Volume 2 OCT 2007

Modeling Amazon deforestation for policy purposes
Clive W J Granger

Economic policy issues for climate change
John Freebairn

The economics of sport
Peter J Sloane

A comparative view of unions, involvement and productivity
John S. Heywood

The world before public affairs
David Merrett

Are delays in tariff-reduction programs ever economically rational?
Neville R Norman

The importance of commerce and commercial principles in determining the well-being of society
Jeff Borland

Guideposts for your future success
Max Corden

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By Max Corden

I graduated here with a Bachelor of Commerce degree 58 years ago. When I was asked to give this address I asked in return, ‘Why me?’  The answer given was, ‘You are old, with a lot of experience. So you should be able to give the graduands some advice.’

My first reaction was to seek some advice from several of your teachers, and from others. I also sought advice from Confucius:

The Master said, If the scholar be not grave, he will not call forth any veneration, and his learning will not be solid.
Book 1, Analects of Confucius

Good advice: I must be serious, otherwise you will not venerate me.

My first piece of advice to you is to be ready to take advice before making important decisions, and take it from qualified people. This applies to decisions in governments, companies and indeed any organisation. One can think of many examples where Prime Ministers and Presidents have not taken adequate advice and thus made bad decisions. Before returning to Australia five years ago I lived and worked in the US for 13 years. Hence I think of American examples. Whose advice did the President of the United States take before he embarked on a disastrous war in the Middle East?  He took advice from the wrong people.

My second piece of advice is to keep studying. Let me quote Confucius again.

The Master said, Is it not pleasant to learn with a constant perseverance and application?
Book 1, Analects of Confucius

Certainly, you should continue to study economics and any other fields you studied here. But also go beyond them, perhaps to science, philosophy and particularly history. I will come back to that later.

My third piece of advice is to learn to speak and write clearly and simply. If you can do this already, you have a great advantage. Communication is crucial to success in life, especially in the jobs that most of you will be doing. When I was a student like you, I was very shy. I could not imagine myself standing in front of a large audience. But I observed the style of good speakers, and when the time came to lecture to a class or to speak at a formal occasion, I discovered the key: careful preparation, plus a few tricks.

I have now given you three pieces of advice for personal success. Now, I come to three more pieces of advice, involving larger issues.

I have always been interested in public policy and politics. Also, I have wanted to understand why some countries are economically successful and some are not; and why policies and economies go wrong, or how they can be made better. I am sure you will be thinking about these matters in years to come.

I draw here upon some of my reflections, which are contained within three key words: history, empathy and morality.

History

We can only understand the present, and form sound views about the future, by knowing the past. I encourage you all to study history. For me, it is a life-long study. I will give three examples which fascinate me:

1. China is going through a fantastic growth period with a massive movement of people out of agriculture and into big cities. This has many problems. Pollution is just one of them. Study the nineteenth century history of Britain and the US, and you will recognise similarities in the problems faced, which means you may be able to anticipate some of them.

2. US and Iraq. Study the history of Iraq – which shows how the British constructed an artificial country after WWI out of three provinces of the Ottoman Empire – and you will understand its present problems. Clearly, American decision makers did not know that history.

3. Australia. To understand the political system, the legal system, and many attitudes – including a deep commitment to democracy – one needs to know the history of Britain and how Australia was formed as a set of British colonies in the nineteenth century.

Empathy

Empathy is an understanding of how others think and feel. In negotiations – whether commercial, financial or political, or between employers and workers – empathy is crucial. For some of you, negotiations will become an important part of your future work.

In multicultural societies, empathy for people coming from different cultures is particularly important. And it is necessary for international peace, social harmony and personal success in business. If there is to be peace (and hence economic prosperity), empathy is needed between Sunnis and Shias, between Palestinians and Israelis, and between Serbs and Croats.

Morality

To get socially desirable behaviour, economists emphasise incentives. If we want to reduce the amount people smoke, we raise the price of cigarettes and people will have a financial incentive to smoke less. But sometimes the price mechanism cannot do the job, so we turn to the legal system and regulations, which are costly to enforce.

If tax evasion becomes very common, it becomes costly to enforce the tax system. If managers of companies generally behaved like those at the notorious Enron firm in the US – who showed a lack of corporate ethics – there would have to be many more strictly enforced regulations. The same is true when bureaucrats are lazy or corrupt, or when teachers neglect their teaching duties.

Morality – or call it ‘professional ethics’ – is much cheaper for society than the regulations, the enforcement staff and the paperwork that regulations require. In a successful economy (like the Scandinavian ones) there will be a high degree of morality. In any case, behaving ethically should be an end in itself for all of us. Those of you that will practice accountancy must particularly remember the need for corporate ethics.

Be moral yourself, and especially favour others – whether in politics or in organisations, private or public – whose behaviour is moral.

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