Interviewed by Daniel Walton
What drew you to the field of economics? And in particular, what inspired you to go into academia?
It all goes back to my high school teacher. In Scotland, I had a really awesome secondary school teacher who taught me economics. It was a very rare and special subject to do at the time. I remember him saying that “economics is everything. It doesn’t matter what you do, economics can be applied to everything.” That resonated with me when I was young and from there, I just loved it. Because of that, I love teaching because I remember being a young boy and just being amazed by how someone can engage you and I try to model my teaching on that.
I decided I’d go to university and that I’d stop studying when I stopped asking questions. I thought that might happen in my undergraduate degree, or in my masters, or even in my PhD but I’m still here and I’m still asking questions. So, the only reason I’m an academic is because I keep asking questions that nobody has the answers to.
What drew you to UQ in particular?
Can I say the money?
No, it has a great reputation for economics and is really world-renowned. When I first came here it had a great faculty, was very diverse and was just a great place to talk to people about ideas and engage with research.
There’s a common saying that if you put 10 economists in a room, you get 11 different answers. Do you think this is true?
When I was younger, I thought that only applied to macroeconomists, so it was easy to laugh at macroeconomics and the infighting between Keynesians and Monetarists. It didn’t seem to have any psychological structure.
Microeconomics doesn’t have that problem because it’s a science. You have scientific ideas like budget constraints and choices that everybody can agree on. I still believe if you get down to the core principles economics is really just a science. What I’ve seen recently in the past five years is people not understanding economics properly or using it incorrectly. It’s not until you learn the subject and see as an academic that a lot of people talk about economics but don’t have a background in it. If you’re a layman or laywomen (or a layperson), you might think someone is smart if they are talking about economics, but you’ve got to be in the tent to realise that they are talking nonsense. It’s been eye-opening in the sense that economics has been used as a tool to distort and manipulate, which is horrible to see as an academic.
The only solution to that is to educate people more in economics and to generate better ideas and debate. What I’ve seen recently is that debate seems to be about who is shouting the hardest and being offended. I think society needs to calm down and have a structured, thoughtful debate. Most things in the world are boring and if you look at them in structure people should agree but they don’t want to, and that’s bad because people should be inviting themselves to look on the dark side.
Where do you get your economics news? What sources can we trust?
I’m apolitical as is clear from my course. I believe the ABC do an excellent job and I can trust them to some degree. Although I am noticing on ABC it’s always just people complaining about things, it’s not news anymore. Maybe that’s just me becoming older. I try to look beyond the news generally. It’s more about digging for yourself into specific policies and at what’s happening in government and trying to find your own answers.
So, if there’s a new regulation, go and look for yourself and see what the details are. A lot of people are just lazy and use the first news source that fits their political opinion. Most issues are less exciting than the media projects.
On the environment, do you think Australia does its fair share in tackling climate change and reducing global emissions?
That’s a loaded question. Australia doesn’t do its fair share. It does in the sense of how much of global emissions we produce is tiny compared to the world. But should we be doing more? Most definitely. Most people simplify the issue and say we are socially responsible citizens, that we care about the world and we want to be the leader in solar and renewables, and those are valid reasons for taking more action on CO2 emissions.
But my view is that to control climate change, it’s not just carbon dioxide. Most gasses are produced as a product of fossil fuel combustion. There’s nitrogen oxide, sulphur dioxides, PM2.5s and other local pollutants which are all horrible for the environment. Say you just burn diesel in a car – the number of fumes that come out as a result are horrible. So, one strong justification for doing more is that you get massive local benefits. People on the other side of the debate think that we will just reduce CO2 and everybody will be free-riding off us. That might be true but imagine the massive benefits in terms of local pollution. For example, if you changed all transport to electric, the air quality in Brisbane would benefit enormously. So even from a selfish point of view we should be doing more.
Do you believe an ETS is the most effective method in reducing our emissions? Or is there a better way?
In terms of CO2, a carbon tax is the most preferred option in terms of reduced inefficiency, and as economists we tend to think about what policy is most efficient. But otherwise, cap and trade markets are well known, mostly work, and provide a clear price at the market. I think currently we are so far gone that we really care about limiting the quantity of emissions, compared to 20 years ago where a tax might be more efficient but might cause a lot of variance in greenhouse gas levels. So, cap and trade systems are probably the way forward, and if you look at my CV, they do have a lot of problems but nothing that can’t be solved.
You said in our 2015 journal that we would likely soon reach a worldwide agreement on environmental policy led by an agreement between China and the US. Since then, the US has withdrawn from the Paris agreement and political tensions between China and the West are higher than ever. Do you still have hope that we can reach a worldwide policy on climate change?
That sounded naïve but Donald Trump becoming President wasn’t in my scope of possible scenarios at the time. I was kind of correct since the Paris agreement exists. It’s clearly not a good agreement and what we should now do is work on that and build it up and have more ratcheting. China still does a lot. Why are they doing a lot? They are beginning to care about local pollution because the citizens are demanding that they have cleaner cities to live in.
It’s interesting given COVID-19, how climate change is not discussed as much as it should be or even used to be. In terms of the economy it should be at the forefront of industry policy and government policy as to how you can create a new economy with low carbon and new industry. The current political class doesn’t want to address it.
What impacts, if any, do you think COVID-19 will have on the fight against climate change?
Emissions have reduced but not drastically. The only silver lining is that people can see new ways of working. Most people are at home working, there’s flexible learning and demand for new communications. But if COVID-19 disappeared tomorrow, people would just go back to what they’ve been doing. Humans are animals. They love structure. This is why we need vision leadership in government to create policies that reduce emissions over time.
Do you think any current governments or leaders are moving forward on the issue?
The EU always has a strong policy and seems to be the grown-ups of the world who actually acknowledge the problem and address the solutions. Again, it’s all to do with the prisoner’s dilemma. It’s probably worse now once economies start building back up after lockdowns, since everyone is trying to get up to speed as fast as possible to maximise their comparative advantage, and doing this probably isn’t compatible with a low carbon economy.
There has been a bit of talk about your political views in class. So, what is your ideal political system?
It’s funny how students are quite centric in their views. It’s always eye-opening when I get comments on my evaluations calling me Marxist and left wing on one hand, and right wing or neoliberal on the other. I think that says more about the students than it does me. Because my course is to do with government policy, I try to be as objective as I can and provide a balance of different arguments.
In terms of my politics, as a Scottish person I’m historically left wing. But I’m really all over the place. As an economist, I believe in markets and that they should work and be effective. I also believe in redistribution and that there is a role for government in the economy.
As a political economist, I’m of the opinion that direct democracy is the best method of representation.
So, a bit like Twitter?
No. I’ve been struggling with this in my mind for years. Since I live in Switzerland, I’ve seen the positives and negatives of referenda driven government. A lot of it is good and over there they have a lot of educated voters. I’m not sure if that’s endogenous, but they are more involved than they are here. My worry is that the outcome would be worse over here. The challenge is that in Switzerland direct democracy has been going on for centuries and they’ve gotten protest votes out of their system. If we had it here, you’d get immediate protest votes and some really weird policy outcomes.
Would economists be out of a job?
Some of them would be. I’m not anti-establishment but I do believe the public service should work for the people, and clearly, they don’t. That’s an economic view in that these are rational agents who are in an occupation to maximise their self-interests.
Some people think that’s rubbish and say, “I know the MP for blah blah district, and they are really nice and what they think is society’s benefit”, but that’s just their perception. There’s no way to determine exactly what society’s preferences are without direct democracy. Most MPs might say they are working for society, but they are to some degree driven by self-interest, otherwise they’d just be irrational. So, to make the system better, you probably need to disentangle the public servants to some extent.
Say that we instead devolve into a benevolent dictatorship of MacKenzie, what is the first issue you tackle?
That’s a good question. You’ll like this. I’d implement free education for all.
Right now, we’re generating a group of citizens who are debt ridden for a degree that is much less valuable today since there is more competition. Going to university and college benefits society and the government should fully pay for those benefits. As a teacher I see what happens when we pay for education. It becomes a commodity, and it shouldn’t be. It’s not a private good. Universities are now providing services for customers and what they think they deserve and that’s a horrible way to educate people. People should feel honoured to be at university and absorb everything, debate, study, argue and that’s being lost in education around the world.
What is one good reason you’d give to economics to take your course, Microeconomic Policy?
Other than that.
It is by far the best and most interesting course there is at UQ. I love this course. Hopefully people watching the online lectures know that it’s not a job for me, it’s a passion. I love shining a torch on things people might not realise are economic topics. This is what I think is the core of an economics degree – the policy. It’s well and good understanding what an indifference curve is or a Cobb-Douglas function, but how does that affect real life? You need that in a degree. UQ graduates are coming out with critical thinking. It doesn’t matter if you do lots of economics, but if you can’t apply it, you’re useless. You don’t have a deep understanding of economics or how things work. You’re basically just a sociologist.
I find it amusing that economists are the only people who view the world as it is. Other subjects ask, “Why don’t we all just be friends, why don’t we have more empathy”. Okay then, how are you going to do that? Economists say, “Let’s think about policies to find a solution” rather than to just cuddle it out. What my course does is it gives you an insight into how your degree can be used in real life.
Obviously, another reason is all these awards.
Ian points to a number of awards.
What do you like to do outside of economics?
Cycling. I’m a big cyclist. If you’re driving around UQ, be careful because I’m also very sensitive. As you can see somebody tried to kill me, he drove at me and literally tried to run me off the road. So be considerate. Have empathy!
Might’ve been a sociologist.
Could be but I don’t know if they can pass their license test.
What projects are you working on at the moment?
I’m currently working on a paper rent dissipation. I’m also coming out with a paper called the “modernisation hypothesis” that tries to explain the link between democracy and growth. Do more democratic countries have higher growth? We’ve come up with a hypothesis and tried to explain when it does occur and when it doesn’t.
There’s another paper called “Cows and Brides”. It’s about polygamy and bridal markets in Sub-Saharan Africa and we’ve got good data showing the connection between polygamy, monogamy, and conflict. We can show there is a link between polygamous societies and increased conflict.
I can imagine.
Not for that reason. For other reasons. So, this isn’t your typical indifference curves stuff, but there are indifference curves in that paper.
On a final note, what is your favourite part of the book ‘Rainbow Fish’?
I always like the bit where they share the load of carrying the seed to help their friends. But most of it is economic drivel and shouldn’t be taught to anyone, and especially not children because it provides them with a false sense of optimism.
My kids are ok though. They’re still happy, they just don’t believe in that stuff