a conversation with warren hogan*

© 2007 The Economic Society of Australiadoi: 10.1111/j.1475-4932.2007.00433.x

THE ECONOMIC RECORD, VOL. 83, NO. 263, DECEMBER, 2007, 446–460

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Blackwell Publishing LtdOxford, UKECOREconomic Record0013-0249© 2007 The Economic Society of Australia.XXXOriginal Articles

A Conversation with Warren Hoganeconomic record

A Conversation with Warren Hogan*

JOHN LODEWIJKS

School of Economics and Finance, University of Western Sydney, New South Wales, Australia

Warren Hogan is an influential and colourful Australian economistwho contributed substantially to the economics profession in this countryand to public life more generally as senior advisor to business andgovernment. A prolific researcher, mentor to innumerable students,Hogan was Professor of Economics for about 30 years at the Universityof Sydney. This is an edited transcript of an interview that providesinsights into his career and the role of economists and some pithycomments on the changing nature of universities.

I Formative Years

Warren, you were born in Papakura, NewZealand, on 3 April 1929. You attended theUniversity of Auckland and completed a BA in1950 and an MA in 1952. Can you tell us aboutyour experience at the University of Auckland?Were there any academics that particularlyinspired you? Where did the interest ineconomics come from?

I believe my initial interest in economics camewhen I was at New Plymouth Boys’ High School.We had some very good teachers, particularly thosewho were teaching history. They raised issuesabout economics in relation to New Zealandhistory which I had never experienced before.This struck me as novel and proved to be the baseon which one tried to expand and understand what

had taken place. Recall my high school years inthe early ‘40s were just out of the depression ofthe 1930s. That was the initial influence and ledme, when I went to Auckland where I enrolled inan Arts degree, to take an interest in economics.

At Auckland, the major influence undoubtedlywas Colin Simkin; he was appointed to the Chairin 1946 when very young and stayed for many years.He assembled around him people, later most influential,of whom the most notable were first and foremostin terms of quantitative work, Rex Bergstrom and,second, Malcolm Fisher who many years later cameto the Australian Graduate School of Managementin Sydney. These two were prominent, but Simkinwas dominant in the Department of Economicsand very influential across the University. He wasa very stimulating person in the context of seniorclasses and the way he conducted seminars. Thenthere was the type of curriculum he developed tobe undoubtedly very challenging. Simkin in con-junction with Bergstrom made Auckland the mostdistinguished Economics Department in NewZealand for many years. Bergstrom most of alldeveloped a quantitative approach to economicanalysis, reflecting his great technical skills.

Then you went and did an MA. What wasthat on?

The MA was rather akin to what we think of asour Honours degree in Australia. New Zealandhad a 3 years’ pass degree as understood in the

* This is an edited and condensed transcript of aninterview with Warren Pat Hogan that took place in hisoffice at University of Technology, Sydney, onWednesday 11th January 2006. The original 19 000word interview is available from the interviewer. Iwould like to thank Ian Sharpe and Eric Sowey for theirhelp in framing some of these questions and for thecomments of two referees and the editor.

JEL Classification: A11, B21, B22, B31, F13

Correspondence

: John Lodewijks, School of Economicsand Finance, University of Western Sydney, Parramatta,NSW 1797, Australia. Email: [email protected]

2007 A CONVERSATION WITH WARREN HOGAN

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© 2007 The Economic Society of Australia

Australian context. Then they had Masters degreesin which you did further coursework and youwrote a thesis. My thesis was on money and themonetary system in New Zealand. This was nottoo surprising a topic coming out of the depressionof the ‘30s with a focus on financial collapses andstrains.

The courses for masters were very impressive.Simkin was at the height of his powers andreflecting the influences and enthusiasm of hislong association with Karl Popper at CanterburyUniversity College (in Christchurch) before hewent into the Royal New Zealand Air Force dur-ing 1942. Popper had a huge influence on Simkin,stimulating him to look at quantitative economicsand mathematics as a basis for economic analysis.We had courses which were really stimulating.Very rarely would you think of it nowadays, butin welfare economics, we had Popper’s

OpenSociety and Its Enemies.

We had work on Paretoand attention was directed to his optimalitynotions for understanding equilibrium. This meanttranslating Pareto from the French edition

Manueld’Economie Politique.

It was not available inEnglish, being many years before it was trans-lated. But the French edition was most importantbecause it had the mathematical appendix with itsproofs of optimality. Thus the class was workingon translating

Manuel d’Economie Politique

whilepuzzling away at his ideas. Various people wentgroping through their French. Bits and pieceswere done by individual students and then piecedtogether. This was an interesting education to saythe least.

You then took up a position in the ResearchDepartment of the Reserve Bank of New Zealand(RBNZ). What was that like?

The 3 years at the RBNZ were very congenialas well as intellectually rewarding, with insightson policy available to relatively few people. It wasalso challenging for a number of reasons. TheResearch Department was, along with the NewZealand Treasury, at the centre of a great deal ofpolicy research in New Zealand. Thus, one wasalways involved directly with issues in thebalance of payments, money supply issues and whatwas the cut and thrust of policy measures at atime when fiscal themes dominated monetary con-siderations. At this time, the post-war years 1946–1955, New Zealand was very much a controlledand insulated economy and with very much anemphasis on fiscal aspects. The balance of pay-ments was subject to considerable supervision and

control from time to time. I did quite a lot ofwork there on forecasting and analysing it; thiswas especially true for analyses associated withestimating future import flows. I was the firstperson to construct a set of balance of paymentsaccounts to conform to the requirements of theInternational Monetary Fund (IMF). New Zealandwas not a member country of the IMF so the relation-ship was at arm’s length though co-operative.

There were various interesting interludes duringthese years at the RBNZ. New Zealand, as with somany other countries, had exchange controls overimports and so on rather than direct physical con-trols. This distinction was a reflection of politicaldetermination. Physical import controls were asso-ciated with Labour Governments in New Zealand.The National Party, then the main alternativeparty, determined to have a different course,choosing to control imports by allocation offoreign exchange. It came down to the same thing.Then senior officers in the RBNZ decided to staffthis function with people drawn from the researchdepartment. It was really interesting because whatwe had were a number of young characters withenthusiastic and inquiring minds. We startedlooking at how exchange controls were operatedbecause we were assigned mostly to analysinghow the system operated, making sure all thedecisions were entered and there was consistencyin outcomes. That there was a cyclical pattern ofbehaviour in allocations was determined quickly.This meant the percentage applications for foreignexchange allocated 1 week would be high but thencame a compensatory lower percentage the next.So there was a cyclical element in all this. We couldeven tell what timing would make submissions forexchange allocations most likely to succeed. Butafter this had been pointed out by various people,including myself, members of the research staffwere soon returned to their department!

You were a research scholar at the AustralianNational University (ANU) from 1955 to 1958and were awarded a PhD at ANU in 1959.What made you decide on going to the ANU?What was your experience there? Who wasyour supervisor? What was your thesis on?

The reason I went to ANU is straightforward.I was offered a scholarship sufficient to meet myneeds, being married with two young girls; onewas just a baby. That choice was made. Theyoffered considerable support to go there. Whatwas interesting at that time, 1955–58, was to findthe proportion of research scholars from New

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Zealand in relation to the Australian researchscholars directly proportional to their populations.The ANU was just simply drawing on graduatestudents as a cross-section of the Australasianexperience.

I was working on growth theory, which at thattime I had a great interest for. My supervisor wasTrevor Swan, a person of most remarkable intui-tion and an outstanding intellect. For him I havegreat respect. He was very helpful not least forsome eccentricity. He was a most rewarding mannot just for his intellectual stimulus but also forhis wide-ranging explorations in public policy.Swan was my formal supervisor but Ivor Pearcejoined him in 1956, about a year after I got there.With him I became very close. Ivor Pearce sub-sequently was my mentor academically. At that timehe had close interests in the work I was doing. Thisreflected the way he and Trevor were working onvarious growth themes. Their various models weredeveloped and then tested by working them on thePhysics School computers. Experiencing thosetwo in action was remarkably good.

Remember, this is when the ANU was small.What the Institute of Advanced Studies is nowwas the entire ANU. Canberra University Collegewas part of the University of Melbourne. Onlymuch later were they merged. People interchangedfrequently between the College and the Institute.There were many seminars, held very frequentlyin various places within the ANU, on economictopics; policy themes dominated but theory asdirectly applied to policy was always well to thefore. Other people present regularly included HeinzArndt and Burgess Cameron. There were a numberof others from Canberra University College.

Prominent in Economics at ANU was WilfSalter who gained considerable prominence forhis work on growth and productivity studies withits emphasis on best practice techniques. NoelButlin with his great interest in Australian eco-nomic history was a very positive fellow and avery good leader. Another was Alan Hall. SirLeslie Melville was Vice Chancellor at ANU. Icame to know him quite well, partly because I wason the University Council for a term. He wouldcome often to seminars. His contributions reflectedhis comprehensive experiences of Australian policychallenges.

There was Horrie Brown, having his back-ground in applied statistics and comprehensiveexperience in government. He was very close toTrevor Swan. Then in the broader context ofstatistics, perhaps a bit further away from eco-

nomics than expected, you had Paddy Moran andTed Hannan who were very prominent and whomI got to know to my considerable advantage.

I had opportunities for a much broader cover-age of topics and interests than is possible thesedays in what are the narrow confines of graduatework. Thus it enabled me to get to know the philo-sophers, John Passmore and Perce Partridge.Oskar Spate in geography was a fascinating andprovocative fellow. You had many developmentsin the John Curtin School of Medical Research ofwhom probably the most distinguished membersfrom that time were John Eccles and FrankFenner. Then you had all the physicists who werevery prominent nationally as well as at ANU;Oliphant and Titterton were the leaders.

In those days, people did not have any difficultyin getting around and meeting because Canberrawas much smaller. Bear in mind, on leavingCanberra in 1958, the population was 28 000. I metSir Roland Wilson, probably the most distinguishedof all the holders of the position of Secretary of theTreasury. He was a man who was truly outstand-ing, remarkably so. He had a most extraordinarilyincisive mind. Once met, you could understandhow he came to dominate all others in the develop-ment of economic policies.

II Developing New Universities

After your PhD work you joined the New-castle University College, which was then partof UNSW, as a lecturer in 1958 and you movedup the ranks very quickly to a Professor, andin 1965, you became Dean of the Faculty ofEconomics and Commerce when the Universityof Newcastle was formed from the UniversityCollege. How do you characterise the decadethat you spent in Newcastle? Who were the keystaff members during that time? What werethe highlights and the difficulties involved inthis institutional transformation?

It was even more complicated than you think.When I went there in 1958, the University of NewSouth Wales did not exist; it was the New SouthWales Institute of Technology that became veryquickly the New South Wales University of Techno-logy (NSWUT). In Newcastle, the Bachelor ofCommerce degree with economics and accountingwas taught as in NSWUT. There was no provisionfor an Arts degree in NSWUT, so the Arts degreewas taught according to the requirements of theUniversity of New England. For the first couple ofyears, twice a year, I would take the Northern


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Tablelands Express to Armidale. There was no lackof cooperation in Armidale where James Belshaw,the Professor of Economics in the University ofNew England, was a congenial leader having amost pleasing personality. Indeed I could havetaken on a job at the University of New Englandrather than Newcastle. I was offered much moremoney to go to Newcastle and I followed my eco-nomic instincts.

Change came when the University of NewSouth Wales was constituted and a large Facultyof Arts soon developed. However, it is well toremember the initial workings of the Arts Facultyin that University were in Newcastle; the firstDean of the Faculty of Arts was James Auchmutywho subsequently became the Vice Chancellor ofthe University of Newcastle when it was establishedin 1965. James Auchmuty provided the academicfoundations for a successful university and hislike has not been seen since.

There were many stimulating students in New-castle. A significant number came from an accu-mulation of people associated with the steelindustry and with teaching who were seeking todo more university work. These people addedgreatly to the quality of an intake otherwisedependent on school leavers. There was very goodsupport from the people in Kensington particu-larly David Rowan, Professor of Economics, andBrian Smith, Professor of Accounting and Dean ofthe Faculty of Commerce. As well remember, thiswas the period during which Sir Phillip Baxterrecruited Murray Kemp as a research professor todevelop this focus in the University of New SouthWales. I greatly respected him, and David Rowan,for the way they supported Newcastle. The ground-work for the development of Newcastle was laidin the years when it was a College of the Universityof New South Wales.

Nevertheless, the institution building whichtook place there did depend on a number ofpeople in Economics. Cyril Renwick arrived inthe middle 1950s to establish the discipline. Criti-cal for developing Economics was foremost BrianJohns who later became professor there beforeheading up the Bureau of Industry Economics inCanberra followed by a stint in the Trade Prac-tices Commission. Other people of note wereBarry Gordon who was just starting his career,Paul Sherwood a senior lecturer and very effectiveas a lecturer, and on the quantitative side, themain contribution came from Robert McShane. Astrong Department of Economics was establishedearly on. With Commerce the accounting firms in

the City of Newcastle were very strong supportersthough this stance applied quite generally in thatembryonic faculty. When the Faculty of Economicsand Commerce came into being from the begin-ning of 1965 with the establishment of the Universityof Newcastle, there was just a change of namewithout any establishment problems.

I find it astounding that you could go fromlecturer to Dean of the Faculty in seven years.It’s a huge jump!

Many publications came in those early years. Iwas getting published in the

American EconomicReview

and

The Review of Economics and Statistics

as well as Australian publications. Much energywent in a very active interest in the workings ofthe University; effectively I had been the equivalentof a Dean from around 1962, being Head of theDivision of Commerce in the University College.I was well supported by the most senior people inthe University of New South Wales including SirPhilip Baxter and Sir Rupert Myers. This was aperiod of very intense effort with research andteaching. The college was an adventurous place,being challenged in an important sense ‘to proveitself’ in an academic setting as well as locationin Newcastle and the Hunter Valley. Staffs weredrawn from an extraordinary wide range of aca-demic experiences.

III Three Decades at the University of Sydney

You left Newcastle and moved to theUniversity of Sydney in 1968 as Professor ofEconomics and spent 30 years there. What wasit like when you first arrived?

The University of Sydney has always attractedvery good students and continues to do so. How-ever, the range and standard of some parts of thecurriculum fell short of what was expected then inthe University of New South Wales or by otherstandards required, say, in the University ofMelbourne. The requirements in quantitative analysiswere slender. The annual budget for the EconomicsDepartment was tight with little provision forequipment to support research or administrativefunctions. Equipment provisions were primitive.For example, one of the Facit hand calculators wentstraight from the Department to a computationmuseum collection. Similarly, photocopy equipmentwas confined to one wet-copy machine to whichaccess was restricted. The student/staff ratio waswoefully high. The then Vice-Chancellor, Sir BruceWilliams, provided a substantial expansion of the

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budget most of all to bring a rapid growth in staffnumbers. This allowed for revision of existingcourses and the inauguration of new ones.

The most testing immediate issue was about theamount of quantitative work which should berequired of all undergraduates taking the Bachelorof Economics (B.Ec.) degree. This caused the mostturbulence initially which left me dumbfounded,given the requirements were rather modest bystandards in other institutions. This featureemerged initially as the ‘lightning rod’ for dis-agreements on what Economics was about. Ifundergraduates cannot understand basic aspectsof quantitative work, testing the applicability oftheoretical constructs becomes very hard toresolve. A state of indeterminacy may well havebeen comfortable for some not wishing to seekpreferences of one claim to validity over anotherin order to sustain unsubstantiated claims.

The straightforward solution would have beento require Economic Statistics I as a compulsoryrequirement for the B.Ec. degree. However, thosein the Department of Economic Statistics did notwish to take on this task, preferring the attractionsof insularity from the heavy burdens of largefirst-year classes and cross-subsidisation as a smallerdepartment in a large Faculty of Economics.Economics has always been a very large depart-ment and thus was carrying the weight of thesmaller departments. However, this meant thefirst year Economics had to incorporate anintroductory quantitative component. This was acumbersome arrangement being a ‘second best’solution.

Another issue about the roles of Professor andHead of Department was raised to become aperennial theme in following years. The professoras ‘god professor’ and Head was an issue until themanagerial approach to academic institutions wasimposed with the increasingly active role of theAustralian Government in the workings of univer-sities. The outcome has been the subservience ofall academics, whatever their rank, to the manage-rial goals of resource generation and institutionalconformity. Thus the weakening of the role ofprofessors did not accomplish the goals of broaden-ing the academic basis for decision-making. Thedemocratisation of the professoriate expressed asLevel E in an industrial relations schedule has donelittle but foster ‘clay professors’ suited to mould-ing to the needs of university administrators.

When you arrived as a Professor, what didyou see as challenges facing the Department?

What do you see as your contribution to theDepartment at the time?

Most important of all was to bring order intoarrangements for the development of a compre-hensive and demanding honours programme. Oncethis was in place, then the rest of academicrequirements should have fallen into place. ThereI was certainly supported by other people in theDepartment who shared those views very firmly,not only Colin Simkin who was the other professorjoining Sydney a couple of years after me but alsoPeter Groenewegen and a number of people onthe then staff such as Viv Hall, now at the VictoriaUniversity of Wellington, and Ian Sharpe, my long-standing friend and colleague. The honours pro-gramme was very successful. Taken over a longstretch of years, the Department of Economics atSydney produced more than double the number ofhonours graduates turned out from the Universityof New South Wales and Macquarie University com-bined. The fourth year honours programme was quitea powerhouse academically. The standard of per-formance and the quality of the people who wentthrough was truly outstanding. You find them inprominent positions all around Australia and overseas.

The improvement in staffing numbers secured anot quite satisfying but nonetheless reasonablestudent/staff ratio. This brought about a trans-formation in arrangements for tutorials to supportlectures in first and second year, a circumstancenot possible in Economics courses prior to thattime. The expansion of the undergraduate curricu-lum to allow for choices of topics across a rangeof options, especially in third year, was a substan-tial achievement. This was possible only becauseof the better staffing arrangements for lectures andtutorials. The options encompassed theoretical,applied and policy themes. No less importantacademically was the support for research andscholarship stemming from the additional resourcesplaced with the Department.

The turbulence which lasted for so many yearshad its origins ostensibly in issues related toquantitative work, though the inspiration lay withother matters related to ideology and aspirationsas well as personal ambitions of some involved.All of this emerged as the so-called politicaleconomy dispute, being something which broughta great deal of turmoil in the Department ofEconomics, the Faculty of Economics and theUniversity. This dispute was wasteful and diffi-cult. The focus on quantitative work and thesubsequent broadening into how to approach


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economics and what economics was about revealedwhat was at stake in terms of political and ideo-logical confrontation. Social, economic and politicaldevelopments in the past couple of decades have castthis challenge as some quaint academic posturing.

Let’s talk now about Colin Simkin. Obviously,it was a very fruitful and collegial relationshipover many years.

I have covered some of this ground in Hogan(1999; 2005). Nobody could have been more sur-prised than me when he indicated his interest inleaving Auckland and coming to Sydney. He foundSydney a challenging experience. He was unableto grip the political economy dispute. He saw it asan academic issue while others, including myself,treated it as purely academic politics and not anacademic issue

per se

. Simkin wrote any numberof papers about issues in dispute in an effort tobring them into focus. The negative outcome ofhis efforts brought him disappointment. Problemsarose with his Macroeconomics lectures to secondyear undergraduates. The problems he had withmacroeconomics stemmed from his own macro-economics textbook. This book was really suited,and should have been confined to the Honoursofferings in second year and third year.

During your time at the University of Sydney,the study of economics has changed markedly.How do you think it affected economics at theUniversity of Sydney?

Economics at the University of Sydney wasmost affected by the political economy dispute. Itwas not aided by the division between econometrics– economics statistics as it was called when Iwent to Sydney in 1968 – and economics. Thetradition in Sydney had been very European inmany ways; each professor had to have his owndepartment. Only with Bruce Williams as Vice-Chancellor was attention given to provision ofmulti-professor departments. Economics had quitewrongly been separated from quantitative analysisand economic statistics. However, the determina-tion in favour of multi-professor departments didnot go so far as to bring economics and economicstatistics together. The institutional and academicrigidities were too embedded and have been pre-served to this day. Perpetuation of this separationwas most unfortunate. That was quite unlike whatyou saw occurring at the University of New SouthWales or had occurred there already anyway. Thisadded to the formalities and the barriers. The divi-sion was a positive handicap and remains so.

One has mixed feelings about the whole experi-ence at Sydney and certainly also the ways in whichthe University changed. As far as the differentdevelopments in the disciplines were concerned atSydney, it is a question really of how you presentthis material in the early undergraduate years.Even for a broad general understanding of eco-nomics, some grasp of what quantitative measuresare about is necessary. I have been a firm advocateof attention being directed to securing a modicumof quantitative understanding across all Economicsgraduates.

The end result was the bifurcation of thediscipline of economics with a separate pro-gramme in economics (social science). That wasone issue. The other one was the turf wars withaccountants and other schools of the faculty.

Take Accounting first of all. For my part, Inever really had a problem with the relationshipbetween economics and accounting. Partly becausethe accountants in Sydney really did have a fairlybroad church when it came to understanding whattheir discipline was about. Indeed, I worked withany number of the accountants in areas and pub-lished in conjunction with some. Recall also thedistinguished contributions of Ray Chambersduring his many years at the University of Sydney.He drew on economics concepts for his inspirationsand those efforts brought concerns amongst theaccounting profession over many years for hismaverick qualities. That his efforts were applaudedin later years was most welcome.

Tensions which did arise came from the realmof finance. Whereas banking and monetary eco-nomics had been very prominent in the curriculumof Economics Departments in Australia and NewZealand for many years, this was not the positionwith finance. Modern Finance had been taught inthird year and fourth year honours in Economicsat the University of Sydney from early in the‘80s. Money and Banking were always prominentin senior undergraduate efforts, and Finance was anatural extension of these themes. The otherimportant reason is the necessary undergraduatecoverage for an understanding of finance. Thereare the microeconomics themes based aroundintertemporal choice under uncertainty. To thisday, the preparation of most people in financeis woeful because of the lack of an understandingof these themes as well as some intermediatemacroeconomics.

In 1990–1991, I sought to persuade staff inthe Department of Economics to embark on a

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programme embracing both finance and economics.But, for a variety of reasons, the proposal wasrejected. What has happened since then in theUniversity of Sydney? The focus of the EconomicsDepartment has narrowed. The long-standingprominence of history of economic thought andanalysis under the outstanding leadership of PeterGroenewegen has been whittled down greatly.Finance is a separate school. The separation issubstantial. The Department of Economics isdiminished.

You were awarded the title of EmeritusProfessor of the University of Sydney in 2001.Do you want to comment on the latter part ofyour career at the University of Sydney?

The watershed for me was that decision of 1991in relation to the further development withFinance. More generally, change and adjustmentwas the order of the day reflecting the basis forfunding emerging from the Federal Government.This was a time when the nature of the Universitywas being changed. In the early days, professorsdealt directly with the Vice-Chancellor on resourceallocations, with his support staff small in numbersand accessible. The Dean was akin to Chairmanof Faculty, with that body having few administra-tive functions outside monitoring and supervisingacademic standards. Now Departments were beingsubsumed under a managerial structure and theirrole and that of professors diminished. More andmore layers of management have been imposed inuniversities. Deans and their faculty organisationwere made paramount. This managerialist approachwas further enhanced with the ‘college’ systemwhereby faculties were placed within these newentities. In many instances, departments have beendone away with for the conglomerate schools. TheVice-Chancellor and the central administrationwere placed ever more remotely from the work-ings of the academic staff. There was then a vastcontrast with the ways business was conducted atSydney under Sir Bruce Williams.

Do these changes mean universities have supe-rior administrations than in the past? If the recentexperiences at the University of Newcastle asreflected in the scrutiny by the IndependentCommission against Corruption (ICAC) are aguide, then the many layers of management havefailed. All that emerged was anointing people to‘pass the parcel’ of responsibility.

One of the major issues at stake for me wasthat, having managed the Department and built upsubstantial financial reserves to smooth the path

of inevitable changes, control of resources wasremoved. This I found very unacceptable conductbecause it was done without any discussion. Myclosing years at Sydney brought substantial fall-ings out with some people with whom I hadworked congenially in previous years.

IV Economics and Economists

Let’s now talk about some of your visitingpositions at overseas institutions. You were atManchester from 1964 to 1965. You visited Zurich,University College, London and Southamptonin 1979. You were at California, Irvine in 1983.How useful were these visits to your professionaldevelopment?

At the University of Manchester, I had a SimonFellowship. I worked on British foreign investmentin Australia, particularly focusing on technology.There I met Bruce Williams, then a professor inthe Economics Department, and Jack Johnston, amost distinguished econometrician. Allan Prestwas just leaving for the University of Lancaster.Jim Ball was on the staff and later to be Directorof the London Business School. In 1979, I spentmy time in the Federal Institute of Technology inZurich and then at University College, Londonand Southampton. In Zurich, more time was spenton growth theory and applications. In UniversityCollege of London, I was with David Henderson.Shared interests were in development themes andaspects of economic policy. In Southampton, workwith Ivor Pearce bore fruit in our writings onEurodollar activities while that location alsoallowed me to renew acquaintance with DavidRowan. Then in 1983, I was a Visiting Professorin the University of California, Irvine.

In 1998, you accepted an Adjunct ProfessorPosition at the University of Technology,Sydney (UTS). Your publications seem to haveincreased exponentially. UTS seems to provideyou with a very agreeable working environment.How does UTS compare with the University ofSydney? How do you explain the takeoff inpublications?

This is very straightforward. The School ofFinance and Economics in the University of Techno-logy, Sydney, is well supported with informationsystems and technology. A technology manager inthe School can give immediate advice and supportshould problems arise. The School has proved amost congenial environment for my academic andprofessional work. On your question about research,


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the explanation lies in having time available tothink and discuss issues. Prior to joining UTSmuch of my time was taken up trying to defendturf, trying to deal with ever more complicatedproblems about resources, staffing and courses inthat order. Other matters about the running of theFaculty and the like took much time and, most ofall, energy. On reflection I should have left someyears earlier. I stayed on longer than I intendedbecause I was asked to so do. One of the ironiesof those last years at Sydney was this request forme to stay. It was forgotten by my critics. Such islife.

A quick scan of your publications leaves oneoverawed not only by their quantity but also bytheir breadth. There are about 125 books,chapters and articles, and 170 shorter publica-tions and conference papers. Your publicationsrun the gamut from prestigious articles in the

American Economic Review

and the

Review ofEconomics and Statistics

, to the Colin Clark,the Alfred Deakin and the Shann MemorialLectures, and books on the Euro–Dollar mar-ket and the Management of Financial Institu-tions. Your first claim to fame was in pointingout an error in the work of a future NobelPrize winner and in one of the pivotal papersthat would lead to that person receiving theaward. Can you tell us about this episode?

My PhD was on growth theory with a focuson depreciation and replacement. Much of thatwork was taken up by looking at empirical studiesthat rested on the work of Raymond Goldsmith.I was looking very closely at the theoreticalstructure deeply associated with the productionfunction and the then very familiar Cobb-Douglasproduction function. Then this paper appearedfrom Robert Solow in

The Review of Economicsand Statistics

, which was very close to my work ingrowth theory. I was stunned almost immediatelybecause there was a result which was impossiblegiven the underlying theoretical structure. Solowwas analysing the empirics of what was effectivelya Cobb-Douglas production function though hewas to deny that specific feature claiming a greatergenerality to the production function he used. Iwent to his data in the article. There was a stepfeature in his empirical work which he could notexplain. Taking the position about this not makingsense, I worked over the evidence and found thearithmetic error embedded in the empirical work.

I took it to Ivor Pearce. I told him how RobertSolow had a Cobb-Douglas function or a function

approximating it. I had the arithmetical exerciseto show what was wrong. Ivor, being the superbtheoretician he was, saw at a glance what it wasall about and confirmed my perceptions as well asfinding the empirical outcome a bit startling,being published despite the lack of explanationfor what was revealed. The exchange between uswas published in

The Review of Economics andStatistics

.

From the mid-1960s, for a decade or so, yourinterests shifted to economic development witha concentration on Pakistan through an associ-ation with Harvard University. Then you workedon India, Malaysia and Thailand, sponsored bythe Nuffield Foundation, the Philippines asSenior Economist with the World Bank in1971–1972, and have a continuing interest inPapua New Guinea and various connectionswith the Economic and Social Commission forAsia and the Pacific. Can you comment onthese experiences?

Initially I was approached, as were one or twoothers, about working for the Harvard UniversityDevelopment Advisory Service. This was while Iwas still in Newcastle. At that time, Wilf Salterfrom the ANU was involved so both of us endedup in Pakistan with Harvard DAS. Unfortunately,Wilf Salter had an infection and died while inPakistan, which was terribly sad, given his greatcapacities, and thus a tremendous loss to the eco-nomics profession in Australia. Pakistan was agenuine hard duty station.

In those days, Pakistan consisted of West Pakistanand East Pakistan, now Bangladesh. I was the firstperson to do any study at all on manufacturingindustry in the country. Field work was verydemanding with the country experiencing severedrought. I collected all the data I could extractfrom official records. I had access to an IBM cardsorter and, having the services of a card puncher,was able to get the data assembled. That wasexposure to very down-to-earth applied economics!

This exposure in Pakistan opened up furtheropportunities in a variety of ways. I attended aHarvard development conference, which was heldin Italy at Sorrento during September, 1967. Thiswas work on capacity utilisation and publishedthe following year (Hogan, 1968). Soon after thePakistan experience, I became involved in PapuaNew Guinea; however, the work in Pakistan ledme to the World Bank and thus to involvementin the Philippines. I was at the World Bank fromlate in 1970 to early in 1972. I was placed in the

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Economics Department but was seconded to the areadivision responsible for the Philippines. David Hend-erson was Director of the Economics Department,and this relationship has been sustained ever since.

Who else was there at the World Bank at thetime?

I worked for Robert Strange McNamara, Presidentof the Bank, directly for 6 weeks. This was for amajor submission on trade development being oneof the earliest contributions linking trade in manu-factures to stimulating investment, employmentand technology in the developing world. This effortwas about reducing trade barriers, especially tariffsbut also the elusive quantitative restrictions com-ing in many forms. I reflect still on the oppositionto these themes at the time and the ways some ofthe then contemporary critics changed their tunes.

Hollis Chenery, who was associated with theHarvard group, became the Vice-President forEconomics at the World Bank. He was a very goodman, astute in his judgements and impressive forhis command of economic themes. He had a rathercool dry profile. Helen Hughes and I were in theIndustry Division of the Economics Department.On secondment from the Economics Department,I went to the Philippines a number of times on myown or in missions of which I was joint leader.These missions brought a range of experiences,not least being to establish a basis for negotiatingchanges to strategic policies to enhance develop-ment and lessen maldistribution of incomes. Thiswas a time when structural adjustment policieswere coming into play. Just how far sovereigngovernments may be pressed to introduce policychanges soon became a fascinating topic. Overtime, there were some revisions of my view aboutthe nature of development and the possibilities ofdevelopment through outside advice and resources.I am now extremely cautious about developmentaid with my initial enthusiasms much dampened.Much is band-aid stuff. There is abundant evi-dence for that. Papua New Guinea is just one of anumber of failed or potentially failed states closeto Australia. Some warned about this prospect20 years ago; they have been proven right in theirjudgements many times over.

If you were to pick out a half dozen or so ofyour most important articles or books – thework you are most proud of or that has hadthe most impact – which ones would they be?

This is a very difficult question; there is a dis-tinction to be made between those with impact

and those of which one is most proud. Theexchange with Robert Solow on the productionfunction issue so early in my career remains astandout. The book with Ivor Pearce on the Eurodollaris another; three editions in a matter of 4 yearssays all about impact. Obviously, a great deal ofattention came its way especially in professionalcircles rather than academic ones. Contributionson industrial capacity and capital requirements,such as in

The American

Economic

Review

, attracteda lot of attention at the time. A precise explanatorypiece on credit derivatives, written by JonathanBatten and myself, has had the most remarkablecurrency in terms of recognition as measured bythe thousands of electronic copies taken.

Amongst the policy offerings, a major contribu-tion was the

Quicksands of Policy-Making

from1978 to 1979. The Banking and Finance sphere posesall sorts of selection problems. The risk-basedcapital adequacy theme offered in

The EconomicRecord

and further developed elsewhere is another.Prudential themes were treated at length, the mostread being the item in the special edition of

Eco-nomic Papers

on the Campbell Report. Stabilityand failure themes were channelled by the workpublished in

Australian Economic Papers

during1988.

Amongst the contributions on empirical studiesof financial markets including foreign exchangeactivities, the recent offering on the performanceof the AUD/USD spot market would be notable. Itculminates much work on foreign exchange mar-kets pursued in recent years. With domestic bondmarkets much attention has been paid to creditspreads with a recent offering in

Applied FinancialEconomics

during 2005, probably most notable.The more satisfying personally was the articleabout use of futures contracts for hedging thatappeared in the

International Review of FinancialAnalysis

for 2004.

V Australian Economic Policy

During the 1970s and 1980s, you contributedvigorously to Australian economic policydiscussions. However, you did not sling arrowsfrom the ivory tower but got your hands dirtyin the rough and tumble of public policyformation as a government consultant andadviser and member of various government andprivate sector councils and advisory groups.

I did involve myself directly in a whole host ofways. This is less noticeable in the professiontoday and has something to do with the way in


455


which the profession has developed, but there isalso the role, purpose and exposure of corporateentities in the media. Company staff appear onTV to explain events and prospects, but in doingso, present their organisations to viewers andlisteners. A presence is established as with adver-tising. In some instances, entities pay for gettingtheir staff into regular appearances in news andpublic commentary features. Universities do nothave this perception of their roles, rightly so. Thattheir contributions have diminished is understand-able but nonetheless a matter for regret.

The nature of the involvement of academiceconomists with business has changed with muchgreater concentration on specific issues, often of aconfidential nature not for public dissemination.With government there has been a fostering ofconsultants on public policy matters rather thanacademics. Yet independent agencies, such as theProductivity Commission, are vital to sustainscope for objective advice in the critical sense ofreports from these sources being most likely tospecify underlying assumptions about their work.

The range of your involvement is surprisinglyextensive, from wages policy to immigration toair transport and recently residential aged care.What do you see as your main contributionswhen you participated in the policy process?

The stimulus to my interests in policy themescame with my 3 years at the Reserve Bank ofNew Zealand. I have taken a strong interest in howmarkets performed, most of all to get an under-standing of their workings and imperfections.

I might best illustrate some policy approachesby referring to my recent efforts reviewing agedcare matters for the Australian Government. Withno data collected about residential aged care serviceproviders, a survey was conducted seeking eco-nomic and financial data from entities. This wasdone at arm’s length by using a major accountinggroup to act for the Review. The absence of muchinformation about individual entities providingresidential and domiciliary services to those inneed brought an early decision to undertakewidespread discussions and interviews aroundAustralia. Amongst the consultancies, there wasAccess Economics for work on modelling theaged care sector to provide a quantitative basis forthe analysis of possibilities and choices about growthand funding in coming decades. The Centre forProductivity and Efficiency in the University ofQueensland examined issues and measures aboutefficiency and productivity. The Australian Bureau

of Agricultural and Resource Economics wasdrawn upon for the skills of their econometriciansand applied statisticians for a comprehensive ana-lysis of the basis of funding of aged care by theAustralian Government according to the ResidentClassification Scale. This was a remarkable andsuccessful piece of work drawing upon a databasereflecting the experiences of over 300 000 residents.Reliance on external consultants was inevitable.Recruitment of the best available people is vital.

When you look back at the policy discussionthat you were so actively involved in, are youquietly pleased or are you astounded by themicroeconomic reform, deregulation and priva-tisation that characterise the contemporaryAustralian Economy? Did you perceive 30 yearsago that tariffs would be cut to around 5 percent, that our trade ratio to GDP would expandvigorously and that our productivity levelswould for a time be the envy of the OECD?Has all this worked out better than you couldhave hoped for in accordance with your broadpolicy agenda? Do you think there’s been anyregrets or missed opportunities along the eco-nomic reform path for Australia?

Economic performance over the past 15 yearshas been very pleasing. We must be clear-mindedabout events. Some developments have takenplace with virtually no policy involvement ofwhich the most notable would be the role of thewine industry in the export market giving a trulyastounding performance. The development of theoil industry reflected initial discoveries in BassStrait. Then there were the huge expansions in theminerals industry along with the opening up ofvast coalfields for which due recognition must goto the Queensland government of that day. Withmicroeconomic reforms, deregulation and reducedtrade protection being the main focus here, manyof my views reflected efforts in the World Bankreferred to earlier. I did not perceive tariffs beingcut so far and so quickly. However, Australia hashad the good fortune of an independent agencypronouncing on trade and protection issues. Thecontributions from professional economists inthese developments I judge to have been substan-tial. Economists brought rigour to the theoreticaland empirical analyses of issues, while thoseclose to government had great influence on theultimate outcomes.

The Coalition Government under Prime MinisterFraser should have done more to secure deregula-tion in the financial services sector. For deregulation,

456



great credit must go to Paul Keating, as Treasurerfirst and then Prime Minister, and before him,R.J.L. Hawke as Prime Minister. Within the wagesaccord agreements, they developed a set of poli-cies which then brought flexibility to workingarrangements in Australia. This was matched insignificance, though earlier in time, by decisionsbringing financial deregulation.

The very success which we have enjoyed overthe past decade and a half in terms of real growthin output, our productivity performance andexport activities has been the relatively easy part.But inclinations to ape foreign ‘betters’ in policyarrangements and strategies have brought missedopportunities. For example, the blind adherence tosurplus budget notions has limited commitmentsto infrastructure projects in transport and energy.Then the non-tradeables goods and services spherespose greater problems for implementation as thereis little external stimulus for change. My work onresidential aged care brings out shortcomingsapplicable right across services activities. I amsure there is further scope for improved productiv-ity across the many nooks and crannies of theAustralian economy.

The biggest and most serious challenge lies inthe health sector. The Productivity Commission’srecent efforts on the workforce and the healtharena were not up to their usual high standard,indicating the testing features of any task in thissphere. There is plenty more thinking to be doneabout effective policy workings in the non-tradeablesspheres.

Over the past two decades, your researchhas concentrated specifically on domestic andinternational banking and finance issues. Theefficiency of financial markets and the role ofprudential supervision seem to be key concernsfor you.

My taking up these stronger interests in bank-ing and financial themes had much to do with twopeople, Ivor Pearce and Ian Sharpe. Discussionswith Ivor Pearce brought about work on the euro-dollar and the joint volume on that topic. Issuesleading up to the establishment of the CampbellCommittee with its inquiry into the AustralianFinancial System brought Ian Sharpe and metogether closely in research and policy interests.Issues in prudential supervision were part of awider coverage of regulation and its impacts occu-pying much time and attention as well as numer-ous publications for a decade. Themes aboutefficiency and market performance have remained

a dominant influence on my work ever since aswitnessed by much work on international bondmarkets and foreign exchange markets. Much ofthis later work has been with Jonathan Batten.

I joined the Board of Westpac in August 1986.For a long time, I was a member and Chairman ofthe Credit Committee at the Westpac Board andhad experience on the Board Audit Committee.So I was very close to the whole issue of creditculture and looking at prudential behaviour, riskmanagement and system stability. As well I waschairman of Ord Minnett for a brief time when itwas a wholly owned subsidiary of Westpac. I hadmuch experience of challenges in financial mar-kets from exposures to various vicissitudes on theWestpac Board. These days, issues about monitor-ing and supervision reach well beyond bankingactivities. The rest of the financial services sectoris a greater concern in light of recent happenings inthe broad insurance sphere and the explosive growthin funds management reflecting the compulsorysuperannuation payments across the workforce.

Would you like to comment on your experiencesas a Director of Westpac Banking Corporation?

I was invited to join the Board of Westpac bythe then Chairman, Sir Noel Foley. I was a mem-ber of the Board for over 15 years. This timingwas immediately after deregulation of the bankingand financial system. There was a great deal ofturmoil. The great bulk of bank staff had onlyknown tightly regulated circumstance. Notions ofprudential regulation, monitoring and supervisionnecessary in an open competitive market were notreadily understood. It was not just a question ofderegulating the banks but changing totally thestructure of most entities operating within thefinancial markets, such as money-market corpora-tions and merchant banks, other than finance com-panies. It was a big learning experience.

These changes brought serious concerns aboutthe quality of the people and their understandingof new needs in competitive markets domesticallyand with foreign exchange. These new operatingconditions called forth requirements which meantfabricating a whole set of systems for control,monitoring and supervision of activities as wellas the various trading systems for the variousactivities within the bank, some of which had notbeen witnessed for decades. The deregulation wasmuch more draconian than had been contemplatedby most observers, going well beyond various setsof recommendations. These measures broughtexciting times.


457


You have covered a wide range of topics inthe finance literature – you’ve written on insidertrading and foreign debts, on prudential regu-lation, the eurodollar market, capital adequacyrules and potential insolvency, financial crisesand corporate governments, moral hazard andcredit derivatives. On the basis of that deepinvolvement with financial institutions, whatlessons have you learnt about the efficiency andstability of financial markets?

Matters of personal and professional integrityare vital. However, effective internal systems arefor checking conduct, if a person is sufficientlymotivated and malign, methods to get around pro-cedures at least for some short period of time canbe devised. Issues of recruitment in terms of qualityhave to be matched by testing for integrity.Searching out people who are brazen in the waysin which they approach their conduct in marketsis vital. This rests entirely on management and thecapacity of management to identify these charac-teristics. Personal accountability and responsibilitycan never be lost from sight by bank management;issues about integrity of people are part and parcelof this responsibility. There are always going tobe some people looking for ways to get aroundsafeguards to secure advantage or preserve posi-tions thus defeating objectives reflecting integrityand responsibility. We have seen recently examplesin the insurance industry. Looking ahead, one fearsthe risks arising from the huge volume of moneypouring into the superannuation area.

My worry about system instability rests uponthe division of the Reserve Bank of Australia fromthe Australian Prudential Regulation Authority(APRA). Instability may be induced by entitiesunder the jurisdiction of APRA. Prudential monito-ring and supervision across the financial servicessector rests with APRA. Given the long history ofbanking supervision and well-established inter-national practices co-ordinated through the Bankfor International Settlements (BIS) in Basel, thelikelihood of bank failures inducing contagionacross banks and then system instability is verymodest. In contrast, established supervisory practicesacross fund managers and insurances is much lesssubstantial in terms of procedures and practices.My preference would be for all the tasks to restwith RBA.

Your involvement with government in advi-sory roles has also been extensive. You were anadviser to the Federal treasurer from 1976 to1981, among many other advisory positions,

and most recently from 2002 through to 2004,conducted the Government’s Review of PricingArrangements in Residential Aged Care. ThisReview process involved a commitment of full-time effort over 3 years. What has impelled youto become involved in these government-relatedactivities? What success rate does economiclogic or economic understanding have in aworld of vested interests?

How did I get involved? I was asked. My discus-sions and public commentaries on policy mattersled to those invitations. This applies to virtuallyall work at the Federal level going back to theearly ‘70s. Coming to the present, the Review onPricing Arrangements in Residential Aged Careoutcome has yet to be seen fully. Short-termmeasures taken so far mean some $1.7 billionmore has been put into aged care stemmingdirectly from the work of the Review. Given theemphasis on neurodegenerative diseases amongstthe elderly in this report, substantial additionalsums directed recently to work on these diseasesmay be attributed in part to my efforts.

The most common experience associated withthese involvements would be the real handicaps orrestraints on the implementation of change. Thereis a widespread conservatism among people witharguments ranging from opposition to change forchange’s sake through to sheer protectionismreflecting entrenched interests of one sort oranother. Regulation generates established posi-tions because some may benefit from it includingthose who administer and manage arrangements.Change challenges established orders.

What about the success rate of economic logicor economic understanding in a world of vestedinterests? At the beginning of the ‘80s, there wasan inquiry about airlines policy. It was a fairlynumbing experience about the effectiveness of theestablished order through the then so-called ‘twoairlines’ policy. The airlines enquiry was a greatlesson in vested interests and regulation being usedin their support. That experience was a wonderfulillustration of the ‘theory of capture’ whereby theregulated embrace the regulators in a bear-likehug expressing recognition of mutual benefit.Ideological dogmas as distinct from analyses arealways present in some measure. In my experi-ence, the Australian scene has not been marredby gross dogmatic insistence from the politicalleadership.

The past 30 years is ample witness to the eventualapplication of better policy outcomes. Airlines

458



policy is one example while the exit of Ansett wasa reflection of management issues. However, thestrategic shifts in policies on financial services,protection and wages matters have brought theremarkable sustained real growth of the Australianeconomy over the past decade and a half. Themain concerns for future possibilities must restgenerally with the services spheres rather thangoods production.

You have served twice as President of theEconomic Society, been on the Library Councilof New South Wales for 6 years, Patron of theTaxpayers Research Association for 5 years.There are numerous other service organisationsthat you have been involved with. Why haveyou undertaken these tasks?

Participation in the Economic Society is to beexpected of any senior academic. I think if youhave a Chair, a reasonable expectation would beto take a significant role. It would be misguidedto act otherwise. With the Library Council ofNew South Wales, I was asked to join. The veryremarkable collection of the Mitchell Library isan enormously valuable asset for Australian society,immeasurably so. There are, or have been, publicresponsibilities as a senior academic. Given thechanging circumstances and character of academiclife, the perception of roles and responsibilities ischanging. Academic betterment may not fosterexplorations outside the ‘factory gate’.

We have not asked so far about your teach-ing or supervision experiences over 40 years orso. Which students really stand out?

Teaching has always been a great interest. Ialways participated fully. Even when Head ofDepartment, I never taught less than 6 hours aweek plus supervisions of graduate candidates.Earlier on in my formative years in Newcastlewhen expansion of student numbers was substan-tial and recruitment of staff lagging, I taught19 hours one term, which was day and nightbecause we had part-time classes.

On matters of curriculum, my focus has beenon getting integration. I fear that the type ofcurriculum we have now at university, reflectingsemester divisions and relatively small topics,risks a lack of coherence imperilling understand-ing of how the disciple fits together. When thisis combined with commitments to provision ofteaching materials and notes to classes, as well asregular testing during the semester, the risks ofthis happening are greater. This does not apply to

the very best students who are going to do wellanyway, but the better than average students maybe thwarted. The emphasis on frequent testing inclass and essays to be submitted has broughtmany problems, of which plagiarism is veryprominent. When so much emphasis is placedupon international standing and attracting foreignstudents, the reputational effects of questionablestandards are vital.

I do not wish to dwell on supervision matterslet alone list names. Fourth year honour studentsare the pride, glory and joy of Australian universi-ties, not to be lost. Amongst graduate studentsclose to me now on a personal basis, and thus Ibelieve would not mind my mentioning theirnames, are three. One of the most outstandingstudents was Ernestine Gross. My last two Ph.D.candidates were Peter Docherty and JonathanBatten.

Let’s now move onto some questions aboutAustralian economics. Which Australian econo-mists – living or dead – who are or were knownto you personally, do you particularly respect?

At the Australian National University, most ofall Trevor Swan and Ivor Pearce. In Canberra,generally the list must include Arndt, Noel Butlin,Cameron, Crawford, Melville and Roland Wilson.In Sydney, Murray Kemp would be the most out-standing. Then there is Max Corden, now a resi-dent in Melbourne after years in North America.Austin Holmes and I discussed many things, espe-cially banking and monetary phenomena. Austin’smost important contribution was that he chal-lenged Dr H.C. Coombs who so dominated bank-ing and monetary matters. Most staff in centralbanking were terrified of Coombs. Austin Holmes,to his great credit, would challenge his thinkingthus raising issues otherwise likely to beneglected. I think that was an important service inits own right. I should mention Fred Gruen. Weargued a lot about issues of policy, particularly inrelation to tariff reduction. The 25 per cent tariffreduction appealed to him; he had much to do withits implementation. The capacity of that particularmove to bring counter-productive outcomes wasthe focus of discussions. Richard Snape is another.I think the Productivity Commission benefitedgreatly from his presence during the closing yearsof his life. I think he sharpened up their bases foranalysis of issues. His contributions generallywere impressive. Then there can be no questionabout the influence Colin Simkin had on mydevelopment in the early years.


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VI Contemporary Themes

Are there any contemporary economists whohave particularly impressed you?

I have been around so long the meaning ofcontemporary may have a very different meaningfor me compared with most others in Australia!There is Ken Clements in Western Australia andJonathan Pincus, now retired from the Universityof Adelaide. Clem Tisdell, my former studentfrom those early days in Newcastle, has exploredfertile pastures. All are people with genuineinsight and real ability. Then there are thoseamongst my former colleagues from days inSydney and Newcastle. Collaborating with BrianJohns in Newcastle brought me into industryeconomics and related themes in trade practices.In Sydney, Ian Sharpe was the closest collaboratorI have had.

This question, unlike the previous one, does notconfine me to Australia. Thus I would place DavidHenderson, now at Westminster Business School,amongst the most stimulating for his ideas aboutbusiness and regulation at this time. Then therewas Palle Andersen at the Bank for InternationalSettlements, a good companion in ideas overmany years. Charles Goodhart is a source of fineideas in the money and banking realm, as isAnthony Saunders at NYU.

What stands out about your contributionis your deep involvement with the businesscommunity and government while holding aChair at one of our leading universities. Youradvisory work has covered a variety of industriesincluding chemicals and petroleum derivatives,electrical engineering, textiles and airlines.What impact have these sorts of activitiesyou’ve been involved in had on your perceptionof where the economics profession is going?

What we have today are circumstances in whichpeople like myself are not going to pursue aca-demic careers. Counting the honours graduates inEconomics from the University of Sydney, thenumber going into academic life during the lastquarter century is small. They have been attractedinto policy arenas and most particularly into thefinancial services sector. Many of them nowoccupy very senior positions. People now enteringacademic life will have little inclination to do thethings I and others have done. They seem unlikelyto have the same disposition. The way the mathe-matisation of economics has gone as well as thestatistical aspects has brought a shift in purpose

to the study of the discipline. Emphases on tech-nique and so on may have been overstated com-pared with thinking about basic issues.

In Australia, academic life is not attractivefinancially despite extra payments made in somefields such as medicine, economics and finance, andaccounting. The discrepancies between salariespaid to senior academics and those pursuing careerselsewhere is just too great. Once upon a time, aprofessor was ranked alongside a first assistantsecretary in the Commonwealth Public Service.But those were days before the incorporation ofColleges of Advanced Education as universities.

On a more personal level, your extensiveprofessional commitments are all the more sur-prising with the demands of five children. Yet Inotice that some of your children have followedyou into economics. How do you balance work,family and leisure?

I have three daughters and two sons in thatorder. I managed to educate them reasonably well.Provision of education places substantial demandson resources available to families. Bear in mind,this was achieved because of my wife’s commit-ment to the home. I cannot judge what circum-stances would have been like in those days in afamily with both parents in paid employment. Interms of pastimes, I played golf for many yearsuntil my knees failed me. Golf brought exerciseand relaxation with emphasis on the latter. Balanc-ing family, work and leisure has always been achallenge. Some might say I have not paid enoughattention to leisure. Others would claim I am aworkaholic. Some of my children exhibit the sametendencies!

Ideas and issues have always interested me.Theory must be directed to explanations of per-formance in economic and financial spheres. Thatis its purpose. My predominant interests havebeen for a very long time in policy themes andapplications. Having always been quite a sup-porter for quantitative economics, I do get worriedby the ways in which the mathematics and thestatistics can capture individual’s attention for theelegance of the instrument itself rather than forwanting to use it for gaining insights. It is now aserious problem in economics. Younger peoplemay be pulled away from academic economicsbecause the rewards are not much. Yet the greaterworry is the failure to attract to economics thetype of person whose interests lie in policy andmarkets spheres but is repelled by intellectual andprofessional rigidities.

460



SELECTED REFERENCES

‘Technical Progress and the Production Function’,

Reviewof Economics and Statistics

, November 1958; pp. 407–11.

‘The Limitations of Capital Coefficients’,

American Eco-nomic Review

, March 1959; pp. 138–51.‘Capacity Creation and Utilisation in Pakistan manufactur-

ing Industry’,

Australian Economic Papers

,

7

, 1968;pp. 28–53.

‘Some New Results in the Measurement of Capacity Utili-zation’,

American Economic Review

, March 1969;pp. 183–4.

‘Quicksands of Policy-Making’,

Australian EconomicPapers

,

18

, 1979; pp. 384–96.

The Incredible Euro-Dollar

(with I.F. Pearce), GeorgeAllen & Unwin, London, 1982.

‘Regulation, Risk and the Pricing of Australian BankShares’ (with I. Sharpe),

Economic Record

,

60

, 1984;pp. 34–44.

‘Prudential Supervision of Australian Banks’ (with I.Sharpe),

Economic Record

,

66

, 1990; pp. 127–45.‘Credit Derivatives’ (with J. Batten), Economic

Papers

,

18

, 1999; pp. 19–41.‘Colin George Frederick Simkin, 1915–1998’,

EconomicRecord

,

75

, 1999; pp. 313–22.‘The Effectiveness of Interest Rate Futures Contracts’

(with J. Batten),

International Review of Financial Ana

-

lysis

,

13

, 2004; pp. 13–25.‘Measuring Credit Spreads’ (with J. Batten & G. Jacoby),

Applied Financial Economics

,

15

, 2005; pp. 651–66.‘Reflections on Colin Simkin’,

International Journal ofApplied Economics and Econometrics

,

13

, 2005; pp. 521–46.

https://www.researchgate.net/publication/4757420_'Regulation_Risk_and_the_Pricing_of_Australian_Bank_Shares'?el=1_x_8&enrichId=rgreq-6f58785d-bca2-4066-882c-496d923f9740&enrichSource=Y292ZXJQYWdlOzQ5OTAxNjU7QVM6MjYzNjk2NTk3Mzg1MjE5QDE0Mzk4ODE1NzY5MzU=





https://www.researchgate.net/publication/229451649_CAPACITY_CREATION_AND_UTILISATION_IN_PAKISTAN_MANUFACTURING_INDUSTRY?el=1_x_8&enrichId=rgreq-6f58785d-bca2-4066-882c-496d923f9740&enrichSource=Y292ZXJQYWdlOzQ5OTAxNjU7QVM6MjYzNjk2NTk3Mzg1MjE5QDE0Mzk4ODE1NzY5MzU=



https://www.researchgate.net/publication/227800396_Prudential_Supervision_of_Australian_Banks?el=1_x_8&enrichId=rgreq-6f58785d-bca2-4066-882c-496d923f9740&enrichSource=Y292ZXJQYWdlOzQ5OTAxNjU7QVM6MjYzNjk2NTk3Mzg1MjE5QDE0Mzk4ODE1NzY5MzU=

https://www.researchgate.net/publication/227800396_Prudential_Supervision_of_Australian_Banks?el=1_x_8&enrichId=rgreq-6f58785d-bca2-4066-882c-496d923f9740&enrichSource=Y292ZXJQYWdlOzQ5OTAxNjU7QVM6MjYzNjk2NTk3Mzg1MjE5QDE0Mzk4ODE1NzY5MzU=

https://www.researchgate.net/publication/283924589_Some_New_Results_in_the_Measurement_of_Capacity_Utilization?el=1_x_8&enrichId=rgreq-6f58785d-bca2-4066-882c-496d923f9740&enrichSource=Y292ZXJQYWdlOzQ5OTAxNjU7QVM6MjYzNjk2NTk3Mzg1MjE5QDE0Mzk4ODE1NzY5MzU=



a conversation with warren hogan*

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