How the fall of the Berlin Wall shaped the life of influential NZ think-tank boss

Dr Oliver Hartwich, executive director of The New Zealand Initiative. Photo / Supplied
Economist Oliver Hartwich heads up one of New Zealand’s most influential think tanks – the NZ Initiative.
Born of a merger between the Business Roundtable and NZ Institute, it is sometimes described by critics as a ‘right-wing’ think tank.
While it has certainly been a champion of free-market economics, Hartwich doesn’t accept the political pigeonhole.
“I would say evidence-based think tank because we do our research and we do our job well and you can look at our research on our website and you can see that all our research is extremely well documented, well researched by people who really know what they’re doing.”
The Initiative is independent and free from any party political affiliation, he says, speaking on this week’s Money Talks.
“We are also a business membership organisation, but we work predominantly as a think tank and that means we are thinking about the big issues affecting New Zealand.
“We are trying to make New Zealand a better country for all its people and we’re trying to do that through policy research.”
There is no question that the Wellington-based organisation’s research carries serious weight in New Zealand’s policy debate. As its executive director that puts Hartwich in an influential position in his adopted homeland.
Born in the industrial north of West Germany in the 1970s, Hartwich grew up through both the Cold War and a period of strong economic growth.
The fall of the Berlin Wall and the collapse of communism loomed large in his youth and helped instil a passion for both economics and public policy.
“When the Wall fell, I was 14 and I was totally aware of what was happening,” he says. “I had visited East Berlin just a year before. So I spent a day in East Berlin, under communism. If you had asked me back then whether this wall would ever disappear, I would have said absolutely not because it looked so permanent.
“When it came down, that came as a big surprise, as a shock to all of us and it was the most exciting time.
“That was a time immediately after the so-called economic miracle. So after World War II, Germany, of course, was in ruins. It was also morally discredited,” he says.
“Out of those ruins came a surprisingly strong economy because of the policies introduced by one man, Ludwig Erhardt.”
Erhardt, first as Finance Minister and then as Chancellor, pioneered the idea of the social market economy, Hartwich says.
“It is an economy that is basically free and, as Erhardt argued, it was an economy that was inherently social because it produced prosperity for all.”
“That was his big slogan, prosperity for all people after the war. And that worked really well. After about 20 years under that prescription, Germany actually overtook Britain in GDP per capita for the first time ever.”
“So when I grew up, that was the period straight after that economic miracle. It was a time when West Germany at least had some enormous amounts of prosperity.”
Hartwich says economics was always his passion so it was a natural choice to study it at university.
Although he did a combined degree with business management and eventually did his doctorate in law – albeit focused on business competition.
It was his PhD that brought him to this side of the world – undertaking a comparative study of the regulatory environment in Australia.
Although, as Hartwich is happy to admit, he had an ulterior motive for focusing on Australia – his future wife.
“My connection with this part of the world is actually my wife. What I haven’t mentioned is that the real background to my PhD thesis was the desire to spend some time with her. We started off as pen friends when she was 15, I was 16. We started writing. We had a pen friendship for eight years.”
After hitting off in real life on his Australian study mission, the pair eventually moved back to London where Hartwich worked for the House of Lords and then a think tank called Policy Exchange, with David Cameron, before he became leader of the Conservative Party.
From there the couple headed back to Australia where Hartwich worked for the Centre for Independent Studies.
“I met a few New Zealanders while I was working in Australia. We had conferences and they often came over so they knew me and when it came to the formation of the New Zealand initiative, they asked me whether I would be interested in leading a New Zealand think tank.
“It sounded interesting. Yeah. And then I thought, well, why not? 12 years ago. Initially, I thought this might just be another five, or six years. Um, continuing my nomadic lifestyle. Yeah, yeah. But then, um, we had a son in Wellington and we bought a house and suddenly things felt a lot more settled.”
Hartwich is now a naturalised Kiwi and highly invested in the nation’s success.
As such he’s well-placed to comment on the two nations’ different cultural attitudes toward money.
“Germans love cash,” he says. “It is a cultural thing. I’m not quite sure where it comes from. But we do love cash.”
Whereas in New Zealand electronic card use dominates.
Could it be a hangover from the post-WWI days of hyperinflation when Germans famously needed wheelbarrows to transport the cash for weekly shopping?
Perhaps, says Hartwich.
But regardless, that highlights another key difference, he says.
“Germans hate inflation with a passion. Yeah, I mean, okay, New Zealand’s recently had their own experience with inflation. But in Germany, it’s quite something. So even when inflation was still in the 1 or 2% range, is news always big news in Germany,” he says.
“Everybody was always panicking. We had this experience twice. We had the big hyperinflation in the Weimar Republic in the 1920s. We had another case of hyperinflation after World War II. So Germans had actually had the experience that from one day to the next, all your money can be worthless.”
That’s one of the reasons that Germans were the most sceptical about the creation of the European Central Bank and the transition into the euro, he says.
“New Zealand’s never really had that experience with hyperinflation. Yes, we’ve had some periods where there was a bit more inflation, 1970s, but then again, everybody had that. But this. The complete eradication of all your previous wealth in one go, very quickly. That kind of collapse New Zealand’s never had.”
After 12 years in New Zealand, Hartwich also has views on our political system.
“It felt good actually coming from this craziness of Australian politics into New Zealand.
“If you remember Australian politics at the time, that was the time of Kevin Rudd and Julia Gillard and later again, Kevin Rudd. It was, let’s put it mildly, a turbulent time in Australian politics.”
“So arriving in 2012 in New Zealand, I felt like, whew, great. Finally, a government and stability. That was just my first impression. Things politically were quite settled in New Zealand, whether it was Helen Clark or John Key, you didn’t have the feeling that it was like Australia where they swap their prime ministers every fortnight or so.”
But he’s not so sure about that stability now and is concerned about the extent of centralisation in New Zealand government.
“Localism does seem difficult for even centre-right parties in this country,” he says.
“We have more than 90% of our taxes and tax revenue and spending controlled by central government in Wellington. For most other developed countries, it’s more like a two-thirds kind of central control.”
“New Zealand’s been like that for a long time, although not forever. If you go into the 19th century, you can see that New Zealand was way more decentralized than it is today. New Zealand back then looked a bit more like Germany or Switzerland today.”
“So there is a localist tradition, even in New Zealand. I think it’s just something that we have to rediscover.”
Listen to the full episode to hear more from Oliver Hartwich about his life and money stories.
Money Talks is a podcast run by the NZ Herald. It isn’t about personal finance and isn’t about economics – it’s just well-known New Zealanders talking about money and sharing some stories about the impact it’s had on their lives and how it has shaped them.
The series is hosted by Liam Dann, business editor-at-large for the Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
Money Talks is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts.