On Monday morning we were driving home from holiday, with a car so chock-full that my eleven year old daughter had bet me I couldn’t get everything back in (she lost), when we got to Tirau and saw a sign advertising a book sale –  at $1 a book.  It was too much for us to resist.   Among the hall full of books, I spotted Street Freak: Money and Madness at Lehman Brothers, by one Jared Dillian.

Readers may recall Dillian.  He was the US-based commentator who late last year wrote a piece on forbes.com claiming that, with the election of the new government, New Zealand was about to “commit pointless economic suicide”.     I wrote about his column here (various other people had a go too).   Like others, I was pretty dismissive: perhaps, as Dillian suggested, there will be a recession here in the next few years (but in any three year period that is a non-trivial risk, including for factors quite outside New Zealand’s control).   And as for “pointless economic suicide” (I noted)

If there is a “suicide” dimension to economic policy in New Zealand, it is the wilful blindness of successive governments led by both main parties, who keep on doing much the same stuff, and either believe they’ll get a different and better (productivity) result, or who just don’t care much anymore.

I’d never heard of Dillian previously –  although on checking around I found that he was a regular markets commentator, and seemed to have people willing to pay for his views –  and had given him no attention since.   But on Monday I picked up his book anyway, for three reasons:

• it was only $1 and I was just a little curious about the author,
• the jacket suggested it wasn’t just another description of life in the financial markets, but was also a pretty honest and searing account of the author’s struggles with mental illness, and
• the rave review on the back cover from the novelist Siri Hustvedt  (“Always vivid, by turns hilarious and sad, this is an electrifying memoir”).     It turns out that Hustvedt had spotted Dillian’s writing talent when she was helping with a programme in a psych unit when Dillian was at his lowest.

It is an excellent book.  I’m a bit of a sucker for (second hand) histories of American corporate takeovers, I have quite a few books about markets acquired when I shifted into the Reserve Bank Financial Markets Department 20+ years ago, and really big piles of 2008/09 financial crisis books.  Dillian’s is unlike any of them.  He had –  and offers –  almost no insights on the failure of Lehmans (though no doubt the name helped him find a publisher a few years after the failure). Dillian was a trader (latterly head trader for exchange traded funds) and knew little more about his employer’s travails –  and reckless real estate risks – than anyone could see (evenually) in the share price.  He’d developed his newsletter  –  and found an audience –  while still at Lehmans but then much of it was about the esoterica of market liquidity.

But it is simply an extraordinarily vivid book –   not sparing the vulgarity, or accounts of his alcohol excesses –  tracing Dillian’s desperate, obsessive, desire to make it in the financial markets (as a late entrant –  he’d been a US Coast Guard officer –  with a part-time MBA from a no-name university.  There are the highs and lows, the emotional intensity, of markets let alone of Dillian himself.  One is never quite sure how his wife coped with him, even before the mental illnesses came to the fore.   As the jacket notes

The extreme highs and lows of the trading floor masked and exacerbated the symptoms of Dillian’s undiagnosed bipolar and obsessive compulsive disorders, leading to a downward spiral that eventually landed him in a psychiatric ward

And that after an earlier suicide attempt, which he survived only because after taking a big dose of pills he –  as people sometimes do –  made a call, not for help but just to say goodbye.  After a family member went through years of serious mental illness I also have a pile of books on mental illness and the experiences of patients and families.  I’m tempted to shelve Dillian’s book with those works, even though most people buying it will probably be after the markets stuff.   Siri Hustvedt continues her endorsement suggesting that the book is “not only about money and madness, but the madness of money”, but I think that is both simply too cute, and wrong.   But it is a powerful account, full of insight, of one man’s experience of both.

What also interested me was Dillian’s career turn. Through much of the book his aspiration is to turn himself into a prop trader successful enough that he could work where he wanted, pretty much on his own terms  –  his example was a Lehmans prop trader then operating from Florida  And when I’d seen he’d previously been at Lehmans I assumed he’d lost his job in the failure, and after a time taken a different path.  His was a (much) braver call.  After the Lehmans failure, Barclays acquired many of the better bits of the business, and Dillian’s job was safe.   And yet he chose to walk anyway, leaving without severance or great wealth (and having lost all the value in his locked-in Lehmans shares) deciding he was going to pursue the vision of writing (and selling) his own newsletter.  That took guts in September 2008 as the crisis was heading towards its worst.

The book is well worth reading.  The author may, for now, have nothing useful or interesting to say about New Zealand economic policy or performance, but set that to one side.  He can certainly write, and it appeared that in his day he could trade and generate trade ideas.   The book is searingly honest –  at times almost uncomfortably so –  and the better for it.

As I say, Dillian can write.  I’ve even signed up now for his free weekly newsletter, The 10th Man . He’s a contrarian;

His free weekly newsletter isn’t called The 10th Man for no reason. It’s named after a strategy which states: if nine people agree on a particular action or plan, then the tenth must disagree in order to stir up alternatives to be considered.

Flicking through some of his past issues, I’m not sure I often agree with him (on things I know something about), but he makes one think and writes interestingly.  Perhaps one day he’ll even revisit New Zealand and there will be some nugget to think about.

As an Anglophile traditional conservative, the idea of the twice-yearly honours lists appeals to me.   It has deepish roots in our past  –  although not that deep (the Order of the British Empire, initial source of most of the awards to ordinary people who do good dates back only to 1917.)   Many societies have such awards in one form or another –  although the United States doesn’t.    All societies honour success –  however defined – and/or sacrifice in some way or another, and formalised state awards can be a part of such a system.  Perhaps the best forms of recognition emerge from below –  whether subsequently encapsulated in formal awards or not.

But if the idea of the honours lists has a certain appeal, the practice is much less satisfactory.   That is especially so in the higher reaches of the lists, where there seem to be too many awards in total, and far too many given to people who, at best, have done competently in highly-paid (or otherwise rewarded) roles.   In our most recent honours list seven knighthoods were awarded –  about a quarter as many as in the UK, for a country with less than one twelfth of the population of the UK.   Are there really 14 people each year of such exceptional merit in New Zealand?     (I’m not bothered about the Sir/Dame title –  hardly anyone knows who has been awarded the premier award in our system, the Order of New Zealand, and there seems to be some merit –  as well as historical continuity –  in the use of a title for the handful of people of exceptional merit.)

And many or most of the people in the upper reaches of the system have already, as it were, had their reward.  Even among the 19 members of the Order of New Zealand, at least half seem to have been rewarded largely for doing their job, typically for quite a long time.  Ken Douglas anyone?  Or Don McKinnon?  Jonathan Hunt, Ken Keith, Ron Carter, or even Richie McCaw.  Jim Bolger, Helen Clark, Cardinal Williams or Mike Moore.

And what of the seven new knights and dames in the latest honours list?   There are a couple of public servants, two former politicians (one successful, one much less so), one former president of a political party, a judge, a successful business person, and a former sportsman –  from the amateur era – who appears to have put a lot back into rugby.   Perhaps they’ve all done exceptionally well at what they did –  most of the names I don’t know well enough to tell –  but in most cases they seem already to have had their rewards –  whether in salary, status, power or whatever.  In most cases, they seem already have have been officially honoured previously too.   From what I can see, there might be a compelling case for a high honour –  titled or not – to perhaps two of these people.

Of the next tier down –  the eight recipients of the CNZM –  most (but not all) appear to have been rewarded for doing their day jobs, often again over long periods of time.   And this doesn’t appear to be unusual.  If I reflect back on people I’ve known who received honours over the years –  family members included –  most seem to have been honoured for doing their job.  In many cases, they probably did those jobs quite well, but not many seemed exceptional.  I suspect –  without doing the supporting analysis –  that there is a big difference between the upper and lower reaches of the honours list.  Probably most recipients of the QSM (eg this chap) are very worthy –  people who have poured their time and energies into some cause or community with little or no expectation of reward. In the higher reaches, that is much less common.  An acquaintance of mine won an award a year or two back for “services to the state”, which consisted of (paid) service on various government boards.  In this year’s honours list, David Smol –  recently departed head of MBIE –  picked up a QSO, simply for doing his job.   Perhaps he ran MBIE well –  but then he was well-paid to do so –  but when the citation suggests that

As Chief Executive of the Ministry of Economic Development from 2008 to 2012 and Deputy Secretary (Energy and Communications Branch) from 2003 to 2008, Mr Smol’s leadership has been critical to the New Zealand economy.

the words “gilding the lily” spring to mind, along with the debacle that is the New Zealand housing market, or an export sector that has been shrinking.  “Critical to the New Zealand economy”?  I think not.  Smol’s isn’t an egregious case –  it seems to be how the system works.

But if rewarding people with honours simply for doing competently a job they were well paid for sticks in the craw a little, rewarding people with high honours for doing a well-paid job rather badly simply shouldn’t happen.

I’ve written quite a lot about Graeme Wheeler, former Governor of the Reserve Bank.  After he left the Bank in September, I didn’t really expect to write about him again.  But then his name popped up in the New Year’s Honours List, as recipient of a CNZM.

In his single five year term –  so it wasn’t even a long-service award –  Graeme Wheeler exercised a great deal of power (the Governor is the most powerful unelected person in New Zealand), but generally neither wisely nor well.   Whether in stories when he left office, or in stories around the appointment of his successor last month, few seemed to much lament his passing from the scene.   So just a quick reminder of some features of Wheeler’s stewardship:

• as sole monetary policy decisionmaker he materially misread inflation pressures, enthusiastically commencing a monetary policy tightening cycle which was soon widely recognised to have been unnecessary. The tightenings were fully reversed, but slowly and, generally, grudgingly,
• as sole prudential policy decisionmaker he rushed into imposing LVR restrictions without any serious supporting analysis of the housing market or the nature of the risks to the financial system.  And then added greatly to regulatory uncertainty through repeated changes to the rules,
• his public communications were poor.  Speeches were generally not very enlightening –  and at times at odds with policy moves shortly thereafter –  and he rarely if ever opened himself to critical scrutiny in the media (refusing all requests for interviews that might involve searching questions).
• he adopted a consistently obstructive approach to the Official Information Act, all the while continuing to assert that he ran one of the most transparent central banks anywhere,
• he oversaw systems that allowed an OCR decision to leak prior to the official release, and when reluctantly he finally had to acknowledge the leak he chose to praise the helpfulness of the media outlet responsible for the leak, and attempt to attack the person who brought the possibility of the leak to his attention (and that of the public),
• his thin-skinned approach to debate and critical scrutiny reached a low point earlier this year when a leading bank economist got under the Governor’s skin to such an extent that Wheeler had his entire team of senior managers trying to censor or silence the economist.  The Governor himself –  regulator of the economist’s employer, the BNZ –  put in writing his attempt to have Stephen Toplis censored.

No wonder even the official citation lists no particular achievements, just offices held –  each and every one well-remunerated.    It is as if even Bill English and Steven Joyce knew there just wasn’t much there.  But they went ahead and tossed him a bauble anyway – comfirmed by the new Prime Minister and her deputy.   It is an award that reflects poorly on the system, on the recipient, and on those bestowing (or acquiescing in) the award.  It should be one more strand in the case for an overhaul of the system, perhaps even for disbanding all but, say, the QSM.  But no doubt Graeme Wheeler will enjoy his day out at Government House.

And thus I agree with much of the editorial in the Dominion-Post on honours lists that seems to have appeared a few days ago.