New Zealand Herald Business Editor at Large Liam Dann is releasing his first book, BBQ Economics - How money works and why it matters. Photo / Jason Oxenham
What exactly is economics? I should know, right? I’m supposed to be an expert. I’ve been writing about it for almost 25 years, mostly in the business pages of the New Zealand Herald.
Now I’ve written a book about it, which is a bit audacious.
I’m not an economist though, that’s important. I’m a journalist, I don’t do the complex maths or make the graphs like real economists do.
I listen to the stories economists tell. I try to make sense of them and re-tell them in a way that helps people understand what’s going on in this crazy, brutal, capitalist world.
In recent years, economics has become a kind of soap opera that dominates our public debate.
We have celebrity economists, media stars who predict the future or confirm our suspicions about the world - or confound them.
We livestream Reserve Bank press conferences and debate inflation and interest rates and recession risk on social media. We wonder about how to improve productivity and make the country a wealthier place.
To the uninitiated it can be daunting stuff, like coming in on Game of Thrones at series four.
Economics does have its own language. But so does hip hop or cricket or gardening - or any number of other pastimes.
We can all learn some rules and jargon in a specialist area if we want to.
We all think about economics every day. Everyone thinks about money, even if it’s just that we’d like some of more of it.
We think about paying our bills, we think about saving for our retirement, or for a holiday. We think about what that drunken bender did to our credit card balance on Friday night.
We dream about winning Lotto, we imagine being rich, we worry about being poor.
Economics is thinking about money and all the things that money represents. It’s thinking about the value of things: resources, needs, wants and luxuries.
What value do we put on our time and labour? What price do we put on security?
Economics is a way of framing the choices we have in front of us so we can make better decisions.
It can also be fun, I reckon.
Of course, for a lot of us, economics was just that class you took in the sixth form because your parents thought you should learn something about money.
That was me anyway, sitting down the back of a cold, dingy room in the C Block of Cashmere High School, sometime in the late 1980s.
I remember being surrounded by my most disruptive buddies, watching an unreasonably harassed and jaded teacher scrawl supply and demand curves nervously on a whiteboard.
High school economics teachers are condemned to suffer the derision of smart-arsed kids who conclude that if they really knew about money, they wouldn’t be there in that stuffy classroom, teaching a bunch of ungrateful sixth formers.
That isn’t true or fair. You can know all there is to know about economics and not get rich.
You can love economics and just not care enough about wealth to bother chasing it.
Or, if you take it too seriously, it might even stop you getting rich.
Economics is often more about highlighting risks than opportunities; pointing out what could go wrong.
It’s a famously pessimistic discipline.
In the 19th century, economics was dubbed “the dismal science” by Scottish writer Thomas Carlyle in response to the grim predictions of population collapse made by his buddy Thomas Malthus.
Carlyle also described economics as “dreary, desolate and, indeed, quite abject and distressing”.
It says something about human nature that it’s still such a popular topic.
These days I answer a lot of questions at barbecues. Mostly, I get asked about things like interest rates and house prices.
But one of the questions I’m asked most often is: how worried should we be?
I always reply: how worried do you want to be?
If you like to worry, then economics has you covered. It draws from an almost infinite pool of doom and gloom.
Only twice in my career have I felt genuinely sick with worry about the economy - September 2008, when Lehman Brothers collapsed, and in March 2020 as the world went into its first Covid lockdown.
In both cases there was fear of the unknown. There was no precedent - nothing certain in the historical economic playbook to guide us.
Both shocks saw central banks and governments forced to take radical action to avoid catastrophe.
The system held. The world didn’t descend into an apocalyptic Mad Max battleground - or at least our bit of it didn’t.
We got through the panic, we counted the costs and worked new lessons into the economic narrative we use to try to manage the world.
While those lessons can’t stop things going wrong in the future, they do help us to prepare and ride out the scary bits.
My version of economics, like yours, is informed by my experiences.
When I write about inflation, it is with childhood and teenage memories of the endlessly spiralling cost of living through the late 1970s and 1980s.
When I write about unemployment, it is with the experience of leaving university in 1992 - with the national unemployment rate at 12 per cent.
When I write about the Global Financial Crisis, it is coloured by my experiences covering it as a young financial journalist and business editor - suddenly finding myself on the front page of the Herald trying to explain why the global economy was imploding.
Our lives inevitably shape our views - which is just a fancy way of saying that readers should feel free to disagree with mine.
If writing a newspaper column has taught me anything, it’s that the fulsome agreement of readers is the exception, not the norm.
It’s the readers who almost, nearly, mostly agree with me that seem to get the most passionate about where they think I’m wrong.
I prefer to try to steer clear of ideology. I see value in ideas from the left and the right of politics - although seldom at the extremes.
I grew up in a left-leaning household. My parents were teachers and book-loving liberals.
My dad was - and still is - a proud blue-collar intellectual, a folk-music singing, union man.
Naturally I grew up with a distrust of business and bosses and wealth.
It was a world view that got turned on its head when I was thrown into the deep end of business journalism.
But in my teenage years, I alarmed even my left-leaning parents with ambitions of turning on, tuning in and dropping out.
I was headed for a West Coast commune and a career in pottery-dragon-making... briefly.
I’ve been a surfer, a hippie, a rocker, a raver. I’ve been a supermarket trolley guy. I drifted through a BA in Sociology with just a tangential appreciation of economics - mostly steeped in the capitalist critique of Karl Marx.
I worked odd jobs and headed off on a romantically doomed OE in Italy, before returning to find my way to a post-graduate journalism diploma and a start in community newspapers.
The leap to business journalism was pure chance.
Back in London in the late 1990s (on my second OE), I started office temping.
Despite a CV championing my success as New Zealand’s 1997 joint runner-up junior community reporter of the year; breaking into Fleet Street proved elusive.
I eventually found my entry point as an editorial assistant at The Daily Mail, but I was broke and work in the banking and finance sector paid better.
So that’s where I went.
I only ever touched the lowest rungs of the financial industry ladder, in accounts and administration departments for banks and credit agencies.
My most interesting assignment was six months with a boutique commodity trader called Marc Rich Investments. The boss - American billionaire Marc Rich - was on the FBI’s top 10 most wanted list (for trading with Iran in the 1980s) so couldn’t safely leave Switzerland. He was later controversially pardoned by Bill Clinton.
His absence made it one of the most laid-back trading firms in London. On my floor, it was certainly more like The Office than Wolf of Wall Street.
Upstairs, there were superstar traders - shouting about oil futures and orange juice derivatives.
They were cockney wide-boys, young men with unabashed self-belief of the professional footballers they probably nearly were.
Meanwhile, I was reconciling the accounts in an eccentric Swiss style - using the right colour highlighter pen was all-important.
Still, it all sparked my interest in the arcane world of finance. And more importantly, I learned how to put on a suit and tie and bluff my way through it all.
When I got back to New Zealand in 2000, I walked confidently into a newsroom wearing my snappy London suit with a glossy metallic tie and joined the business section.
In 2007, I became business editor at the NZ Herald. I still can’t work out how I pulled it off.
Back then though, I didn’t have time to stop and think.
I took on the role as the biggest financial crash the world had seen for almost 80 years began to unfold.
The Global Financial Crisis (GFC) was terrible in many ways - but it was a fair wind for my business.
It took financial reporting and economics right into the mainstream news agenda, where it has been ever since.
So, understanding economics might not make you rich. But it won’t hurt. And it will certainly help you avoid being poor.
If you just want to feel less anxious about money - if you want to know why things go up and why things go down, if you want to understand the forces that shape your financial life - then plug in that economic soap opera. It’s a wild ride.
How much do you want to worry?
Experts call it “risk appetite” but just think about how much you want to worry about money. If you enjoy investing and moving money around, then go for it. But if it makes you stressed, just do the basics well and forget about it. Life’s too short.
Invest in yourself
I haven’t met a rich-lister yet who chased dollars for their own sake. Successful people set goals and get a buzz from achieving them. Get good at something and financial security will likely follow.
Expect the worst - short term
Economic forecasts usually come with best, central and worst-case scenarios. It’s safest to expect the worst - so, for example, if interest rates do go higher, you don’t get caught short.
But assume things will be all right in the end.
Keep the gloomy nature of economics in perspective. In the long run, markets create wealth.
BBQ Economics by Liam Dann (RRP$40, Penguin Random House) is published on Tuesday March 12. Also available as an audiobook. For more stories from Liam, click here.
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