Book review: Get off the Grass, by Shaun Hendy and Paul Callaghan

by Tim Hazledine / 12 September, 2013

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Get off the Grass is a classy, spirited, intelligent book – but its central claims are wrong.
The great physicist Max Planck once said he tried to study economics but gave up because it was too hard. Professor Sir Paul Callaghan – a distinguished physicist and 2011 New Zealander of the Year – had no such qualms. He was “fascinated” by economics and cheerfully popped out a book on the subject – Wool to Weta: Transforming New Zealand’s Culture and Economy (2009). So how did Callaghan deal with the too-hard problem? He simply ignored it, evidently innocent of any reading into the discipline or serious conversations with working economists.

Sir Paul Callaghan, By Murray Webb


I may not have been the only economist reviewer of Wool to Weta to grumble about this. In any case, when Callaghan – knowing his time was short – approached another physicist, Shaun Hendy, to collaborate on what became Get off the Grass: Kickstarting New Zealand’s Innovation Economy, their approach was totally different. They shared drafts with possibly New Zealand’s smartest young economist – Dave Maré of Motu Economic and Public Policy Research – and others, and dug enthusiastically into the classics of the subject, such as the ideas of Adam Smith, David Ricardo and Alfred Marshall, as well as modern research into the economics of growth and the economy of cities. They brought in Hendy’s own work on similarities between biological and innovation networks and ecosystems, and that of other non-economists – fascinating stuff.

However, the results are basically the same as those of the earlier book. There are in essence two claims made: one major, one subsidiary. The major is this: the income gap between New Zealand and Australia and other economies is caused by a “knowledge gap” marked by our relatively low output of patented intellectual property (IP), to be cured by more (and better) government spending on research and development (R&D).

The subsidiary proposition is signalled by the clever title of the new book: current R&D efforts, such as they are, are inappropriately biased towards our traditional land-based activities – especially agriculture – instead of focusing on developing IT and other advanced manufacturing and service activities. We should be “exporting knowledge, not nature”.

In 2009, I thought both these propositions were wrong, and they still are in 2013. You simply cannot build a well-grounded explanation of international income variations on differences in R&D or IP or patents. And the view of land-based activities as producing boring “commodities” is simplistic and misleading – there is a heck of a lot of “knowledge” built into the modern agricultural supply chain, for example.

But never mind that. This is a classy, spirited, intelligent book, with something of interest on just about every page – from people in big cities walking faster to the serendipitous origins of Silicon Valley. Read and enjoy, but don’t take it all on. Economics really is difficult. Another great physicist – the magical Richard Feynman – gave a clue why when he said: “Imagine how much harder physics would be if electrons had emotions!”

Humans do move in mysterious ways. They have their reasons and these can differ across countries and cultures. Meddle with caution.

GET OFF THE GRASS: KICKSTARTING NEW ZEALAND’S INNOVATION ECONOMY, by Shaun Hendy and Paul Callaghan (AUP, $34.99).

Tim Hazledine is a professor of economics in the University of Auckland Business School.

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