Saturday lunch with the Australian Financial Review

The Australian Financial Review was kind enough to do a profile of me for the 'Saturday lunch with...' column. Here's the highlights from a delightfully long chat with journalist Fleur Anderson:

The very different politician

Lunch with economist turned politician Andrew Leigh begins with an embarrassing mix up. There’s a patch of his ­Canberra electorate that’s become hipster heaven. It has been lauded even in the New York Times travel section for the proliferation of cool restaurants where the patrons play “hipster or hobo”, guessing the socio-economic status of people on the street.

We had agreed to meet at his local favourite in the city’s northern suburbs; the restaurant has all the attitude but its $8 bottles of bubbly water seem a bit profligate for the politician who has written an entire book about economic inequality.

Minutes tick by before we realise my ­mistake. He is in the cafe next door and it is with some relief I pay the bristling wait staff for the undrunk water. His choice, Lonsdale Street Roasters, is a cheery student hangout and part coffee-tragic haven with distressed floorboards and granny-chic crockery.

Leigh is fresh from launching his latest book,The Economics of Just About ­Everything, and proceeds to demonstrate how an economist chooses lunch. Don’t choose the muesli – made in bulk in advance for breakfast – or the lasagne at an Italian ­restaurant. An economist would choose the most unlikely dish, with the most outlandish combination of ingredients, to ensure it hadn’t been prepared ahead.

“These guys are chefs,” he says of the cafe. They take pride in their work, using choice ingredients and making it a point to deliver unpopular dishes that would put off less hardy diners. We agree the economist’s pick would be a radicchio, pear, blue cheese and hazelnut salad.

Instead, Leigh chooses a salad of smashed avocado, quinoa, coriander, lime, bonnet chillies and tomato. I scoff, saying quinoa is so everywhere right now, and choose a salad of roast cauliflower, berber spices, chickpeas and tahini yoghurt.

A race to the publishers

It seems every second politician is flogging a book at the moment. The day before, Leigh attended former Labor treasurer Wayne Swan’s book launch. There’s been Greg Combet’s memoirs, Gareth Evan’s diaries, and of course the biography of Treasurer Joe Hockey.

All of them give an insight, to a greater or lesser degree, into the highs and lows of politics, the angst, the personal ambitions and of course the bitterness of defeat and betrayal.

This is where Leigh’s book differs. There’s no insider view of the leadership ­tensions that plagued the previous Labor government. This is not a call to arms to break the shackles of political factionalism or an economic manifesto.

Instead, it’s an engaging look at behavioural economics – why we are more likely to buy a convertible on a sunny day and a black car on a cloudy day, why dating is a numbers game, and why sometimes the most important causes are not always the most newsworthy.

Leigh attempts to get the reader to think about their everyday decisions in an economically rational way: incentives, tradeoffs, comparative advantage, the perils of the “sunk-cost fallacy”.

Perhaps one of Leigh’s most surprising revelations is that economics can give you the confidence to run against the herd – for example, the belief that “winners aren’t quitters” isn’t always correct, and sometimes quitting is exactly the right thing to do.

This is the fallacy of the sunk cost – that a past decision cannot be undone.

In the current “win at all costs” political environment, it seems this is a particular malady. Look at the policy contortions over Tony Abbott’s paid parental leave scheme and the political cost to Labor over its commitment to carbon and mining taxes.

Change is good

As a young man, Leigh obviously understood instinctively that sometimes winners are quitters, deciding to make a career U-turn after devoting years to becoming a lawyer. He must have been half decent at it because he worked for Minter Ellison in Sydney and Clifford Chance in London as well as serving as an associate to former Justice Michael Kirby of the High Court of Australia.

“Working for Michael Kirby was amazing, I probably learnt more from him than anyone except for my parents,” Leigh says.

“But in the end, the problems I was concerned about – inequality and disadvantage – the legal framework of rights was probably less useful than the economic framework of incentives.”

That preoccupation with disadvantage prompted him to go to the United States to “retool” as an economist at Harvard University, where he met the student who would become his wife, landscape architect Gweneth (they now have three children), and formed life-long friendships with celebrity economists, if there is such a thing – ­fellow Australian Justin Wolfers, now a University of Michigan economics professor, and his wife Betsey Stevenson, the Obama administration’s key economic adviser.

As a federal MP since 2010, Leigh is now in his third career and learning fast. When asked what life could bring after politics, Leigh answers as most politicians do – that he does not even countenance a life after ­politics. He has a bit of a reputation for being a non-politician and he is certainly outside Labor’s powerful factional machine.

But Leigh has been a Labor Party member his entire adult life and actually ran against former Liberal NSW premier Barry ­O’Farrell as a 22-year-old “cannon fodder” candidate for Labor. He put up a decent fight for the Sydney seat and, as expected, ­O’Farrell thrashed him.

“Ever since then, every time something good would happen in my life, Barry O’Farrell would send me a lovely little handwritten congratulations,” he says.

The terrible irony, as Leigh points out, is that O’Farrell’s generosity in sending handwritten notes became his downfall over a thank-you note for a $3000 bottle of Grange.

Through the lens of an economist

Nevertheless Leigh – a bit like an ex-smoker – still looks at life and politics like an economist. The latest book is his third on economics and the absence of political insider trivia – the stuff that gives political junkies their highs – is noticeably absent from Leigh’s works. Is he censoring himself now that he’s a federal politician?

Not at all, Leigh says, nor has he been told to keep mum about internal Labor ructions.

“There’s value in being yourself and focusing on the stuff you do differently to your colleagues,” he says.

“If you are the only person in the room who is involved with ­getting better wages for childcare workers, you really want to bring that perspective to any conversation you have. Likewise, if you’re the only former economics professor in the room, it doesn’t help the room if you try to behave like everybody else.”

While your average career politician is quick to tug on the heart strings, and rely on emotion over evidence to sway the masses, Leigh seems the opposite. He’s one of Canberra’s most accessible politicians – but ask Leigh what he feels about an issue and it’s like drawing blood from a stone.

Take for example, his interest in elevating poverty. Where did this interest in inequality come from, I ask? He spent three years in Indonesia as a child with his parents, both academics who were working on an AusAID-funded project there, and “those issues were talked about a lot”.

I probe further. What specifically made such an impact that years later he would give up a legal career to become an economist so focused on alleviating poverty?

Formative first-hand experiences

Leigh pauses, thinking of a place where kids lacked even healthcare basics. “Indonesia in the 1970s was a desperately poor place. I was the only white kid in my class in Banda Aceh and most of the other kids in the class didn’t have knives or forks or plates at home.

“They would have been eating with their right hand off banana leaves. One morning at school, one of the teachers announced one of my classmates wouldn’t be coming to school. And it was because he’d died.”

Leigh suggests there is a disconnect in the way Australians perceive their own wealth and the poverty around them. Our national psyche is built around the idea of egalitarianism, but “the fact is we are not as equal as we’d like to think”, Leigh says.

Australians on average believe that the top fifth of the income earners have a third of all wealth. In fact, that top fifth have two-thirds of all wealth; the bottom 20 per cent has less than 1 per cent of all wealth.

We are not alone with this flawed self-image. Europeans are much more likely to believe the circumstances of your birth determine your life chances, whereas Americans believe anyone can make it.

“But the fact is, Europe is much more socially mobile than America,” Leigh says.

Understanding national myths is important if you are a politician who wants to ­disrupt the status quo; personalities and emotive arguments too often trump ideas in the combative bipartisan nature of politics.

On the ‘other side’

Leigh says there are people on Australia’s conservative side of politics whose opinions he values. One is Senator Arthur Sino­dinos, the former assistant treasurer, now embroiled in the NSW anti-corruption inquiry. Leigh and Sinodinos shared a ­regular ABC Radio National Drive radio spot and Leigh valued the ­Coalition senator for being “so thoughtful and reflective”.

Says Leigh, “I miss that conversation. I walked out of each interview feeling that I was a very slightly better politician than I was walking into it.”

Leigh is fond of others from “the other side” but the current political environment being what it is, it would only harm them to name them, he says. His friends in Washington report the same phenomena.

We talk about the surprise defeat of US House majority leader, a moderate Republican Eric Cantor, who lost to a Tea Party candidate, seemingly unaware of a far-right revolt brewing among his constituents.

“I don’t think it’s quite as bad here,” Leigh says, “but there is a sense that what used to be a conversation in the town square has now devolved into little cafes on the sides, where you have a far-left conservation on one side and far-right on the other.”

We finish our cauliflower and quinoa ­salads and leave the cafe on the left side of the street.

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