Ferian Muse #5 Richard Portes CBE: Philanthropic Economist

SECRET MUSE #5

Name: Richard Portes CBE

Profession: Economist

Location: London

Richard Portes is Professor of Economics at London Business School, founder and Honorary President of the Centre for Economic Policy Research, and former Secretary-General of the Royal Economic Society. Richard holds a CBE for services to economics. His work spans international finance and economic policy.

I spoke to Richard about the value of time — the theme that inspired the latest Ferian series The Hours — as well as his work in macroeconomics, his philanthropic ventures, how he uses his time, his love of music and wine, his views on John Maynard Keynes and the Bloomsbury Group, his interest in art and architecture and, of course, why he chose his Lapis Lazuli swivel ring.

LB I've been pondering the value of time and the latest Ferian Images series, The Hours, which explores our relationship to time - whether mastering a skill, pursuing beauty ideals, creating something enduring, or the formation of gemstones stones over millions of years. It takes me a lot of time to design an object that I think is worthy of the time investment, and the craftspeople I collaborate with bring generations of skill. I wonder, from your perspective, does our ability (or inability) to sustain focus affect economic behavior or productivity?

RP I think there is something to that. The range of stimuli to which people are exposed now is just greater than it was a few years ago,even 20 years ago. I probably get 300 emails a day – I can't cope with those. I can delete a fair number easily, but then I like to read about current affairs and politics. I subscribe to the New York Times, Wall Street Journal, Financial Times, Guardian and Bloomberg. I cut my subscription to the Washington Post because of politics but I still get the headlines from the Post.

LB That's a lot of reading.

RP I wake up in the morning, and I see all these emails with today's news, and a lot of it I'm interested in, and some of it has professional interest about the economics that I'm doing. I'm concerned about what's going on in the United States. I'm concerned about what's going on here, concerned about what's going on in Europe,

And there are some areas in which I can actually say something - and my wife as well.

LB Is she an economist?

RP She is, she is. And we're pretty much in the same area .And we both have policy interests as well as our analytical work, so we have a lot to talk about.

LB Could you tell me a little about your formative years in America, and what first drew you to study economics?

RP I grew up in a suburb north of Chicago – a proper middle, upper- middle class suburb with driveways, gardens, basketball hoops in the driveways and barbeques in the gardens.

The state high school I attended was absolutely first class. It was very big, my class was 800 students. From there I entered Yale as an aspiring mathematician, but I discovered that although I could probably end up being a pretty good mathematics professor, there would always be a higher level of people who were really at the genius level, and you couldn't really compare yourself with them - and I didn't want to be in a field where I knew that I was never going to be at the top.

LB So, have you always been ambitious?

RP Competitive? Yes, as a child and always. Very competitive.

RP So at Yale I did a degree in mathematics and took a degree in philosophy at the same time - it may have been a mistake, but it worked out just fine. The normal course is four years at university in the U.S.A and I skipped a year - finishing Yale in three years. I won a Rhodes scholarship and went off to Oxford to study economics. Two of my mentors I really looked up to had won Rhodes scholarships and it had always been my ambition.

I hadn't done any economics before, just mathematics and philosophy, which I think were good training for economics. I knew that I wanted to do something which had applied aspects to it, which might actually influence the world with policy implications. That was one of the things that drew me into economics. But I also knew that fairly early on that I really wanted to be mainly an academic. And that is the way things ended up.

LB When you say you wanted to do something that influenced the world, did you have a vision of what you were trying to achieve?

RP I think early on, it was helping less developed countries. But I never did get into that as it turned out. The things that I've done relevant to policy have been quite different, but we might get to that later. So, at a very early age - circumstances were propitious - I was offered a fellowship at Balliol College, Oxford. And it was an offer I couldn't refuse.

And how old were you then?

RP 23.

LB So that's incredibly young, isn't it?

RP It was, yes. I was offered a lifetime job at the age of 23.

So I wrote my PhD thesis, while I was teaching, on Central Europe, Hungary and the economic system there. I fairly soon moved into other aspects of economics, but that's where I started off - centrally planned economies.

LB So you know that I'm completely ignorant about these things, although I'm fascinated, which is why I wanted to talk to you, and I read that you have focused on macroeconomics.

RP Indeed - and that started, I don't know, six or seven years after I finished my PhD, originally, I was more a microeconomist.

LB For readers who might not know the difference, could you explain — in everyday terms — what macroeconomics and microeconomics are, and how they connect?

RP Microeconomics is about how markets work and how individual decisions are made. Macroeconomics is about the big aggregates; money flows, budgets, fiscal policy, tax. It might be a financial crisis, for example. It might be a big tax increase, it might be a big budget programme. How does the economy respond to these stimuli, shocks, and so forth? That's a good part of macroeconomics.

LB Economists often talk about the ‘value’ of things, but how do you, personally, think about the value of time.

RP We economists are very conscious of the value of time .What are people willing to give up for an hour’s time?

If you look, for example, at HS2, if you must, as we must look at HS2, sadly. One of the original justifications was attempting to value in cash the amount of time that would be saved as a result of putting this faster connection in. To do that, obviously, you estimate how much faster you can get from Euston to Birmingham, and second, you value how much each of those minutes is worth to a representative individual and multiply that by the number of people … we do that sort of stuff all the time. It is part of what we call cost-benefit analysis, and you try to estimate the value of time saved. Another application might be how do you value the amount of time, months, years that can result from a medical advance in terms of life hours saved.

But you must also be thinking about what those hours cost. What's the value of an additional hour of life? There are various ways to try to pursue that, but it's an important question.

LB Do you have an answer?

Oh, no, I don't. - not at all. What would I - you can ask people, what would you be willing to pay now for an extra year of life? What of your current income, or assets, would you be willing to sacrifice to add one year to your life?

LB And when you ask that question, are you quantifying it with a quality?

RP Yes, of course, and the next step to a question like that is, how many years of healthy life you have. And this is something that people are becoming more and more sensitive to, more preoccupied with, yes, we are extending longevity but what is the quality of those extra years? And end of life care is now very expensive. It's very complex.

But again, it's part of the value of time, right? .

LB We're all affected by economic forces daily, yet economics isn't part of most school curriculums. Do you think better economic literacy would change how people live or how society functions? Should it be taught in schools?

RP A couple of things to say on that. One is that on the whole, I regret to say, my experience in dealing with undergraduates, those who had done economics in school, I had to unteach them. Economics is not very well taught at school.

Music, on the other hand, when it is taught these days, is, though we've sadly cut back on musical education in this country, but let's hope it'll get rescued. But economics A levels, I would not advise anyone to do economics A levels. You just get things mixed up. Best if you want eventually to do economics, do mathematics, do philosophy, do history, the things that are really useful in doing economics.

LB Apart from your analysis, do you look to history and philosophers? How do these disciplines influence your work?

RP We use math a lot in constructing models of how the economic system or markets or whatever operate, and those models can be very abstract, but we try, ultimately, to bring them to confront reality, facts. Then history, some of the work that I've done has been economic history, looking at the sovereign debt incurred by countries, whether they may have defaulted on the debt, why they defaulted, what were the consequences of defaults and how to stop debt burdens from accumulating too much, and so forth.

I've done a fair amount on how to deal with sovereign debt crises, why countries can't pay what they owe? What do you do at that point? Do you declare that it is in default, do you try to work out a rescue programme? You take the case of Argentina, which has been in the headlines a bit recently. Argentina has defaulted on its national debt, I don't know, seven times, eight times in history, and there are countries, like Guatemala, that started defaulting in the 19th century. That has a substantial historical dimension to it. Look at what happened in the 1930s, where you had quite a number of countries defaulting on their debts - and some of the work I did was seeing what the consequences of that were.

LB That sounds like a huge amount of labour. Do you collaborate ?

RP Yes, in that research I worked with a co-author. And we certainly had assistants look at the archives and historical records.

LB Can history offer some advice on current issues?

I just sent something to my daughter, who is studying history now, about whether history can tell us about decisions that have to be made now in politics. The answer to that is, no, history does not have those kinds of lessons, except for broad lessons. We can see for example, patterns of behaviour that developed into authoritarian states. I sadly think that right now, the United States has been going very much in that direction. Whether you want to call it fascist or not, not quite yet, but there are certainly trappings thereof.

And so, yes, there are analogies between what's happening in America right now and what happened in the 1930s – sadly - but history does not repeat. As they say, ‘History doesn't repeat, but it rhymes’ and there's something to that, sure, but I find economic history just interesting in itself.

LB Well, and it all stems from individuals' psychology, doesn't it? it’s all interwoven.

RP Absolutely right.

I've done various aspects of international finance since the late '80s, early 90s. I wrote with another co-author the first paper about the potential international role of the Euro, when the Euro is still being constructed. So that paper was 1991. The Euro came into existence in 1999, but the basic plans were there, and then one could look at what makes a currency an international currency, why is the dollar the dominant international currency, what prospects were there for the euro to challenge the dollar as an international currency, and so on.

LB In your view, is the UK having our own currency a good thing?

RP I was for the accession of the United Kingdom to the Euro at the time. And so was Tony Blair, and he was vetoed by Gordon Brown. I think that was a mistake. It's been bad for the UK and bad for the European Union, bad for the Euro.

LB It’s been bad for the fashion and creative industries.

RP Totally. Bad for all of us. There can be advantages in having your own currency, but there are major advantages to a common currency regime.

LB Should we be thinking about time more as a currency ? Who has the time to think and the freedom to pursue their interests and leisure time ? Do you see AI making free time more democratically accessible?

RP I've found it very difficult to come to grips with AI.

Some days I wake up and say, “The world is being transformed and I'm not being transformed with it." And other days, I wake up and say, "This is really not going to have that much effect after all. I mean, it's just a relatively limited extension of our capabilities to do certain things. But is this going to revolutionise our lives now?”

I really would prefer the second interpretation, because I, you know, I’m perfectly happy, I like it more or less the way it is.

LB How do you find your time best spent?

RP I think the question about time is an interesting one, because I know that I always feel pressure of time. In recent years, I am devoting more time to music. Because I really enjoy it so much. I probably go once a fortnight to Wigmore Hall and South Bank and The Barbican and so on.

LB I worked next door for 16, 17 – years , we could hear the artists rehearsing.

RP Yes, Margaret Howell, of course. Acoustically, Wigmore Hall is perfect. There is nothing like it, really extraordinary. And they get lots of good artists, Some of whom I know personally.

LB So music leads us to your support of the Orchestra of the Age of Enlightenment. How did you become involved?

(The OAE is a classical orchestra resident at North London comprehensive school Acland Burghley whose ‘enlightenment’ mission is to reach as wide an audience as possible ).

RP My father was a lawyer and one of his clients was a man who was very well off and created a charitable foundation. My father administered the foundation, and then later he controlled the foundation. And when my father died, the lawyers came to me and said, "Would you like to take this over?” I said, "Absolutely."

There's a wonderful cartoon that I have had on my wall.

It's a Peanuts cartoon.

So, in the first panel, Charlie Brown asks Linus, what do you want to do when you grow up?

Second panel.

Linus says, "I want to be a great philanthropist.”

Third panel, Charlie Brown says, "But you need a lot of money for that.”

Linus says, finally, the fourth panel. ‘Oh, no, I want to spend somebody else's money.’

And so that's what I do.

So I can give money to the OAE, to the LSO,to the Royal Academy, the Tate, the V&A, Donmar Theatre, Garsington Opera and others.

LB Your connection to the arts is something you share with John Maynard Keynes, who was a member of the artistic and intellectual circle known as the Bloomsbury Group. I understand Keynes resigned from the Paris Peace Conference, and in response, wrote The Economic Consequences of the Peace. Among your many roles and honours, you have, like Keynes, served as Secretary-General of the Royal Economic Society . Do you have any thoughts on his involvement with the Bloomsbury Group, or on how artistic and intellectual circles might influence economic thinking?

RP There’s never really been anything like it. They were intellectually serious people, and they were rather precious. But that said, they were productive.

One of the first assignments my daughter has had is to look at historical biographies. One leading example is Eminent Victorians by Lytton Strachey, a key member of the Bloomsbury Group. And so these people, you know, were Lytton Strachey, Virginia Woolf, Vanessa Bell, Duncan Grant, E. M. Forster, G. E. Moore, Roger Fry.

I have a friend from Oxford days, Paul Levy. He's a Bloomsbury specialist, and I can remember a party that he gave many years ago, where one of the guests was a - quite old by then - Duncan Grant. Paul did his PhD thesis at Nuffield College Oxford on G.E. Moore. So, again, part of that scene. Paul is actually a trustee of the Lytton Strachey Trust.

So anyway, so you wonder, in a way, right? Going back to time, what did these people actually do with their time? Did they just sit around having nice intellectual conversations? Did they just go off and fuck? What did they do?

LB I think it has been speculated that ‘The Economic Consequences of the Peace' would have been more prescient if Keynes hadn't been tangled up with the Bloomsbury group.

RP He was such an amazingly diverse intellect,” The Economic Consequences of the Peace’ was a very good piece of economics. It turned out to be absolutely right. And I don't think he was distracted by the Bloomsbury group.

LB Was he enriched by that relationship, do you think? And do your own relationships with the arts influence your work?"

RP No, I don't think so. I mean, I can't see it. I'm very interested in the arts. I'm very interested in music. I'm very interested in wine.

LB And there are no parallels?

RP Not a lot. Of course, you can try to draw connections ….

RP Speaking of artists, and this is kind of an indulgence, as it were, have you ever heard of a British sculptor/painter, and before all that, architect, Celia Scott?

We first met when we were in Princeton, and her husband was the head of the architecture department there and Celia was studying architecture.

In London, my first wife and I bought a flat- a shell - in Clerkenwell, and Celia was our architect – she did this space extremely well. We got to know each other pretty well. Then when my second wife and I bought our house near Regent’s's Park, Celia did that. Then she moved out of architecture, to sculpture. And the sculpture that she did, was busts - she has done busts of most of the famous contemporary architects

(James Stirling, Richard Meier, Michael Graves, Peter Eisenman, Sandy Wilson, Ed Jones, MJ Long, Alan Colquhoun, John Miller and Colin Rowe).

For my seventieth birthday, my wife said, "I want to commission Celia to do a sculpture of you’, which she did, and I'm very pleased with it.

You know, the Financial Times had a series for a while, on the Saturday FT ‘X at Home’, and they did one on my wife. And one of the questions that they always asked at the end of these interviews was, "What's your favourite object?

My wife said, "This Bust’.

LB Oh, that's very flattering, isn't it?

RP Very sweet.

LB So can you tell me how you spend your time – do you have hobbies?

RP My hobby is wine. There's an intellectual side to it and a personal side to it.

I go to a lot of tastings and sessions with producers. I had never belonged to any of those clubs, because the atmosphere didn't appeal but then, a very interesting entrepreneur established this club for wine lovers - 67 Pall Mall.

Last week Terry, the first sommelier at 67, came back to give a little master class with several of his own wines because he became a producer. You talk to somebody like that, and he's so passionate about what he does. It can be very technical, but there's also a lot of feeling for the land, feeling for the soil, actually feeling the grapes. So it's a multi-dimensional pursuit and he pursues it not just to make money - I mean he makes good money, his wines are ridiculously highly priced, I mean, they're very good, but I couldn't believe what he was getting - but still - good for him.

LB And how do you spend your leisure time other than your interest in wine?

RP My Who’s Who entry has always listed as recreation ‘living beyond my means’. There you have it…

LB So with wine you are partly working with instinct? In design and fashion we work months in advance, so we are always relying on instinct. Do you find something similar in economics—that you need an instinct for where things are heading beyond the conclusions you can draw from data?”

RP I think there's something to that, yes. If we're looking at different aspects of economics. and some economists are more prone than others to the influence of what we would call, ‘your priors’ - your prior beliefs.

LB I haven't heard that term before, so your priors are your beliefs, influences and biases?

RP Yes, your constructs of thought,the data that you have stored in your head and the conclusions that you've drawn from that. For example, when the COVID crisis came, I knew very quickly that it could have very severe economic consequences. In particular, financial sector consequences. And there were a few other people. Part of my work is not just academic, I’m involved in policy, with the institution that is supposed to safeguard the financial stability of Europe. And a few of us realised immediately that the COVID crisis that hit the economy in March of 2020 would have big implications for financial markets and that this could be very dangerous. It was the most intense period of work from mid-March of 2020 to maybe early July. I felt like I was going back to graduate school, you know, writing stuff all night.

LB Sounds exhausting.

RP It was exhausting! I was running several different working groups, working on various aspects of responding to this shock. And so I was reviewing draft papers, writing stuff, and so on and so on, but it was, you know, it was important. It seemed important at the time, I think it was important. We got out of it without too much of a financial disaster, and maybe what we did contributed to that.

LB I sometimes feel we are meant to have an opinion on everything?

RP On some things people ask me what my view is, and I say, “well, you know. I don't have a view. I'm not sure.’ I mean, I know what the subject matter is - I haven't taken a view yet.

LB Do you think more people should just say, ‘I'm sorry, I can’t make an informed judgement’ - have more honesty about how complex issues can’t be answered immediately?

RP I had an email on my way here - it's a request for an interview from some newspaper. And there are some cases where I'll say, yes, happy to talk about that. In other cases, I'm not at all reluctant to say, ‘I do not know enough about this.’

If I can't add value to what somebody could get out of the FT or the Economist, I say - you know - go talk to somebody else.

LB If you hadn’t become an economist, where might you have invested your hours?

RP One of my basic precepts in life is not to look back and say, what might it have been; do I have any regrets?

Maybe if I let myself explore, at not doing some things that I might have done.

I just don't do that, so this is not a question that I am prepared to answer.

I would have liked to have been accomplished, as an instrument player, but I tried when I was young and either I didn't have the coordination or whatever it was, I couldn't do it. And so, I'm very happy to consume rather than produce.

LB And we need to consume so other people can produce.

RP That's absolutely right!

Work from Richard's collection by Michael Craig-Martin and Celia Scott

LB Which brings me to my last question – your consumption of Ferian jewellery. I’m very flattered that you've always bought things from me, but they have been presents for people and the ring that you bought was for yourself. So I’m curious, what was it that resonated with you?

RP I don't know - but it was not a sudden decision. The idea had attracted me for quite some time. And I finally put it to my wife, and she said,’ you know, you'd like it . Go for it. We're not poor”

I love it. I just like it. And I love the colour of Lapis. It was actually one of the early things I bought my first wife. We were in Hong Kong. And I bought her a Lapis necklace. So yes, it was just something I said ‘I would like to have this for myself.’

LB And why did you go for the swivel one rather than a signet ring?

RP Ah, that's a good question. I don't know.

LB I was hoping it was some sort of duality

RP No - maybe. I hadn't thought of it that way. I just like the design.

LB And that’s a perfect reason.

Thank you for being Muse #5

To spend your time like Richard, see links below:

The Orchestra of the Age of Enlightenment

Explore Gemstones Rings