Economics matters, but it doesn't have all the answers
BookConfessions of a Meddlesome Economist, by Ian Harper (Acorn Press, 2018)
By Phil Dolan
July 15 2019Ian Harper’s Confessions of a Meddlesome Economist is, in his own words, intended to be the outworking of his struggle to reconcile his profession and his faith over the past 30 years, and it succeeds admirably in achieving that aim.
The book also provides a good overview of the economics profession as it applies both in academia and more widely, from the perspective of a respected practitioner who has been, and remains, a major contributor to some of the most important policy decisions in Australia’s recent history. Indeed, the book’s brief but illuminating summary of Australia’s economic history since 1788 is one of its many highlights, as is the author’s readable but rigorous definition of some of the key terms used by professional economists. Those wanting to know exactly what is involved in considering the trade-off between equity and efficiency, what moral hazard and opportunity cost are, and how normative and positive economics differ, will find their answers here.
Reading the views of the former Chair of the Australian Fair Pay Commission on the pros and cons of a minimum wage, and the extent to which such a policy might help or hinder those it is intended to benefit, provides an informed, and informative, insight into one of the key debates of our time. Similar comments apply for those curious about, and impacted by, the role and decisions of bodies such as the Reserve Bank – in other words, anyone who has ever borrowed or loaned money. The author’s reflections on what has, and hasn’t, changed about the Bank from his time there as a junior economist in the early 1980s to his current position as a Board member will resonate with anyone who has spent time at significantly different levels in a long-lived institution.
The book ranges widely over the role that solid economic thinking can play in the betterment of society, and covers topics such as the outlook for rural and regional Australia, the need to look beyond our current sources of prosperity and the imperative for a move to a “knowledge economy”, and technological innovations and new business models such as Uber.
Harper makes a good case that economics matters, and it matters a lot, noting that market-based economic policy has lifted billions worldwide out of poverty in the last fifty years. He is also candid about the discipline’s limitations, and, in particular, the ways in which some of its fundamental underlying assumptions, for example that individuals are driven by self-interest, are in conflict with the values and tenets of the Christian faith. As he notes, “economics makes various claims about what motivates people and makes them happy that jar with a Christian understanding of God’s will for humankind”. He also discusses the ways in which market failures can contribute to serious global issues such as climate change. His views on the role that Christian economists can play in addressing some of these issues will be of real interest to those contemplating a career in the area, or even for those wanting to know what might be possible.
The book’s final chapter, in which he warns against allowing one’s profession to become too great a source of meaning in one’s life, is sound advice, and applies to people of any faith, or indeed none at all. He is likewise critical of those aspects of society that encourage materialism, and an indifference towards the disadvantaged. While economics has much to offer and can, and does, play a role in improving the earthly lives of many, Ian Harper’s book is a well written and useful reminder that it does not, and will never have, all the answers.
Phil Dolan is a private equity investor, and adjunct professor at La Trobe University. He was previously Dean of the Business School at the University of Western Australian, and worked in the financial services industry.
He is on the Board of the Australia College of Theology.