September 11, 2024 • 29 mins
Economist Oliver Hartwich shares his best and worst money stories with Liam Dann.
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Speaker 1 (00:02):
Madam. Hi, I'm Liam Dan, New Zealand Herald Business Editor
at Large, and welcome to this episode of Money Talks.
This is a podcast about money, but we're not going
to tell you how to get rich, and we're not
going to try and pick the next interest rate move.
In this series, I'll be talking to interesting New Zealanders
(00:24):
about how money has shaped their lives and what they've
learned over the years. For today's podcast, I'm joined by
doctor Oliver Hartwich, economist and CEO of the independent public
policy think tank, the New Zealand Initiative. You're Oliver. Welcome
to Money Talks.
Speaker 2 (00:39):
Great to be with you, Liam.
Speaker 1 (00:41):
Hey, look, just regular business newsreaders will know your name
well and the initiative in its work, but can you
just describe a little bit you know, what is a
think tank exactly and how do you see its role?
Speaker 2 (00:52):
Okay, So, as you said, we are think tank. We're
also a business membership organization, but we work predominantly as
a think tanker. That means we are thinking about the
big issues affecting New Zealand. We are trying to make
New Zealand a better country for all its people, and
we're trying to do that through policy research. So we're
looking into issues ranging from education to housing, to social policy, transport,
(01:13):
local government, anything that we think needs to be fixed
and could be better, because we want to create a
better future for this country.
Speaker 1 (01:20):
Sure, and economics kind of goes to the heart of that.
Speaker 2 (01:23):
A lot of it, A lot of it is economics,
but not all So in our team we're quite diverse. Actually,
We've got a psychologist, we have someone from a classics background,
so we have quite a range of different specialties in
our team.
Speaker 1 (01:37):
Sure, and what would you say to people who are
inevitably particularly on the left that they would say, oh,
right wing thing tank. What do you say when you
hear yourself described that way?
Speaker 2 (01:46):
I would say evidence based think tank because we do
our research, and we do our job well and you
can look at our research on our website and you
can see that all our research is extremely well documented,
well researched by people who really know what they're doing, and.
Speaker 1 (01:59):
You kind of, I guess you'd say, quite focused case
by case on what the you know, the right prescription
of policy is for different aspects of the economy and
social life.
Speaker 2 (02:09):
And of course when you're doing research into fiscal policy,
that differs from monetary policy, and it certainly differs from
what we're doing in education.
Speaker 1 (02:16):
Yeah, sure, okay, Look, we'll come back to a bit
of that. And it was some questions later on, but
I wanted to go right back because people might have
already guessed from your accent. Really I'm trying to hide
it so well that you didn't grow up in New Zealand.
So you can you tell us a little bit about well,
we start with your first memories of money and what
that was, and maybe from there where you were growing up.
Speaker 2 (02:36):
Okay, So, for my first memories of money are dorge marks, yea,
and that's where I'm from. So I was born in
West Germany in nineteen seventy five, and so I grew
up with the German mark. So if you're asking me
about my first memories of money, it is that currency
that no longer exists, and that's the money with which
I grew up. And we had marks, we had Phoenix
(02:57):
and Germany of course has a very complicated history with
money because we can probably talk about this later, but
there were quite a few instances of hyperinflations before my time,
but they have certainly shaped how German still feel about
money until this day.
Speaker 1 (03:11):
Sure, but you're growing up in the so you're growing
up with the late seventies in the childhood in the eighties.
That was a pretty strong time for the weist German economy,
wasn't it.
Speaker 2 (03:21):
That was the time immediately after the so called economic miracle.
So after World War II, Germany of course was in ruins.
It was also morally discredited. And out of that ruins
came a surprisingly strong economy because of the policies introduced
by one man, and that was not Rich Earhart. So
Aerhard was the economics minister first under Chancellor Conohad Ardenaw
(03:42):
and he later became Chancellor himself, and Aerhart started something
that he called the social market economy. It is an
economy that was basically free, and Erhardt argued it was
an economy that was inherently social because it produced prosperity
for all and that was his big slogan, prosperity for
all people after the war, and that worked really well.
(04:02):
And after about twenty years under that prescription, Germany actually
overtook Britain in gdpeper capital for the first time ever.
So that really worked well. And so when I grew
up that was really the period straight after that economic miracle,
So it was a time when West Germany at least
had enormous amounts of prosperity.
Speaker 1 (04:20):
Yeah, I mean, did you feel that growing up, that
sense of you know, economic prosperity around you.
Speaker 2 (04:26):
I guess yes I did, although I should probably qualify
that a bit. The region where I'm from is actually
Germany's version of Liverpool, so it is a region that
was built on coal and steel, but that region had
been in crisis since the late nineteen fifty because German
cool became uncompetitive, and so it was an area that
was always struggling when I grew up, with its predominant sectors.
(04:50):
But apart from that, I mean there was a sense
of stability, and the whole country was doing well. It
was just something that was specific to my region where
you could feel that the transition actually from this these
old industries to something you hadn't actually properly started.
Speaker 1 (05:04):
Yeah. Sure. And so did you get pocket money? And
did you go and spend that pocket money somewhere?
Speaker 2 (05:09):
I certainly did get pocket money, and I remember my
parents started giving me fifty phoenix per week from whenever
six and that automatically increased by fifty phoenix for each year.
Speaker 1 (05:18):
Yeah. Yeah, and what did you spend it on?
Speaker 2 (05:21):
Well, at the time, I think that would have still
brought you probably an ice cream in a corner with
ye two scoops. I mean those were the days. And
inflation today of course, means that you probably now look
at about a europe per scoop, but back then that
was probably enough for an ice cream a week.
Speaker 1 (05:35):
So it's actually, I mean, it's not that different. When
I talked to people growing up in New Zealand and
the seventies or eighties, they talk about going to what
we call the dairy obviously, Yeah, but a corner sharp something.
Speaker 2 (05:44):
Like that exactly.
Speaker 1 (05:45):
Yeah, yeah, absolutely. And did you have a part time
job and all that sort of stuff. Did you deliver papers?
Speaker 2 (05:52):
And I did actually deliver papers for a while, and
then I also help people with their computer needs, and
I also helped tutoring, so yes, I had a few
jobs on the side.
Speaker 1 (06:01):
Yeah. Sure, So that sounds like you were like in
tune with computers, which was kind of like socially new
thing at that time.
Speaker 2 (06:09):
Yes, and it was fascinating. I think I had my
first computer when I was eleven and it was an
Amiga five hundred if you remember them, I do, five
and twelve killer bites and really good graphics actually for
the time.
Speaker 1 (06:20):
I mean I remember back to ZIDEX eighty one I
think is the earliest.
Speaker 2 (06:24):
Okay, right, just for the computer nerds out there, but
certainly exciting times and technology.
Speaker 1 (06:30):
Yeah, yeah, sure. And I mean what were your parents,
What did your parents do growing up?
Speaker 2 (06:34):
Well, my dad worked as a policeman and my mum
was a whole wife from the time I was born,
and so I would say it was a typically kind
of family in a pretty working class area.
Speaker 1 (06:46):
Yeah. And at school, were you I mean the interest
in economics did that sort of come early?
Speaker 2 (06:52):
Do you think or I think that came actually really early.
I was interested in politics and economics from a very
early age. I think even at primary school. I remember
having discussions with my primary school teacher. So that continued
then into high school or what we call gumnasium, so
that's a grammar school basically. And yes, I did take
social studies at grammar school and English and history, and
(07:15):
I loved this kind of stuff.
Speaker 1 (07:16):
Yeah, and you must have been were you still at
school when the war came down? At a Berlin Wall.
Speaker 2 (07:20):
Yes, that was right in the middle of my school
career really, nineteen eighty nine, of course, and we were
glued to the television at the time watching it because
it was really the most exciting thing that could have happened.
Speaker 1 (07:31):
Yeah, I mean, if you're interested in politics, to have
that happening around you was probably quite quite incredible, right.
Speaker 2 (07:37):
Yeah. When the war fell, I was fourteen, and I
was totally aware of what was happening. And actually I
had visited East Berlin just a year before, so I
actually spent a day in East Berlin. Under communism, we
visited West Berlin mainly, but we spent a day in
the East. And if you had asked me back then
whether this wall will ever disappear would have set absolutely not,
because it looked so permanent. And so when it came down,
(07:59):
that came as a big surprise, as a shock really
to all of us, and it was the most exciting time.
Speaker 1 (08:04):
Yeah, yeah, I mean there was a lot of optimism
and all that, but also was a bit of an
economic shock for Germany. Wasn't it to have to absorb
East Germany which was not in great shape?
Speaker 2 (08:14):
That's right? And actually until this day I think actually
the policies that the Germans took when it came to
unification were fundamentally wrong because they didn't give the East
German economy any chance to kind of change or gradually arrive.
For basically, we had monitory union between East and West,
and from that day onwards, the East German economy was
(08:34):
completely uncompetitive. They couldn't evalue their currency, something that might
have been possible in other transformation countries in Eastern Europe.
And so I think unification from an economic perspective actually
didn't work that well.
Speaker 1 (08:46):
Yeah, I mean it's I guess it's like two I mean,
you could say New Zealand Australia or something, but having
suddenly running one monetary policy for two quite different economies.
Speaker 2 (08:56):
That's right, and not just monetary policy, but really from
one day to the next, all apparatus of West German
regulations were put in place in East Germany, and of
course nobody could deal with that.
Speaker 1 (09:05):
Yeah.
Speaker 2 (09:06):
There was another thing. Actually, we subsidized a lot of
the development from west to east. So billions and really
by now twillions of euros were shifted into the East
and subsidized basically capital, well, capital is mobile anyway, so
I'm not sure whether if anything needs to be subsidized
its capital. What might have actually worked better in the
(09:28):
long run would have been to subsidize labor for a while,
at least in East Germany, because the way it happened
it came as a complete shockgun. It actually led to
large parts of the East German population just leaving because
it was so brutal.
Speaker 1 (09:40):
Yeah, yeah, absolutely, so that's happening when you're a teenager.
You obviously were keen to go to university. Was it
straight in with economics at university?
Speaker 2 (09:49):
Yeah? But actually at the time, we had a military
draft in German, so I had a choice between doing
twelve months in the German army or fifteen months of
something else. Because I was always a that I would
be the first to kill myself cleaning my gun. I
did fifteen months of something else, and I worked in
a daycare center for people with mental health problems.
Speaker 1 (10:08):
Oh wow. Yeah, so that was sort of like you
had to do some public service basically exactly.
Speaker 2 (10:12):
So fifteen months of that dealing with people who were
suffering from all sorts of mental problems, and that was
eye opening and quite an experience for a teenager.
Speaker 1 (10:21):
Yeah, I bet. I mean, did it change your attitude
on life?
Speaker 2 (10:25):
It did change my attitude on mental health and mental
problems because I came to recognize them as something absolutely normal,
and it's a disease almost like any else. It can
happen to anyone. And I mean back then in the
nineteen nineties, there was probably still a little bit of
stigma around mental health issues, and just working with our people,
(10:46):
I've quickly got over that and actually realized it for
what it is.
Speaker 1 (10:49):
Yeah. Sure, so you've got a PhD here, doctor of economics.
Oh no, it's not economics.
Speaker 2 (11:01):
It's not economics. I got a doctorate in law.
Speaker 1 (11:03):
Okay, So how did you make your choices around what
to study?
Speaker 2 (11:08):
Well, economics was what I always found fascinating and what
I was interested in at school, and so for me
it was quite a natural choice to go to university
and study economics. But actually the university I chose had
a combined degree, so you did economics and business administration
together all the way up to the master's degree, which
at the time in Germany we called a diploma. And
(11:29):
I did marketing in my business studies, and I did
public finance and public choice on the economics side, and
towards the end of my studies, I was nevertheless quite
disillusioned with economics as a discipline, and I wanted to
do something else. And we had a very good law
teacher at the time, and I took some voluntary law classes,
(11:51):
and so after the master's thesis, I thought, what, actually
this might be something for a PhD, right on the
border of economics and law. And I thought, well, I'll
give to go and and I tried to figure out
where I should do that, and I found, to my
great surprise that our law faculty at Boham University opened
the PhD program to non lawyers. That's why I applied.
(12:12):
And I said, well, I would like to do something
that is a law thesis but with a lot of
economics in it. Would you like to take me on?
And so they did, and so in the end I
got a law PhD. But I've got no law undergraduates
to stand in the court and trying I couldn't. I
lack the proper qualifications for what.
Speaker 1 (12:29):
Was the what was the topic of the PhD.
Speaker 2 (12:33):
Topic of the PhD was actually a critique of German
unfair competition law. That sounds a bit abstract perhaps, but
it's basically the regulation of advertising. I've had done a
few internships with companies and was always puzzled actually be
how complicated advertising law was in Germany. I mean, just
to give you an example, you could not legally offer
(12:55):
your customers a cup of coffee because then some lawyers
would argue that you're putting a psychological pressure compulsion really
to buy on your customers. And so just because he
gave them a cup of coffee, they felt really grateful
now that they had to buy the whole kitchen from you,
and so absurd regulations like that actually drove me into
my PhD thesis and I wanted to critique that, and
(13:17):
I did it from a legal history point of view,
where I went through two hundred years of German legal
history trying to figure out where all of this came from,
and I found it had a lot to do with
Nazi law. And then I compared this with the experience
of Australia. So I spent a year in Australia comparing
with a Trade Practices Act, and my conclusion was, actually,
the Australians do it a lot better than the Germans.
There's much to learn and then I finally did a
(13:38):
law and economics chapter just comparing how unfair competition law
could be done from a liberal economic point of view,
from an Austrian school point of view, and how legal
systems actually deal with it in practice, and whether this
is in any way efficient. And just to conclude this,
I had an example where I do all of these
perspectives together and looked at comparative advertising because it's really
(13:59):
fast there.
Speaker 1 (14:00):
Yeah, so that was your first time this part. I
mean you went to Australia, so obviously you know, just
looking for how you ended up with this connection to
this part of the world. Was that did you stay
in Australia long?
Speaker 2 (14:11):
Yeah. My connection with this part of the words ax
my wife. Right. So what I haven't mentioned is I've
coursed at the real background to my PhD thesis. Was
the design to spend some time with her. Yeah, because
we started off as pen friends when we were when
she was fifteen I was sixteen. We started writing. We
had a pen friendship for eight years.
Speaker 1 (14:29):
So this is one of those classics I sort of
had one old school years. You swounded up and you
found a pin free, yes, and.
Speaker 2 (14:33):
There was no internet, and we didn't telephone because it
was ridiculously expensive back then. It was all before the
liberalization of the tel course, and so we wrote led
to us the old fashioned way, and so whatever I wrote,
it would take about a couple of weeks until I
got an answer from Australia and vice versa.
Speaker 1 (14:48):
Wow.
Speaker 2 (14:48):
We did this for eight years, and then we met
on my first trip to Australia a holiday, and I thought, okay,
and no, one wouldn't need a really good excuse to
spend more time with her, so why not actually include
an Australian chapter into.
Speaker 1 (14:59):
My fantastic Yeah, and so obviously you got married, yes, yeah,
And well I mean from there did you stay in Australia,
because I noticed on your CV you've spent some time
in London, including the House of Lords, which looked interesting.
Speaker 2 (15:12):
That follows straight from that story, because after I finished
a PhD and we said, okay, it's now time to
bring our long distance relationship to a clause and move together.
And London was a compromise. So for me it was
relatively easy because it was before Brexit and you didn't
need a visa at the time as a German to
live in London. It's all changed, of course, for in
(15:33):
Australia it was relatively straightforward visa program exactly. And so
we decided to meet in London, and we got married
in London, so we could actually stay a bit longer.
And yeah, I worked in the House of Lords. That
was my first job I got. And then afterwards I
got a job with a think tank called Policy Exchange,
which turned out to be David Cameron's. But I actually
(15:55):
got this before David Cameron was leader of the Conservative Party,
and it was only after he became leader of the
Exchange became basically his ideas factory and I was chugor
economists there. And then yeah, after four and a half
years in London, we decided, okay, we had enough. My wife, bizarrely,
although she was Australian, wanted to move to Berlin, and
I bizarrely wanted to move back to Sydney. And so
(16:16):
the compromise we had was, I mean, for her it
was relatively easy to get jobs no matter where. For myself,
I said, well, it's a bit harder. So I said, okay,
I'll apply for jobs in both places. We'll see what
comes up, and the best job wins and I got Sydney,
so I won.
Speaker 1 (16:31):
Yeah, so that was that was that was that with
a think tank in Sydney.
Speaker 2 (16:33):
Yes, I was the Center for Independent Studies. I knew
them for my time in Australia when I had studied there,
and I had been in touch with them before, and
so I knew who they were and what they were doing.
And I liked them, and well, they liked me and
hired me. And that's how I ended up back in Sydney.
Speaker 1 (16:47):
Okay, so a bit around off this bit how do
you end up in New Zealand from there?
Speaker 2 (16:52):
So what happened was actually that I met a few
New Zealand That's well, I was working in Australia. We
had conferences and they often came over and so they
me and when it came to the formation of the
New Zealand Initiative, they had heard of me, they had
met me before, and then they asked me whether I
would be interested in leading a New Zealand think tancher
And at the time, I didn't know New Zealand that well,
(17:13):
but sounded interesting, yeah, and I thought why not? And
I was twelve years ago. Initially I thought this might
just be another five six years continuing my normadic lifestyle.
But then we had a son in Wellington and we
had bought a house and suddenly things felt a lot
more settled.
Speaker 1 (17:31):
So now you really are like, you know, you're adopted kiwi.
Speaker 2 (17:34):
I guess well, I'm a naturalized key words passport.
Speaker 1 (17:38):
Yeah, and as soon as you've got kids as well,
that's always a really draws you. It draws you. And
can I ask then, just because I'm curious and I
know that there's a lot to it, But you know, culturally,
have you noticed differences around money in this country compared
to say Germany, particularly growing up massively?
Speaker 2 (17:55):
Yeah? Massively? So where do we want to start? Yeah? Yeah,
I mean for star Germans love cash. It is a
cultural thing. I'm not quite sure where it comes from,
but we do love cash wars. Of course in New
Zealand everything is.
Speaker 1 (18:09):
By contesting because I mean everyone knows the stories of
Germans in the hyperinflation years in the twenties and in
pre war wheelbarrows for the cash and all that sort
of stuff. Do you think there's a cultural hangover from that?
Speaker 2 (18:22):
There might be, And that's the other difference. Actually, Germans
hate inflation with a passion. Yeah, I mean, okay, New
Zealand's have recently had their own experience with inflation, but
in Germany it's quite something. So even when inflation was
still in the you know, one or two percent range,
inflation news every month in Germany that's kind of front
page news because everybody was always panicking. We had this
(18:45):
experience twice. We had the big hyper inflation in the
Weima Republic in the nineteen twenties. We had another case
of hyper inflation after World War two. And so Germans
have actually made the experience that from one day to
the next audio money can be worthless and saw inflation reporting,
even if it's just one or two percent, is always
kind of big news in Germany. So from that perspective,
(19:09):
actually looking at the creation and of the European Central
Bank and the transition into the Euro or the Germans
were was the more skeptical and it's why and when
I look at New Zealand, well, New Zealand's never really
had that experience with hyperinflation. Yes, we've had some periods
where there was a bit more inflation in nineteen seventies,
but then again everybody had that. But this complete eradication
of all your previous wealth in one gore very quickly.
(19:32):
That kind of collapse I think New Zealand's never had. Yeah.
Speaker 1 (19:35):
Also, you come into New Zealand and how does it
look politically because we're an interesting max we sort of
flip flop. We had a fairly long period, you know,
post war until nineteen eighty four where we were almost
sort of into socialist territory or certainly the state was
involved in everything, and it's changed and we know, how
(19:57):
did you see all that when looking in as an outsider.
Speaker 2 (20:01):
Well, first of all, I arrived in twenty twelve, and
if you remember Australian politics at the time, that was
the time of Kevin Rutt and Julia Gillard and later
again Kevin Rudd. It was well, let's put it mildly,
it was a turbulent.
Speaker 1 (20:14):
Time in Australian politics as exactly.
Speaker 2 (20:19):
And so arriving in twenty twelve in New Zealand, I
felt like, oh great, finally and I was in government
and stability. I mean that was just my first impression actually,
and things politically were quite settled in using ye I mean,
whether it was previously Halen Clark or John Key. But
I didn't have the feeling that it was like Australia
where they spopped their prime ministers every fortnight or so,
(20:41):
and that was actually quite nice. It felt good actually
coming from this craziness of Australian politics into New Zealand.
Speaker 1 (20:54):
We'll come back to a little bit more of those
big questions, but I do want to get through some
of our quick fire questions. Just to go back on
some of your experiences with money over the years. Can
I ask one of the ones we love here is
what's the poorest you've ever been?
Speaker 2 (21:08):
Probably when I was a student, I mean obviously, I
mean that's where I was living on some of the
money that I still had for my grandparents. Actually they
were quite nice to leave some money for my studies
for me. Yes, I had a job at university as well,
but yeah, it was not a luxurious life, I would say.
Speaker 1 (21:27):
And flip side of that is what what would be
the when you when you first got a proper job,
like a decent salary. Do you remember what what you
was there? Something you splashed out on, or what what's
the most indulgent purchase you would have gone for?
Speaker 2 (21:39):
Actually I do remember such an incident and that was
actually when I at the civil service, time after school
at the Mental health Decare Center, and my first few
salaries because it wasn't much really were invested into a
video recorder.
Speaker 1 (21:52):
Oh yeah yeah, which was actually quite a big deal.
Speaker 2 (21:54):
It was quite a big deal back then. I mean
you have to explain it for the younger generation.
Speaker 1 (21:58):
Could take you or you could get a movie out
and you could watch a movie at home, and it
was amazing. Yeah, yeah, absolutely. I mean how are you
with money? Do you think so yourself as a without
going into you know, specifics, but are you a good saver?
Do you do all the right things with the personal
finance or are you a spender?
Speaker 2 (22:16):
I actually think I am a saver and I'm an
investor and I like to keep my money together and
i'd like to have full control over it, and I
need to dot or almost onto the last dollar how
much I currently have, otherwise I wouldn't sleep well. But
then again, I'm.
Speaker 1 (22:29):
Sure German, yeah, yeah, so an investor but relatively conservative
then like you're not taking wild risks with well.
Speaker 2 (22:35):
Actually I am taking some risks. I've invested in a
number of ETFs and investment funds. But then again, you
see that's.
Speaker 1 (22:44):
A way to take some risk in a measured way, right.
Speaker 2 (22:46):
Yes, And I've spread it over so many of them
that are trying to cancel each other out, and so
I'm trying to get some return, but I'm trying to
also have a reasonable risk profile.
Speaker 1 (22:55):
Sure, And just like for people listening to ETF is
kind of like a fund that will track a certain
sector of the of the stock market.
Speaker 2 (23:01):
Right, that's exactly right. And so what I've tried to
do is actually combine different regions, different industries, different risk profiles,
different everything, basically just to mix it as much as
I could. Except you remember probably a couple of years ago,
after the Russian invasion of Ukraine, every single Essa class
went on and I something wrong.
Speaker 1 (23:20):
Yeah, well, there are times when you wonder where you
can put money. But during the election campaign last year,
Christopher Luxen was asked how much he spends a week
on groceries and he came up with sixty dollars, which
was a unusual, pets politically thing to say. But are
you are you the grocery shopper in the house, and
do you.
Speaker 2 (23:39):
Know actually that is mainly my wife. I mean I
do occasional shopping, but know that that's typically her territory.
Speaker 1 (23:45):
Yeah, so it's not like you're not controlling the money,
not down to needing to.
Speaker 2 (23:50):
Check or no nor way.
Speaker 1 (23:52):
Yeah, because I say that because I kind of am
like I'm going through the supermarket checking that the onions
are good and all that sort of stuff. How about
we often ask if you buy lotto tickets and if
you're you know, when you imagine winning lotto, how much
would you imagine winning?
Speaker 2 (24:12):
Well, I always have a bad conscience when I do
buy a lot of tickets, which I do occasionally because
as a cold hearted and rational economists, I know this
is nonsense, of course, but I do it for the
thrill of just playing, and also knowing, of course that's
whatever profits the company makes, it goes into good products.
Speaker 1 (24:28):
So that's fine.
Speaker 2 (24:30):
So I don't really plied with the expectation of winning anything,
but just for the fun of it and actually for
doing something good.
Speaker 1 (24:37):
I guess I ask about how much money because sometimes
you know, and I'm thinking about Loto, it might be like,
I'd rather just win two million dollars. I don't want
to win forty four million dollars and turn my life
upside down.
Speaker 2 (24:48):
Say, win forty four million dollars and then just give
the rest away and keep as much as you like.
Speaker 1 (24:51):
Well that's true. Yeah, yeah, yeah, I mean I get
I guess.
Speaker 2 (24:55):
If you don't know what to do with the other
forty two million dollars, I mean, I can give you
my address.
Speaker 1 (24:59):
Yeah, I can fund some research projects that would be
a good idea.
Speaker 2 (25:04):
Yeah.
Speaker 1 (25:04):
Yeah. Coming back to some bigger questions, but that you know,
how much is money important to you? And how much
has it been sort of a byproduct of the career?
Speaker 2 (25:13):
You know, Well, I think money is important, but it
doesn't make you happy, but it calms you down. So
what I really want to see with my money in
my investment is actually that I don't have to worry
too much about what will happen in maybe twenty or
thirty years time. So weirdly, perhaps I think most people
are not quite like that. I've always had this perspective that, well,
(25:37):
you don't want to rely on state pension in the end,
because of my constant moving around anyway, I couldn't actually
bank on any state pension system to pay me anything
because I was always too short in the country, so
I was only spending a few days a few years
and so I always thought I have to kind of
do it for myself. I can't rely on anyone to
(25:58):
really pay me a pension at the end, and so
I always had this idea of being totally self funded
in the end, and that made me quite conservative in
a way.
Speaker 1 (26:07):
Sure, these last questions are sort of kind of a
sitter for you know, given you know that you're at
a think tank and they're sort of policy type questions.
But if you had to say one thing, what do
you think the biggest driver of social inequality is in
the sense of, you know, why some people are rich
some people are poor.
Speaker 2 (26:26):
I think that a too. Actually one is education, and
I'm the best example. So I come from, as I said,
a typical kind of middle class background in a not
so flash part of Germany. But I had an excellent education.
I had a fantastic school, a state school, by the way,
and that the door to all sorts of jobs afterwards,
(26:46):
and education is super important for that kind of social mobility.
The other factor I think that makes a massive difference
is housing, And I mean often housing and education are linked,
but we are now at a situation where, I mean,
for ordinary New Zealander's coming from not so flash backgrounds,
actually owning our house as a major challenge and sometimes
(27:07):
outright impossible. And so I think actually, with the craziness
of our property markets, the property letter has actually lost
its bottom rungs and that is a massive warrior, and
it should wearry us all for social reasons because I
think that is one of the biggest drivers of inequality
in this country. So housing an education, both of them.
Speaker 1 (27:28):
Sure, So I think that it probably sets up the
last question really, which is if we could make you
prime minister for a day, and if prime ministers could
actually wield this kind of power, what would be the
policy you would focus on that you could would want
to bring through to try and address some of those issues.
Speaker 2 (27:46):
I've got so many ideas after twelve years at the
end stuff, but I would really focus on these tools.
In education, I mean, we have a government that's currently
undertaking a lot of reforms, introducing a new curriculum, introducing
changes to teacher education, and new assessment system. So all
of these things are really important. I mean, there's not
that one silver bullet that would fix the whole education system,
(28:08):
but that's roughly what I would do too. And on housing,
I mean, we've had discussions in the past. You know
that I'm a great believer in decentralization and subsidiarity and
giving incentives to councils because I think that's the only
way we can really crack that housing market. But I
would do that, and if I had a third wish,
I would also liberalize or foreign direct investment regime.
Speaker 1 (28:29):
Yeah, which may be going to happen to some extent.
Speaker 2 (28:31):
Looks like it. I think it's in the Coalition agreement.
Speaker 1 (28:34):
Yeah, but I guess you know, with the housing and
the logo, the idea, I mean, we've talked before about
localism does seem difficult for even seen to right parties
in this country. It's sort of there's a lot of
central control in Wellington right.
Speaker 2 (28:48):
Now, yes, and much more so than in most other countries.
So we have more than ninety percent of our texas
and tax revenue and spending control by central government in Wellington.
For most other developed countries it's more like a two
thirds kind of central control. And New Zealand's been like
that for a long time, although not forever. So if
(29:09):
you go into the nineteenth century, can find that New
Zealand was way more decentralized than it is today. New
Zealand back then looked a bit more like Germany or
Switzerland today, so that there is a localist tradition even
in New Zealand. I think it's just something that we
have to rediscover.
Speaker 1 (29:23):
Well, look, that is fantastic, all of it. We're going
to leave it there. But thanks for being on Money Talks.
Thank you Liam, Thanks for listening to this episode of
Money Talks. If you want to get in touch, drop
me a line at Liam dot Dan at inzme dot
co dot nz and you can read more from me
at inzidherld dot co dot nz. Thanks to my producer
(29:43):
Ethan Sills and sound engineer LeAnn McDonald. Follow Money Talks
on iHeartRadio or wherever you get your podcasts, with new
episodes available every Thursday,
Madam. Hi, I'm Liam Dan, New Zealand Herald Business Editor
at Large, and welcome to this episode of Money Talks.
This is a podcast about money, but we're not going
to tell you how to get rich, and we're not
going to try and pick the next interest rate move.
In this series, I'll be talking to interesting New Zealanders
(00:24):
about how money has shaped their lives and what they've
learned over the years. For today's podcast, I'm joined by
doctor Oliver Hartwich, economist and CEO of the independent public
policy think tank, the New Zealand Initiative. You're Oliver. Welcome
to Money Talks.
Speaker 2 (00:39):
Great to be with you, Liam.
Speaker 1 (00:41):
Hey, look, just regular business newsreaders will know your name
well and the initiative in its work, but can you
just describe a little bit you know, what is a
think tank exactly and how do you see its role?
Speaker 2 (00:52):
Okay, So, as you said, we are think tank. We're
also a business membership organization, but we work predominantly as
a think tanker. That means we are thinking about the
big issues affecting New Zealand. We are trying to make
New Zealand a better country for all its people, and
we're trying to do that through policy research. So we're
looking into issues ranging from education to housing, to social policy, transport,
(01:13):
local government, anything that we think needs to be fixed
and could be better, because we want to create a
better future for this country.
Speaker 1 (01:20):
Sure, and economics kind of goes to the heart of that.
Speaker 2 (01:23):
A lot of it, A lot of it is economics,
but not all So in our team we're quite diverse. Actually,
We've got a psychologist, we have someone from a classics background,
so we have quite a range of different specialties in
our team.
Speaker 1 (01:37):
Sure, and what would you say to people who are
inevitably particularly on the left that they would say, oh,
right wing thing tank. What do you say when you
hear yourself described that way?
Speaker 2 (01:46):
I would say evidence based think tank because we do
our research, and we do our job well and you
can look at our research on our website and you
can see that all our research is extremely well documented,
well researched by people who really know what they're doing, and.
Speaker 1 (01:59):
You kind of, I guess you'd say, quite focused case
by case on what the you know, the right prescription
of policy is for different aspects of the economy and
social life.
Speaker 2 (02:09):
And of course when you're doing research into fiscal policy,
that differs from monetary policy, and it certainly differs from
what we're doing in education.
Speaker 1 (02:16):
Yeah, sure, okay, Look, we'll come back to a bit
of that. And it was some questions later on, but
I wanted to go right back because people might have
already guessed from your accent. Really I'm trying to hide
it so well that you didn't grow up in New Zealand.
So you can you tell us a little bit about well,
we start with your first memories of money and what
that was, and maybe from there where you were growing up.
Speaker 2 (02:36):
Okay, So, for my first memories of money are dorge marks, yea,
and that's where I'm from. So I was born in
West Germany in nineteen seventy five, and so I grew
up with the German mark. So if you're asking me
about my first memories of money, it is that currency
that no longer exists, and that's the money with which
I grew up. And we had marks, we had Phoenix
(02:57):
and Germany of course has a very complicated history with
money because we can probably talk about this later, but
there were quite a few instances of hyperinflations before my time,
but they have certainly shaped how German still feel about
money until this day.
Speaker 1 (03:11):
Sure, but you're growing up in the so you're growing
up with the late seventies in the childhood in the eighties.
That was a pretty strong time for the weist German economy,
wasn't it.
Speaker 2 (03:21):
That was the time immediately after the so called economic miracle.
So after World War II, Germany of course was in ruins.
It was also morally discredited. And out of that ruins
came a surprisingly strong economy because of the policies introduced
by one man, and that was not Rich Earhart. So
Aerhard was the economics minister first under Chancellor Conohad Ardenaw
(03:42):
and he later became Chancellor himself, and Aerhart started something
that he called the social market economy. It is an
economy that was basically free, and Erhardt argued it was
an economy that was inherently social because it produced prosperity
for all and that was his big slogan, prosperity for
all people after the war, and that worked really well.
(04:02):
And after about twenty years under that prescription, Germany actually
overtook Britain in gdpeper capital for the first time ever.
So that really worked well. And so when I grew
up that was really the period straight after that economic miracle,
So it was a time when West Germany at least
had enormous amounts of prosperity.
Speaker 1 (04:20):
Yeah, I mean, did you feel that growing up, that
sense of you know, economic prosperity around you.
Speaker 2 (04:26):
I guess yes I did, although I should probably qualify
that a bit. The region where I'm from is actually
Germany's version of Liverpool, so it is a region that
was built on coal and steel, but that region had
been in crisis since the late nineteen fifty because German
cool became uncompetitive, and so it was an area that
was always struggling when I grew up, with its predominant sectors.
(04:50):
But apart from that, I mean there was a sense
of stability, and the whole country was doing well. It
was just something that was specific to my region where
you could feel that the transition actually from this these
old industries to something you hadn't actually properly started.
Speaker 1 (05:04):
Yeah. Sure. And so did you get pocket money? And
did you go and spend that pocket money somewhere?
Speaker 2 (05:09):
I certainly did get pocket money, and I remember my
parents started giving me fifty phoenix per week from whenever
six and that automatically increased by fifty phoenix for each year.
Speaker 1 (05:18):
Yeah. Yeah, and what did you spend it on?
Speaker 2 (05:21):
Well, at the time, I think that would have still
brought you probably an ice cream in a corner with
ye two scoops. I mean those were the days. And
inflation today of course, means that you probably now look
at about a europe per scoop, but back then that
was probably enough for an ice cream a week.
Speaker 1 (05:35):
So it's actually, I mean, it's not that different. When
I talked to people growing up in New Zealand and
the seventies or eighties, they talk about going to what
we call the dairy obviously, Yeah, but a corner sharp something.
Speaker 2 (05:44):
Like that exactly.
Speaker 1 (05:45):
Yeah, yeah, absolutely. And did you have a part time
job and all that sort of stuff. Did you deliver papers?
Speaker 2 (05:52):
And I did actually deliver papers for a while, and
then I also help people with their computer needs, and
I also helped tutoring, so yes, I had a few
jobs on the side.
Speaker 1 (06:01):
Yeah. Sure, So that sounds like you were like in
tune with computers, which was kind of like socially new
thing at that time.
Speaker 2 (06:09):
Yes, and it was fascinating. I think I had my
first computer when I was eleven and it was an
Amiga five hundred if you remember them, I do, five
and twelve killer bites and really good graphics actually for
the time.
Speaker 1 (06:20):
I mean I remember back to ZIDEX eighty one I
think is the earliest.
Speaker 2 (06:24):
Okay, right, just for the computer nerds out there, but
certainly exciting times and technology.
Speaker 1 (06:30):
Yeah, yeah, sure. And I mean what were your parents,
What did your parents do growing up?
Speaker 2 (06:34):
Well, my dad worked as a policeman and my mum
was a whole wife from the time I was born,
and so I would say it was a typically kind
of family in a pretty working class area.
Speaker 1 (06:46):
Yeah. And at school, were you I mean the interest
in economics did that sort of come early?
Speaker 2 (06:52):
Do you think or I think that came actually really early.
I was interested in politics and economics from a very
early age. I think even at primary school. I remember
having discussions with my primary school teacher. So that continued
then into high school or what we call gumnasium, so
that's a grammar school basically. And yes, I did take
social studies at grammar school and English and history, and
(07:15):
I loved this kind of stuff.
Speaker 1 (07:16):
Yeah, and you must have been were you still at
school when the war came down? At a Berlin Wall.
Speaker 2 (07:20):
Yes, that was right in the middle of my school
career really, nineteen eighty nine, of course, and we were
glued to the television at the time watching it because
it was really the most exciting thing that could have happened.
Speaker 1 (07:31):
Yeah, I mean, if you're interested in politics, to have
that happening around you was probably quite quite incredible, right.
Speaker 2 (07:37):
Yeah. When the war fell, I was fourteen, and I
was totally aware of what was happening. And actually I
had visited East Berlin just a year before, so I
actually spent a day in East Berlin. Under communism, we
visited West Berlin mainly, but we spent a day in
the East. And if you had asked me back then
whether this wall will ever disappear would have set absolutely not,
because it looked so permanent. And so when it came down,
(07:59):
that came as a big surprise, as a shock really
to all of us, and it was the most exciting time.
Speaker 1 (08:04):
Yeah, yeah, I mean there was a lot of optimism
and all that, but also was a bit of an
economic shock for Germany. Wasn't it to have to absorb
East Germany which was not in great shape?
Speaker 2 (08:14):
That's right? And actually until this day I think actually
the policies that the Germans took when it came to
unification were fundamentally wrong because they didn't give the East
German economy any chance to kind of change or gradually arrive.
For basically, we had monitory union between East and West,
and from that day onwards, the East German economy was
(08:34):
completely uncompetitive. They couldn't evalue their currency, something that might
have been possible in other transformation countries in Eastern Europe.
And so I think unification from an economic perspective actually
didn't work that well.
Speaker 1 (08:46):
Yeah, I mean it's I guess it's like two I mean,
you could say New Zealand Australia or something, but having
suddenly running one monetary policy for two quite different economies.
Speaker 2 (08:56):
That's right, and not just monetary policy, but really from
one day to the next, all apparatus of West German
regulations were put in place in East Germany, and of
course nobody could deal with that.
Speaker 1 (09:05):
Yeah.
Speaker 2 (09:06):
There was another thing. Actually, we subsidized a lot of
the development from west to east. So billions and really
by now twillions of euros were shifted into the East
and subsidized basically capital, well, capital is mobile anyway, so
I'm not sure whether if anything needs to be subsidized
its capital. What might have actually worked better in the
(09:28):
long run would have been to subsidize labor for a while,
at least in East Germany, because the way it happened
it came as a complete shockgun. It actually led to
large parts of the East German population just leaving because
it was so brutal.
Speaker 1 (09:40):
Yeah, yeah, absolutely, so that's happening when you're a teenager.
You obviously were keen to go to university. Was it
straight in with economics at university?
Speaker 2 (09:49):
Yeah? But actually at the time, we had a military
draft in German, so I had a choice between doing
twelve months in the German army or fifteen months of
something else. Because I was always a that I would
be the first to kill myself cleaning my gun. I
did fifteen months of something else, and I worked in
a daycare center for people with mental health problems.
Speaker 1 (10:08):
Oh wow. Yeah, so that was sort of like you
had to do some public service basically exactly.
Speaker 2 (10:12):
So fifteen months of that dealing with people who were
suffering from all sorts of mental problems, and that was
eye opening and quite an experience for a teenager.
Speaker 1 (10:21):
Yeah, I bet. I mean, did it change your attitude
on life?
Speaker 2 (10:25):
It did change my attitude on mental health and mental
problems because I came to recognize them as something absolutely normal,
and it's a disease almost like any else. It can
happen to anyone. And I mean back then in the
nineteen nineties, there was probably still a little bit of
stigma around mental health issues, and just working with our people,
(10:46):
I've quickly got over that and actually realized it for
what it is.
Speaker 1 (10:49):
Yeah. Sure, so you've got a PhD here, doctor of economics.
Oh no, it's not economics.
Speaker 2 (11:01):
It's not economics. I got a doctorate in law.
Speaker 1 (11:03):
Okay, So how did you make your choices around what
to study?
Speaker 2 (11:08):
Well, economics was what I always found fascinating and what
I was interested in at school, and so for me
it was quite a natural choice to go to university
and study economics. But actually the university I chose had
a combined degree, so you did economics and business administration
together all the way up to the master's degree, which
at the time in Germany we called a diploma. And
(11:29):
I did marketing in my business studies, and I did
public finance and public choice on the economics side, and
towards the end of my studies, I was nevertheless quite
disillusioned with economics as a discipline, and I wanted to
do something else. And we had a very good law
teacher at the time, and I took some voluntary law classes,
(11:51):
and so after the master's thesis, I thought, what, actually
this might be something for a PhD, right on the
border of economics and law. And I thought, well, I'll
give to go and and I tried to figure out
where I should do that, and I found, to my
great surprise that our law faculty at Boham University opened
the PhD program to non lawyers. That's why I applied.
(12:12):
And I said, well, I would like to do something
that is a law thesis but with a lot of
economics in it. Would you like to take me on?
And so they did, and so in the end I
got a law PhD. But I've got no law undergraduates
to stand in the court and trying I couldn't. I
lack the proper qualifications for what.
Speaker 1 (12:29):
Was the what was the topic of the PhD.
Speaker 2 (12:33):
Topic of the PhD was actually a critique of German
unfair competition law. That sounds a bit abstract perhaps, but
it's basically the regulation of advertising. I've had done a
few internships with companies and was always puzzled actually be
how complicated advertising law was in Germany. I mean, just
to give you an example, you could not legally offer
(12:55):
your customers a cup of coffee because then some lawyers
would argue that you're putting a psychological pressure compulsion really
to buy on your customers. And so just because he
gave them a cup of coffee, they felt really grateful
now that they had to buy the whole kitchen from you,
and so absurd regulations like that actually drove me into
my PhD thesis and I wanted to critique that, and
(13:17):
I did it from a legal history point of view,
where I went through two hundred years of German legal
history trying to figure out where all of this came from,
and I found it had a lot to do with
Nazi law. And then I compared this with the experience
of Australia. So I spent a year in Australia comparing
with a Trade Practices Act, and my conclusion was, actually,
the Australians do it a lot better than the Germans.
There's much to learn and then I finally did a
(13:38):
law and economics chapter just comparing how unfair competition law
could be done from a liberal economic point of view,
from an Austrian school point of view, and how legal
systems actually deal with it in practice, and whether this
is in any way efficient. And just to conclude this,
I had an example where I do all of these
perspectives together and looked at comparative advertising because it's really
(13:59):
fast there.
Speaker 1 (14:00):
Yeah, so that was your first time this part. I
mean you went to Australia, so obviously you know, just
looking for how you ended up with this connection to
this part of the world. Was that did you stay
in Australia long?
Speaker 2 (14:11):
Yeah. My connection with this part of the words ax
my wife. Right. So what I haven't mentioned is I've
coursed at the real background to my PhD thesis. Was
the design to spend some time with her. Yeah, because
we started off as pen friends when we were when
she was fifteen I was sixteen. We started writing. We
had a pen friendship for eight years.
Speaker 1 (14:29):
So this is one of those classics I sort of
had one old school years. You swounded up and you
found a pin free, yes, and.
Speaker 2 (14:33):
There was no internet, and we didn't telephone because it
was ridiculously expensive back then. It was all before the
liberalization of the tel course, and so we wrote led
to us the old fashioned way, and so whatever I wrote,
it would take about a couple of weeks until I
got an answer from Australia and vice versa.
Speaker 1 (14:48):
Wow.
Speaker 2 (14:48):
We did this for eight years, and then we met
on my first trip to Australia a holiday, and I thought, okay,
and no, one wouldn't need a really good excuse to
spend more time with her, so why not actually include
an Australian chapter into.
Speaker 1 (14:59):
My fantastic Yeah, and so obviously you got married, yes, yeah,
And well I mean from there did you stay in Australia,
because I noticed on your CV you've spent some time
in London, including the House of Lords, which looked interesting.
Speaker 2 (15:12):
That follows straight from that story, because after I finished
a PhD and we said, okay, it's now time to
bring our long distance relationship to a clause and move together.
And London was a compromise. So for me it was
relatively easy because it was before Brexit and you didn't
need a visa at the time as a German to
live in London. It's all changed, of course, for in
(15:33):
Australia it was relatively straightforward visa program exactly. And so
we decided to meet in London, and we got married
in London, so we could actually stay a bit longer.
And yeah, I worked in the House of Lords. That
was my first job I got. And then afterwards I
got a job with a think tank called Policy Exchange,
which turned out to be David Cameron's. But I actually
(15:55):
got this before David Cameron was leader of the Conservative Party,
and it was only after he became leader of the
Exchange became basically his ideas factory and I was chugor
economists there. And then yeah, after four and a half
years in London, we decided, okay, we had enough. My wife, bizarrely,
although she was Australian, wanted to move to Berlin, and
I bizarrely wanted to move back to Sydney. And so
(16:16):
the compromise we had was, I mean, for her it
was relatively easy to get jobs no matter where. For myself,
I said, well, it's a bit harder. So I said, okay,
I'll apply for jobs in both places. We'll see what
comes up, and the best job wins and I got Sydney,
so I won.
Speaker 1 (16:31):
Yeah, so that was that was that was that with
a think tank in Sydney.
Speaker 2 (16:33):
Yes, I was the Center for Independent Studies. I knew
them for my time in Australia when I had studied there,
and I had been in touch with them before, and
so I knew who they were and what they were doing.
And I liked them, and well, they liked me and
hired me. And that's how I ended up back in Sydney.
Speaker 1 (16:47):
Okay, so a bit around off this bit how do
you end up in New Zealand from there?
Speaker 2 (16:52):
So what happened was actually that I met a few
New Zealand That's well, I was working in Australia. We
had conferences and they often came over and so they
me and when it came to the formation of the
New Zealand Initiative, they had heard of me, they had
met me before, and then they asked me whether I
would be interested in leading a New Zealand think tancher
And at the time, I didn't know New Zealand that well,
(17:13):
but sounded interesting, yeah, and I thought why not? And
I was twelve years ago. Initially I thought this might
just be another five six years continuing my normadic lifestyle.
But then we had a son in Wellington and we
had bought a house and suddenly things felt a lot
more settled.
Speaker 1 (17:31):
So now you really are like, you know, you're adopted kiwi.
Speaker 2 (17:34):
I guess well, I'm a naturalized key words passport.
Speaker 1 (17:38):
Yeah, and as soon as you've got kids as well,
that's always a really draws you. It draws you. And
can I ask then, just because I'm curious and I
know that there's a lot to it, But you know, culturally,
have you noticed differences around money in this country compared
to say Germany, particularly growing up massively?
Speaker 2 (17:55):
Yeah? Massively? So where do we want to start? Yeah? Yeah,
I mean for star Germans love cash. It is a
cultural thing. I'm not quite sure where it comes from,
but we do love cash wars. Of course in New
Zealand everything is.
Speaker 1 (18:09):
By contesting because I mean everyone knows the stories of
Germans in the hyperinflation years in the twenties and in
pre war wheelbarrows for the cash and all that sort
of stuff. Do you think there's a cultural hangover from that?
Speaker 2 (18:22):
There might be, And that's the other difference. Actually, Germans
hate inflation with a passion. Yeah, I mean, okay, New
Zealand's have recently had their own experience with inflation, but
in Germany it's quite something. So even when inflation was
still in the you know, one or two percent range,
inflation news every month in Germany that's kind of front
page news because everybody was always panicking. We had this
(18:45):
experience twice. We had the big hyper inflation in the
Weima Republic in the nineteen twenties. We had another case
of hyper inflation after World War two. And so Germans
have actually made the experience that from one day to
the next audio money can be worthless and saw inflation reporting,
even if it's just one or two percent, is always
kind of big news in Germany. So from that perspective,
(19:09):
actually looking at the creation and of the European Central
Bank and the transition into the Euro or the Germans
were was the more skeptical and it's why and when
I look at New Zealand, well, New Zealand's never really
had that experience with hyperinflation. Yes, we've had some periods
where there was a bit more inflation in nineteen seventies,
but then again everybody had that. But this complete eradication
of all your previous wealth in one gore very quickly.
(19:32):
That kind of collapse I think New Zealand's never had. Yeah.
Speaker 1 (19:35):
Also, you come into New Zealand and how does it
look politically because we're an interesting max we sort of
flip flop. We had a fairly long period, you know,
post war until nineteen eighty four where we were almost
sort of into socialist territory or certainly the state was
involved in everything, and it's changed and we know, how
(19:57):
did you see all that when looking in as an outsider.
Speaker 2 (20:01):
Well, first of all, I arrived in twenty twelve, and
if you remember Australian politics at the time, that was
the time of Kevin Rutt and Julia Gillard and later
again Kevin Rudd. It was well, let's put it mildly,
it was a turbulent.
Speaker 1 (20:14):
Time in Australian politics as exactly.
Speaker 2 (20:19):
And so arriving in twenty twelve in New Zealand, I
felt like, oh great, finally and I was in government
and stability. I mean that was just my first impression actually,
and things politically were quite settled in using ye I mean,
whether it was previously Halen Clark or John Key. But
I didn't have the feeling that it was like Australia
where they spopped their prime ministers every fortnight or so,
(20:41):
and that was actually quite nice. It felt good actually
coming from this craziness of Australian politics into New Zealand.
Speaker 1 (20:54):
We'll come back to a little bit more of those
big questions, but I do want to get through some
of our quick fire questions. Just to go back on
some of your experiences with money over the years. Can
I ask one of the ones we love here is
what's the poorest you've ever been?
Speaker 2 (21:08):
Probably when I was a student, I mean obviously, I
mean that's where I was living on some of the
money that I still had for my grandparents. Actually they
were quite nice to leave some money for my studies
for me. Yes, I had a job at university as well,
but yeah, it was not a luxurious life, I would say.
Speaker 1 (21:27):
And flip side of that is what what would be
the when you when you first got a proper job,
like a decent salary. Do you remember what what you
was there? Something you splashed out on, or what what's
the most indulgent purchase you would have gone for?
Speaker 2 (21:39):
Actually I do remember such an incident and that was
actually when I at the civil service, time after school
at the Mental health Decare Center, and my first few
salaries because it wasn't much really were invested into a
video recorder.
Speaker 1 (21:52):
Oh yeah yeah, which was actually quite a big deal.
Speaker 2 (21:54):
It was quite a big deal back then. I mean
you have to explain it for the younger generation.
Speaker 1 (21:58):
Could take you or you could get a movie out
and you could watch a movie at home, and it
was amazing. Yeah, yeah, absolutely. I mean how are you
with money? Do you think so yourself as a without
going into you know, specifics, but are you a good saver?
Do you do all the right things with the personal
finance or are you a spender?
Speaker 2 (22:16):
I actually think I am a saver and I'm an
investor and I like to keep my money together and
i'd like to have full control over it, and I
need to dot or almost onto the last dollar how
much I currently have, otherwise I wouldn't sleep well. But
then again, I'm.
Speaker 1 (22:29):
Sure German, yeah, yeah, so an investor but relatively conservative
then like you're not taking wild risks with well.
Speaker 2 (22:35):
Actually I am taking some risks. I've invested in a
number of ETFs and investment funds. But then again, you
see that's.
Speaker 1 (22:44):
A way to take some risk in a measured way, right.
Speaker 2 (22:46):
Yes, And I've spread it over so many of them
that are trying to cancel each other out, and so
I'm trying to get some return, but I'm trying to
also have a reasonable risk profile.
Speaker 1 (22:55):
Sure, And just like for people listening to ETF is
kind of like a fund that will track a certain
sector of the of the stock market.
Speaker 2 (23:01):
Right, that's exactly right. And so what I've tried to
do is actually combine different regions, different industries, different risk profiles,
different everything, basically just to mix it as much as
I could. Except you remember probably a couple of years ago,
after the Russian invasion of Ukraine, every single Essa class
went on and I something wrong.
Speaker 1 (23:20):
Yeah, well, there are times when you wonder where you
can put money. But during the election campaign last year,
Christopher Luxen was asked how much he spends a week
on groceries and he came up with sixty dollars, which
was a unusual, pets politically thing to say. But are
you are you the grocery shopper in the house, and
do you.
Speaker 2 (23:39):
Know actually that is mainly my wife. I mean I
do occasional shopping, but know that that's typically her territory.
Speaker 1 (23:45):
Yeah, so it's not like you're not controlling the money,
not down to needing to.
Speaker 2 (23:50):
Check or no nor way.
Speaker 1 (23:52):
Yeah, because I say that because I kind of am
like I'm going through the supermarket checking that the onions
are good and all that sort of stuff. How about
we often ask if you buy lotto tickets and if
you're you know, when you imagine winning lotto, how much
would you imagine winning?
Speaker 2 (24:12):
Well, I always have a bad conscience when I do
buy a lot of tickets, which I do occasionally because
as a cold hearted and rational economists, I know this
is nonsense, of course, but I do it for the
thrill of just playing, and also knowing, of course that's
whatever profits the company makes, it goes into good products.
Speaker 1 (24:28):
So that's fine.
Speaker 2 (24:30):
So I don't really plied with the expectation of winning anything,
but just for the fun of it and actually for
doing something good.
Speaker 1 (24:37):
I guess I ask about how much money because sometimes
you know, and I'm thinking about Loto, it might be like,
I'd rather just win two million dollars. I don't want
to win forty four million dollars and turn my life
upside down.
Speaker 2 (24:48):
Say, win forty four million dollars and then just give
the rest away and keep as much as you like.
Speaker 1 (24:51):
Well that's true. Yeah, yeah, yeah, I mean I get
I guess.
Speaker 2 (24:55):
If you don't know what to do with the other
forty two million dollars, I mean, I can give you
my address.
Speaker 1 (24:59):
Yeah, I can fund some research projects that would be
a good idea.
Speaker 2 (25:04):
Yeah.
Speaker 1 (25:04):
Yeah. Coming back to some bigger questions, but that you know,
how much is money important to you? And how much
has it been sort of a byproduct of the career?
Speaker 2 (25:13):
You know, Well, I think money is important, but it
doesn't make you happy, but it calms you down. So
what I really want to see with my money in
my investment is actually that I don't have to worry
too much about what will happen in maybe twenty or
thirty years time. So weirdly, perhaps I think most people
are not quite like that. I've always had this perspective that, well,
(25:37):
you don't want to rely on state pension in the end,
because of my constant moving around anyway, I couldn't actually
bank on any state pension system to pay me anything
because I was always too short in the country, so
I was only spending a few days a few years
and so I always thought I have to kind of
do it for myself. I can't rely on anyone to
(25:58):
really pay me a pension at the end, and so
I always had this idea of being totally self funded
in the end, and that made me quite conservative in
a way.
Speaker 1 (26:07):
Sure, these last questions are sort of kind of a
sitter for you know, given you know that you're at
a think tank and they're sort of policy type questions.
But if you had to say one thing, what do
you think the biggest driver of social inequality is in
the sense of, you know, why some people are rich
some people are poor.
Speaker 2 (26:26):
I think that a too. Actually one is education, and
I'm the best example. So I come from, as I said,
a typical kind of middle class background in a not
so flash part of Germany. But I had an excellent education.
I had a fantastic school, a state school, by the way,
and that the door to all sorts of jobs afterwards,
(26:46):
and education is super important for that kind of social mobility.
The other factor I think that makes a massive difference
is housing, And I mean often housing and education are linked,
but we are now at a situation where, I mean,
for ordinary New Zealander's coming from not so flash backgrounds,
actually owning our house as a major challenge and sometimes
(27:07):
outright impossible. And so I think actually, with the craziness
of our property markets, the property letter has actually lost
its bottom rungs and that is a massive warrior, and
it should wearry us all for social reasons because I
think that is one of the biggest drivers of inequality
in this country. So housing an education, both of them.
Speaker 1 (27:28):
Sure, So I think that it probably sets up the
last question really, which is if we could make you
prime minister for a day, and if prime ministers could
actually wield this kind of power, what would be the
policy you would focus on that you could would want
to bring through to try and address some of those issues.
Speaker 2 (27:46):
I've got so many ideas after twelve years at the
end stuff, but I would really focus on these tools.
In education, I mean, we have a government that's currently
undertaking a lot of reforms, introducing a new curriculum, introducing
changes to teacher education, and new assessment system. So all
of these things are really important. I mean, there's not
that one silver bullet that would fix the whole education system,
(28:08):
but that's roughly what I would do too. And on housing,
I mean, we've had discussions in the past. You know
that I'm a great believer in decentralization and subsidiarity and
giving incentives to councils because I think that's the only
way we can really crack that housing market. But I
would do that, and if I had a third wish,
I would also liberalize or foreign direct investment regime.
Speaker 1 (28:29):
Yeah, which may be going to happen to some extent.
Speaker 2 (28:31):
Looks like it. I think it's in the Coalition agreement.
Speaker 1 (28:34):
Yeah, but I guess you know, with the housing and
the logo, the idea, I mean, we've talked before about
localism does seem difficult for even seen to right parties
in this country. It's sort of there's a lot of
central control in Wellington right.
Speaker 2 (28:48):
Now, yes, and much more so than in most other countries.
So we have more than ninety percent of our texas
and tax revenue and spending control by central government in Wellington.
For most other developed countries it's more like a two
thirds kind of central control. And New Zealand's been like
that for a long time, although not forever. So if
(29:09):
you go into the nineteenth century, can find that New
Zealand was way more decentralized than it is today. New
Zealand back then looked a bit more like Germany or
Switzerland today, so that there is a localist tradition even
in New Zealand. I think it's just something that we
have to rediscover.
Speaker 1 (29:23):
Well, look, that is fantastic, all of it. We're going
to leave it there. But thanks for being on Money Talks.
Thank you Liam, Thanks for listening to this episode of
Money Talks. If you want to get in touch, drop
me a line at Liam dot Dan at inzme dot
co dot nz and you can read more from me
at inzidherld dot co dot nz. Thanks to my producer
(29:43):
Ethan Sills and sound engineer LeAnn McDonald. Follow Money Talks
on iHeartRadio or wherever you get your podcasts, with new
episodes available every Thursday,
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