was doing my HSC economics exams, my economics teacher handing me out
Ross Gittins articles to read and comment on.
Over that sort of period of time, what's kept you going? Where does the enthusiasm and the interest in the subject come from?
Ross Gittins: Well, you make me feel very old, John.
But yes, I mean it is an issue because, you know, I did my 34th Federal Budget lockup the other day.
So you do have to have some source of, that keeps you interested and going. I think part of it is that I started
out not remembering most of the economics that I did at university so I've been learning economics throughout that whole 30 years and I'd like to think
that the stuff I'm writing about, say the Budget, this year was an improvement on what I was writing about it 10 years ago.
So I think there's some kind of, I hope there's some kind of evolutionary progress in my understanding of the topic, my ability to explain it.
But the thing that really keeps me going is that economics is a very big topic. It's vast. It's not just micro, it's not just macro.
When you get bored with macro you can move to micro-economics and go around there.
I've actually got to the point where I find micro far more interesting than macro-economics.
But there are new parts of economics and keeping up with those is what can really give me a buzz.
You get information economics, the study of how what's happening on the Internet, the way it really fits the economic model,
doesn't fit the economic model, that's the kind of stuff that really gets me going.
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John Pierce: Who have you come across who are the most, I suppose important or insightful economists, and
what sort of questions were they trying to answer?
Ross Gittins: Well, lots of people I guess, but one guy who had a big influence on me is Robert Frank from Cornell.
He's the man who first introduced me to behavioural economics, which is the kind of, which is a combination of economics and psychology.
It's saying, what can the psychologists tell us about the way people behave and the way they make decisions.
That's a cutting edge of economics and I'm very interested in that.
It's really, behavioural economics is very useful if you're trying to figure out why politicians do the things they do, for example.
But, so he introduced me to behavioural economics.
He's interested in a lot of other subjects on the edge of economics, such as why, for example, why do people give tips in restaurants that they're not
going to visit again, they know they're not going to come back to because they're just passing through town or whatever.
Why do people do that? Well, you can think of reasons why it makes sense for people to do it.
Partly people do it because they're trying to say something about themselves: 'I'm a decent person. If you give me good service I'll reward it.
I won't do this on the cheap.' They're partly saying something about themselves.
But they're also saying, sending a message, and this is the thing that Frank was on about, they're sending a message that says: 'I'm the kind of person
you can trust. I'm a person you can rely on.' That's an important message and it's actually an economic message if you look at economics more broadly
than just the very narrowest interpretation of the model.
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John Pierce: Learning how to use, I suppose the tools of economic analysis to arrive at conclusions is one thing,
but being able communicate those conclusions to others is a completely separate task in itself.
What sort of research and effort goes into your articles and has it got any easier over the years?
Ross Gittins: Well, a fair bit of research goes into it.
I spend a lot of time reading mainly government reports, getting stories even out of boring things like budget papers.
John: Thank you.
Ross: But a lot of effort goes into the writing of them. I think I probably take longer to write things than other
people do and that's because I'm putting a lot of effort in to try and explain, explaining what it's all about in a way that's simple but not too simple
and that's clear and that people can follow, so that you kind of; I'm often trying to demystify economics, find ways to explain it in ways that people
understand but which an economics professor won't think, 'Well, that's wrong'.
That's actually, that's a kind of skill I've been working on.
If you want to know what I've been doing for the past 30 years, I've been working on honing that skill. Has it got easier?
I'm pleased to say that in just the last five years maybe, it has got easier and I can actually write these things quicker, partly because I've just got
a better feel for what I'm doing and where I'm going. It's become a bit more kind of automatic, you know, a bit like driving a car.
I kind of know where I've got to go and where I've got to end up.
John: So there's hope for the rest of us.
Ross: There is. Just keep at it.
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John Pierce: Do you have any guidance or tips that you would give to economic students about, you know, when it comes to writing about economics?
Things to keep in mind?
Ross Gittins: The most important thing to remember, there are lots of things but the most important single thing to remember is: don't skip steps
in the argument. Economists think it's all obvious and clear and they keep jumping steps.
And every time an economist jumps a step in the argument, he loses, or she loses part of the audience.
If you're spelling something out, go through all the steps.
Don't be afraid to say the obvious because what's obvious to you may not be obvious to other people, and in any case, people like the obvious.
Economists are afraid, lots of people are afraid that if I state the obvious, I'll be offending your intelligence.
It doesn't actually work like that. People like you to say things that they know and have always believed.
It makes them feel comfortable. They say, 'Yes, I understand that. Take me somewhere further.'
John: There appears to be a perception I think, at least amongst some high school students, that economics is the sort of subject you do if you're
good at mathematics. How important have you found mathematics in your understanding of economics? How relevant is it?
Ross: For me, not terribly. Fortunately I went to university before there was a lot of maths in the course.
And I wouldn't say that I'm terribly up with all the maths.
Economics has become a lot more mathematical. I'd say that you don't need it to do economics at high school.
Economics at high school is about words and understanding and the maths involved is just a bit of arithmetic.
I have to say that when you do economics at university, there is a fair bit of maths, a fair bit more maths as each year passes.
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John Pierce: I remember at the very first economics lecture that I attended at university, the lecturer ran through, oh, half a dozen of the classic
sort of economic problems and answers, and at the very end of the lecture concluded by raising his arms above his head and declaring, 'And that's why
economics is the ultimate morality.'
Now that is clearly, that declaration, overstating the case, but why do you think that at least an understanding of some economic fundamentals
is so useful to people?
Ross Gittins: Well I think it is useful. I don't think there's any doubt about that.
It's because the economy that you read about in the newspaper is the macro economy. It's the big economy.
It deals with things that are remote, that are important but remote from our lives: the Budget, the current account deficit, the balance of payments,
these things. Well, how does that relate to me?
But, so if that stuff doesn't do a lot for you then you can feel that it's not terribly relevant and important.
But in fact, economics is about the study of production and consumption.
Well that's what we do in our lives. We get up, we go to work, that's production. We stop at lunch time and have lunch, that's consumption.
Economics is the study of the ordinary business of life that all of us are engaged in.
And so economics can tell us things about how we fit into the economy, how the economy affects us, useful things, things which, if you know them,
you can have a more successful life.
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John Pierce: In your book, 'Gittinomics', you write about, I suppose many of my favourite topics, at least topics I've had to wrestle with:
the ageing of the population, taxation, the income/leisure trade-offs.
And as you point out in various parts of the book, at least part of the answer to a lot of economic problems is to grow the economy faster,
particularly through higher productivity growth.
Where does that higher productivity growth come from and how do we get more of it?
Ross Gittins: Well, one of the ways we get higher productivity growth is by using more machines and by better machines but really a lot of it comes
from technological advance. We just get better at doing things.
Now some of that technological advance is really big, you know, the discovery of electricity, the discovery of the motor vehicle, the production line.
More recently we've had the development of computers, we've had the Internet.
All of those things, those big technological advances can move, can increase our productivity, our ability to produce more goods and services with the
same quantity of inputs: labour and capital.
John: We normally talk about higher productivity being accompanied by a shift of resources, labour and capital as you said, from one sector
of the economy to another.
But perhaps sometimes that term 'resources' can hide the fact that it's really people we're talking about shifting, people shifting from not just one
firm to another but from one sector of the economy to another and indeed even from one location within a country to another geographic location.
What are some of the issues involved in trying to get higher productivity through shifting people around?
Ross: Well, there are, it does involve shifting people around and economists can forget that.
The people never forget it and I have to say the politicians don't forget it either, because if the people dislike it too much they might vote
against the politicians.
They often like the results but don't always like the things that have had to happen to get those results, to make the economy to grow faster and
to make us better off. I think we need to be more conscious that moving people around, often that can involve that if you move them around the
same town, same big city, that doesn't matter so much.
But if you separate them from their family and their friends, if you separate them from their parents, if you find that, in climbing the tree of some
organisation you've ended up living in a town way away from where your parents are who are starting to get old and need their children to keep an eye
on them, that can be a real problem.
If you're raising kids but your parents aren't there to help with the babysitting and so on, that can be a problem.
I think economists tend to forget that and I think the people who run business and departments can forget it, but people don't forget it and it's more
important than we often give, the attention that we often devote to it.
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John Pierce: Most of us work in jobs where those trade-offs are not as visible or are not as controllable so what real choice do the rest of us
have in that income/leisure trade-off?
Ross Gittins: Well, married women, mothers, have a lot more choice, whether to work or not work, whether to work full-time or work part-time, and
that's a factor that the people who put together our tax system don't seem to take adequate notice of.
But for, if you talk about people, primary earners, people who are just, you know in a full-time job and they need to be in a full-time job, they've got
people they're supporting, you can say, well employers tend to give you jobs in packages.
They don't tend to let you say, well, I'd like to do more, or I'd like to do less. That's true.
I think you can influence it at the margin and I think that when people say, 'Look it's all, I don't like any of this but it's all forced on me,
I have no choice, I'm just a cog in the great capitalist machine,' I think often what they're saying is, 'I've considered the possibilities but I'm not
prepared to pay the price of exercising them.'
There are ways you can, a lot of people have jobs that are very task oriented.
They're not jobs that say, we expect you to arrive at nine and leave at five or six or whatever.
They're jobs that say, get this thing done and then we'll give you another task.
Well the extent that that's the case, you can get things done more efficiently by working harder during the ordinary hours and avoiding as much overtime
to meet a deadline, bearing in mind that often the extra time you put in, the very long hours that you put in, sometimes that's unavoidable but
often that extra time is not terribly productive because you're tired. I mean people are heavily affected by tiredness.
I spent the first part of my life trying to reduce the amount of time, trying to increase my productivity by reducing the amount of time that I wasted
sleeping until I actually started reading a few things about sleep and the benefits of sleep and now I do the reverse.
I try to increase my productivity by making sure I get all the sleep I need so that when I'm there I'm bright and I can, if I'm putting the time in,
it's effective time. There are ways we can do it.
Sometimes we have to make really hard choices which say, 'I can get myself a big pay rise by going for this promotion, but this promotion will involve
me doing a lot of extra work, coming in at the weekends, things like that, which I don't particularly want.
So I'm not prepared to, I'm not, I don't aspire to do all that work just because there's a bit more money attached' - making those choices.
Now they are hard choices. I mean you give up something. This is opportunity costing.
There is no way you can take control of your life and fashion it in a way that's more satisfactory to you without being prepared to give up something.
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Economics is not just about money. What perspectives would Gittins’s broader interpretation of economics include?
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John Pierce: We're often told that the major issues confronting the community at the moment need to be looked at from a social perspective, an economic
perspective, an environmental perspective, as if those perspectives are three completely independent and different sorts of perspectives.
I think, you know, one of the messages in your book, I would suggest, is that they're not separate and in fact economics looks at all of them and
in fact the social and environmental perspectives are part of what economics is about. Is that the way you see it or are they quite different?
Ross Gittins: No, that's certainly the way I see it. I believe, I take, I believe that economics needs to be interpreted very broadly and not narrowly.
Economics is about people. If you ignore the social aspects of people's lives and just focus on how much money they're making, how many goods and
services they're getting to consume, you won't get the right message.
Similarly, if you think that we can run the economy in some kind of vacuum that ignores what the economy, what economic activity is doing to the
environment then you're in for a rude shock and the way climate change is going you're going to get that rude shock pretty soon.
John: Yeah, most people seem to think that economics is about money.
Your book reminds us that it's not solely, and perhaps not even primarily about that.
So what sort of, what sort of review do you think 'Gittinomics' will receive from other mainstream economic commentators that do tend to see it a bit
more narrowly sometimes?
Well I guess the review I'd expect would be mixed. I think there's a lot in my books that every economist would recognise and agree with, and
there are a few things in there that are a bit challenging of conventional economics and say, well look, it is possible for economists to be a bit
blinkered, there are these other dimensions to life.
Economics is about the material side of life. The material side of life will always be important.
All of us are materialists to a greater or lesser extent.
There are not many of us who are prepared to just sort of live the life of a monk, but the risk for economists is to think that the material is all
that matters. Because it's the bit they specialise in, it's the only bit that matters.
One of the things I'm saying is, materialism is important, the material is important, but we've got to put it into a broader context and make sure we
get lives that are balanced.
Now an idea that our lives should be balanced, should be in some kind of equilibrium, is an idea that an economist ought to find intuitively appealing.
John: Indeed. Thank you for making the choice to agree to this interview today.
Ross: I'm sure it will be worth my while, John.
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