Money Talks: Shamubeel Eaqub on the ‘dumb’ inflation debate and how it would solve poverty

Shamubeel Eaqub, economist and consultant at Sense Partners. Photo / Provided

“We are very unsophisticated in the way we conduct these debates,” says economist Shamubeel Eaqub, as he discusses inflation politics in New Zealand.

“It’s black or white. A lot of savings are shades of gray.

“Here we say it’s because of central banks that we have this inflation,” says Eaqub.

“About a third of that is from food and fuel. Is it really the case that because of central bank policies, food and fuel have gone up? That’s stupid, isn’t it ?

“I think there’s a lack of humility and a lack of uncertainty,” he says. “The longer I was an economist, the more I realized that I know very little and that things will surprise me again and again.”

Our interview, for the Money Talks podcast, focuses on growing up, career choices and attitudes towards money.

But it wouldn’t be a decent conversation with the top economist if it didn’t involve some candid observations about the current state of the economy.

Never short of opinion, Eaqub is uniquely placed to put the chaos of capitalism’s ebb and flow into context.

During the global financial crisis he was chief economist for Goldman Sachs NZ before switching gears and working for himself.

He now works with Wellington-based consultants Sense Partners.

Eaqub grew up in Bangladesh, then moved to Samoa where his father had a teaching job.

His family arrived in New Zealand when he was 13 and settled in Lincoln, near Christchurch.

“My family, we’ve been pretty open about the money,” he says.

“When we moved to New Zealand in the 90s my dad was very clear, you have to have your own bank account, your own card, your own money – so when you get a job you can take care of everything from that.”

Settling into New Zealand life hasn’t been difficult at all, says Eaqub.

“It was really fun, I really loved living in Lincoln, I had an amazing group of friends. It was a quiet place but very multicultural because of college.”

He remembers the difficult economy of the time.

“It was in the early 90s and there was a lot of tension, we had gone through the [economic] reforms, things were very uncertain, the currency was very weak.

“Certainly from a family perspective, moving here we were moving money around the country to buy a house, so it was: what are interest rates going to do?

“My memories as a 13-year-old are limited, but when I look at the data I see it was a really interesting time for New Zealand.”

Eaqub acknowledges that many older New Zealanders were scarred by nearly two decades of inflation from the mid-1970s to the early 1990s.

“It was their lived reality. This period was extraordinarily frightening. Inflation was extremely entrenched and was really difficult to eradicate.

“So I don’t think we should diminish their lived experience…when inflation gets out of hand, it embeds itself into a society and an economy.

“But at the same time, New Zealand isn’t what it used to be. We have extraordinarily flexible labor markets, we have extremely individualized wage setting. We’ve seen the relationship between wages and unemployment s ‘collapse.”

The fears of the 1980s and 90s experience might not be suitable for this age, he says.

“I think it’s important that when we talk about these things there’s a reduction for age because there’s a lot of old people saying old stuff and maybe it’s not relevant to today. today.”

Of course, Eaqub is old enough to have been at the heart of this century’s biggest financial crash and economic downturn, working at Goldman Sachs during the peak of the GFC.

Eaqub in 2007 when he was director of investment research in Australia and New Zealand for investment banking firm Goldman Sachs JBWere.  Photo/Brett Phibbs
Eaqub in 2007 when he was director of investment research in Australia and New Zealand for investment banking firm Goldman Sachs JBWere. Photo/Brett Phibbs

“Being in an investment bank during a global financial crisis was extremely interesting,” he says.

“We were able to see all the thinking that was going on and the explanations that were being put forward about how the GFC was going, what the connections were, what the spread would be.”

The thing is to be around the people involved, he says.

That’s been the appeal of consulting, moving around the country and working with different companies in different industries.

Eaqub studied economics in school, but his main focus then was math and science.

It was not until he went to Lincoln University that the passion for economics seized him.

“I had a speaker, Bert Ward, who was truly amazing, an inspiration, and got us interested in data and models.

“It wasn’t just theory. It’s not just something in textbooks. The beauty of economics is that it’s actually about people and society.”

Sometimes we lose that, he says.

“We think it’s all about business, in a way, but business is made up of people and is for people by people.

“And the economy as well. Having that base and that ability to see that is pretty powerful.”

Eaqub graduated in 2001, at a time when the reforms of the 1980s had become entrenched in politics.

“We were determining if they were working,” he says.

There were always question marks. “These questions have been asked from the beginning.”

Eaqub sees economics as deeply political.

“Sometimes we miss that in the way economics is taught and talked about,” he says.

“We like to think that somehow it’s separate. The borders, the rules, the incentives that we have in the economy are quite often decided by political systems. So politics is absolutely integrated to the economy.”

Eaqub’s poorest period was his student years, when spare money was mostly spent on beer.

He’s not particularly extravagant with his spending, but he thinks money should be more than enough – that we should try to enjoy things even if it’s small indulgences.

When he got his first professional job, he got into the habit of buying coffee every morning and taking some quiet time to drink it alone.

“My first job was with StatsNZ. I moved to Wellington at 20 and it was wonderful.”

He then worked for ANZ here and then in Melbourne before joining Goldman.

“I don’t think I was actively looking for more money in my jobs,” he says now. “It was about the opportunity to learn how to do something different.

“In my mind, the work is very important and we spend so much time doing it. It should be interesting and get people interested.”

Leaving the harsh world of investment banking was not an outcast, he says.

“I loved it. It was a tough working environment. But there was something about this pressure cooker that was fabulous,” he says.

“But also it means you don’t have time to do those other things that are also important. The reasons were very personal. Selena and I had just gotten married and we wanted to spend more time together.”

Over the past decade, Eaqub’s media profile has grown steadily.

“It’s not a deliberate decision to be in the media,” he says. “In most cases the media comes to me.”

Eaqub has also taken a more socially conscious approach to its economy in recent years.

“Totally,” he said. “Because I started my career as a macro [economist] – you did not see any individuals. You’ve seen totals and averages and aggregates.

“I think as you get older you have a greater sense of appreciation for diversity and differences in outcomes and consequences.

“But also the lesson of having lived through a recession and seeing the human cost of changes in the economy.”

Over the past decade, he has spent more time visiting communities and engaging with different organizations, he says.

“It gave me a better understanding that there is real poverty in New Zealand. If you only looked at the averages, you wouldn’t think that. There is real poverty, material hardship and deprivation.”

So why are some people destined to be rich while others never will be?

“A lot of it is luck,” says Eaqub. “If you’re lucky enough to be born in a particular time and place and into a particular family… more often than not, that’s the biggest predictor of where you’ll go in life.”

But it’s also because of the choices we make as a society around education, well-being, access to jobs and amenities, he says.

“Success is not the same for everyone. It’s very easy to be materialistic as an economist and say that if you earn that many dollars, you succeed, but if you earn that much, you don’t succeed. not.”

Eaqub thinks we should invest more in tackling inequality.

“The big thing we could do with poverty is to have enough taxes to properly fund our social services,” he says.

“We have pretty good safety nets, but they’re nasty and stingy and the reason for that is that we don’t raise enough taxes for our welfare system to do what it’s designed to do.

“I don’t think things are fundamentally broken in New Zealand. I live in this country and I love this country because it has so much potential and life is good for so many people,” he says. .

“But we also know that’s not the case for some. I don’t think the fixes are as fundamental and structural as people think.

“I feel so optimistic when I travel the country because there are so many good things happening. But if we could put the safety net a little higher, a little wider, a little kinder, I think we could do things better.”

Money Talks is a business podcast from the NZ Herald, with new episodes on Saturdays.

• Money Talks is a podcast run by the NZ Herald. It’s not about personal finance or economics – it’s just well-known New Zealanders talking about money and sharing stories of the impact it’s had on their lives and how it’s shaped them.

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