2B RED: By and about economists and economics🍋

Sticking to my knitting

Recent 2B RED posts have ranged across a variety of themes, generally related, at least indirectly, to economics (OK, so I hear the economic imperialists amongst you protest that “everything on the planet — and beyond — is related to economics!”). But this post sticks to my knitting: economists and economics.

Economist on the world stage

If we were conducting a poll for the economist who made the most significant contribution on the global stage in 2025, Mark Carney would have to be the frontrunner. His career has taken him a long way from the remote town of Fort Smith (population some 2,000) in the Northwest Territories of Canada. With degrees from Harvard and Oxford, he then spent 13 years in the finance sector with Goldman Sachs. Following a period as a deputy minister in the Canadian Department of Finance, he was appointed Governor of the Bank of Canada. He followed that a little later by serving as Governor of the Bank of England, the first foreigner to serve in that position in the Bank’s long history.

Chalky Island, Fiordland National Park. Dave Heatley

In 2025 he became Prime Minister of Canada, a position bringing with it some significant challenges in managing economic and political relations with Canada’s neighbour on its southern border. (Former prime minister Pierre Trudeau when asked about Canada’s relationship with the US, said it was like sleeping in bed with an elephant; however kind and well behaved, every time the elephant moved even slightly, you could be crushed). Carney’s speech at Davos could well be a turning point in international relations; he called for the medium sized countries to act together to counter the power of the mega countries (Russia, China and the US), signalling a new direction for international trade and cooperation.

In Mark Carney’s book, Values: An Economist’s Guide to Everything that Matters (William Collins, 2021) one can see ideas and analysis that underpinned the Davos speech. He paints a somewhat grim picture of the world, but then sketches a roadmap for a way forward. Unsurprisingly given his background, he views markets as an essential element in society, but we must “channel the value of the market back into the service of the values of humanity.”

Trade policy by whim

The breakdown of multilateralism and global trade is highlighted by Philip Coggan, The Economic Consequences of Mr Trump: What the trade war means for the world (Profile Books, 2025). If ever US economic policy was driven by the whims of one person and based on mistaken premises, Liberation Day would have to be the epitome. What every Economics 101 student understands is trade deficits reflect an excess of domestic investment over savings; this apparently escaped Trump and his economic advisers. The surpluses of other countries against which he rallied were, in large part, nothing more than the consequences of the US government’s massive and ongoing deficits. In a well-known quip, Milton Friedman responded to a question about US trade deficits: If foreigners are happy to provide us with nice shiny goods in exchange for bits of green paper that cost us next to nothing to print, then this surely has to be a great deal.

Trump’s lack of understanding of international trade is enough cause for concern; but the real damage has come through the uncertainty created by a lack of a strategy, constant reversals, and the use of tariffs to “punish” countries whose leaders or policies are not to Trump’s liking. The chaos in the global system brought about by Mr Trump and its wide-ranging consequences, including for the US itself, are clearly stated in this highly accessible, jargon-free little volume of 144 pages.

Guide for the perplexed

Philip Coggan is also the author of our next entry: Economics: The Economist Guide (Profile Books, 2025). He is a British business journalist and news correspondent, who has written for The Economist newspaper since 2006 after 20 years at the Financial Times. After a brief opening synopsis of the history of economic thought, each subsequent short chapter covers a standard menu of fiscal and monetary policy, trade, productivity and the labour market.

In his concluding chapter, Coggan addresses issues that critics feel are inadequately dealt with by “mainstream” economics. In each case, he lays out the basis for concerns and provides a cogent analysis of how economics has responded (but still comes up short). Topics covered in this chapter are the environment, climate change, inequality, anti-globalisation and behavioural economics. The book finishes with a most useful and extensive glossary of economic terms from arbitrage to zero lower bound. A comprehensive index follows.

This book would be an ideal starting point for anyone wishing to get an introduction to economics in an accessible and highly readable form: nary a graph nor an equation!

Economic puzzles and parables

Tom Standage (ed.) The Economist Quiz Book: 60 brain teasers for inquisitive minds (Profile Books, 2025) is not about economics per se; it has its origins in The Economist newspaper. It comprises four sections, each with a particular theme; e.g. “Answer the questions to reveal a common theme”; or “Spot the myths.” A good one to challenge the brain.

Tim Harford is a British economist, journalist and author of several “economicsy” books, including The Undercover Economist Strikes Back: How to Run or Ruin an Economy (Little Brown, 2013).

New Zealand readers will enjoy the opening chapter , as it starts with recounting the story of New Zealander Bill Phillips and his seminar at the London School of Economics in which, to the utter astonishment of the crusty academics, he demonstrated his hydraulic machine, the MONIAC (Monetary National Income Analogue Computer). Their disbelief turned to amazement when they realised this machine could simulate a complex set of equations to analyse the impact on national income of macroeconomic policy changes, a task which hitherto had been beyond any computational solution.

The book employs an unusual but captivating literary style in which a sceptic poses challenging questions to which an economist responds. For example:

Sceptic: “So you’re saying if I want to solve economic problems, I should fire up the printing presses after all?”

Economist: “Yes, sometimes. But before we get any further into the topic of creating money, I think we need to take a step back and get our heads around what money is.”

In short, a readable, clever, entertaining and informative volume.

Harford is a great story teller; some readers will recall his keynote presentation to an NZAE conference when he told the story of Thomas Thwaites, a British designer who gained recognition for his 2009 project The Toaster Project: Or a Heroic Attempt to Build a Simple Electric Appliance from Scratch. Fans of Harford regularly listen to his podcast Cautionary Tales.

Milton Friedman revisited

Jennifer Burns, a Stanford University historian, has produced the first comprehensive biography of the life and ideas of Milton Friedman: Milton Friedman: The Last Conservative (Farrar, Straus and Giroux, 2023). Friedman was a classical liberal, and one of the most influential, and at times controversial, economists of the 20^th century. His work on money and inflation was fundamental to shaping our understanding of the role of monetary policy. He had an ability to communicate complex economic concepts to a wide audience, always underscoring the importance of individual freedoms and the role of markets. That is amply demonstrated in the TV series Freedom to Choose. A Nobel laureate, he was a major figure in the Chicago School of Economics and arguably his libertarian views contributed to “the conservative shift in American political ideology” in the 1970s and 1980s, associated with the Reagan years.

Jennifer Burns’ biography portrays Milton Friedman as a principled but evolving thinker, who was more complex than his ideological reputation suggests.

Rational rationing

Let me end this edition of 2B RED with an interesting bit of New Zealand’s economic history. The monograph by Lynley Stone, Rationing in New Zealand: September 1939 – June 1950 (Mt Albert Historical Society, 2025), is a comprehensive, well-researched piece that details the history of rationing in New Zealand during and after WWII. It highlights the challenges of implementing and monitoring a complex set of government regulations. For anyone interested in following up on this topic, Stone provides an extensive bibliography.

Rationing had an enormous impact on private households for more than a decade. The range of items covered included petrol, tobacco, butter, tea, sugar, meat, clothing, hosiery, fabrics, eggs, cream, footwear, household linen, blankets, paper and rubber. In the latter case, gumboots were only available to farmers with 12 or more cows.

There were two principal mechanisms for rationing. One was the the Government, voa the Post Office, issued individuals with ration books containing coupons which could be “spent” at shops (e.g. sugar, butter, clothing). (At this point your 2B RED columnist should declare his own experience: as a young boy I was sent to Mr Dalgano’s grocery store around the corner on Grey Street, Invercargill with the requisite number of coupons to buy tea, butter, sugar etc.)

The second mechanism was the Government restricted the supply of goods (e.g. eggs, bacon, fruit) to registered retailers . In that case, the shopkeepers had to be relied on to “equitably allocate” the limited supply amongst their customers.

Given the complexity and detail of the ration book system, one can only imagine the extent of the bureaucracy needed to design and implement the system. To illustrate: petrol was rationed to 2-4 gallons a month, depending on the horsepower of the vehicle; foodstuffs were rationed by weight (e.g. 2oz of tea per week, or 8oz of butter) and different amounts were set for adults, children from ages 5-10, and those under 5. In some cases extra allowances were granted to pregnant and lactating mothers. In some years extra allowances were granted over the Christmas period. Ration books had to be constantly updated as prices and regulations changed.

Doubtless, there were incidents of cheating and fraud, but given the universal nature of the schemes and a heightened level of patriotism during wartime, one suspects it may not have been very extensive. Coupon trading was permitted, and those with coupons in excess of their needs could trade those for other coupons to supplement their holdings.

There were significant social and cultural consequences, many of which carried over for many years after the war. Shortages of almost everything fostered both a culture of frugality and an emphasis on home skills. Clothing was expensive and hard to obtain so many clothes were sewn at home; old woollen sweaters were unravelled and the wool used to knit a new one. Prime cuts of meat were a rare item, but offal was not rationed. Dishes involving kidneys, liver, tripe and brains were common in my household. We were required to use dripping (lard or bacon fat) on the first piece of bread or toast, and then allowed butter on the second piece. “Making do” became very much part of wartime life. And the practices, skills and attitudes developed in those years, were to varying degrees reflected in the lifestyles of the next two generations.

New Zealand made huge sacrifices in WWII; the history of rationing highlights that some of the costs fell on households which by and large would seem to have “done their bit” for the war effort.

By Grant Scobie

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Entoloma hochstetteri, Fiordland National Park Dave Heatley