Andrew Sentance is Senior Economic Adviser to Price Waterhouse Coopers and combines a demanding career with a love of classic rock music. I was curious to find out how he has synthesised these apparent opposites.
Tell me something about your background as an economist?
I started studying economics in 1974 at school in the sixth form. I went on to accumulate three degrees in economics from Cambridge University and the LSE, and then joined the CBI’s Economics Dept in 1986. That was a key stepping stone for my career. I went on to become the CBI Director of Economic Affairs and was appointed to an important group advising the Chancellor of the Exchequer – which was known as the “seven wise men” – in 1992. I also developed a high media profile while I was at the CBI, something which has been a key feature of my career since then. After the CBI, I spent four years at London Business School and then nearly nine years at British Airways, as their Chief Economist.
In 2006, I was appointed to the Bank of England Monetary Policy Committee and I served on the Committee until 2011. I guess that is the position for which I am best known, partly because I was very vocal in making the argument for higher interest rates in late 2010 and early 2011. Even though the majority on the Committee did not support me, many other people agreed with me and supported my arguments.
I know you wrote a paper about Led Zeppelin and the economy – please explain in brief?
Mervyn King – the Governor of the Bank of England – is a big sports fan and puts a lot of sporting analogies in his speeches. He once explained monetary policy by referring to Maradona’s second goal against England in the 1986 World Cup semi-final.
I am useless at sport but I really enjoy rock music. So when I joined the Monetary Policy Committee of the Bank of England, I felt there was an opportunity to make some connections between rock music and economics.
In the summer of 2010, I started to argue for higher interest rates and I was looking for a good title for the first speech in which I would explain my position. The speech was in Reading, which has good rock music connections because of the Reading Festival.
I came up with the title – How long should “The song remain the same”. The basis of my argument was that very low interest rates had been put in place to deal with a crisis in 2008/9, but the economy had started to recover and inflation had been much higher than expected. So interest rate policy should not remain the same when the economy was changing. You can read the speech on the Bank of England website at How long should “The song remain the same”.
I went on to give another speech inspired by rock music in February 2011 – inspired by the Genesis album “Selling England by the pound”. Editor’s note – For our blogs on Led Zeppelin – see Whole Lotta Love.
A lot of rock songs have been written about money – can you comment in the inherent wisdom (or lack of it) in these songs?
I think a lot of the “money” songs are quite superficial in terms of their lyrics. Pink Floyd are one of my favourite bands, and “Money” is one of the stand-out tracks on their album “Dark Side of the Moon”. The irregular time signature – 7/4 – which then resolves into a straight 4/4, along with the sax and guitar solos, make it an excellent piece of music. But the lyrics are pretty banal – just a rant against various aspects of the supposed lifestyle of rich people. Ironically, the members of Pink Floyd went on to embrace a number of aspects of that lifestyle!
Interviewer’s note: I must agree. As Prince noted “Money don’t buy you happiness, but it sho’ ‘nuff pays for the search”
There are some good songs, both lyrically and musically, which reflect on broader economic themes. Two of my favourites are “The Pretender” by Jackson Browne and “American Tune” by Paul Simon. Both reflect on the state of economic unease in the US in the 1970s in different ways. “American Tune” comments on the loss of political direction:
We come on the ship they call the Mayflower; We come on the ship that sailed the moon; We come in the age’s most uncertain hour; and sing an American tune
Jackson Browne’s lament is more personal and reflects on how we are all drawn into a very materialistic lifestyle through necessity and habit:
I’m going to be a happy idiot and struggle for the legal tender, where the ads take aim and lay their claim to the heart and soul of the spender
Can you comment on what we can (or should) do to encourage a climate where innovation is at the heart of the economy?
Innovation is a very broad concept, and it is not just confined to hard technology. Economic studies show that the introduction of tea, coffee and sugar into the British economy was one of the most valuable innovations – from a consumer perspective – in our economic history. See A spoonful of sugar.
So if we want to encourage innovation – we should not just look to certain high-tech sectors of the economy, but to how new ideas, products and processes might affect the way we live. It is all about how creativity and creative processes feed through into economic activity.
In my view, the flowering of creativity in the 1960s and 1970s laid the foundation for the technological advances of the 1980s, 1990s and 2000s in information and communications technology. The ICT revolution of the last couple of decades has been based on ideas of sharing information, music and visual impact. These were ideas which developed in the 60s and 70s and the “geeks” who have carried forward this revolution grew up in that era..
If I can identify a driver for creativity and innovation in the future, it is probably more closely linked to the challenges we face in managing our environmental problems and the scarcity of energy and natural resources. We have never before been in the situation we now face where nearly 7 billion people all aspire to higher standards of living, and a claim on the limited natural resources on the planet.
We are already seeing these stresses reflected in market prices, as global demand outstrips supply. We are in an era of high and volatile energy and commodity prices. Even in the depths of the euro crisis, the oil price is $100/barrel, compared with $10-20/barrel in the late period from the mid-1980s to the early 2000s. Looking further ahead, the current pattern of use of energy and natural resources risks creating a severe problem in terms of global climate change.
Technology and innovation can help solve these problems of resource scarcity and climate change but it will take time. In my view, the next big wave of innovation will be in these energy and resource-hungry industries – helping us to develop new energy sources and be more efficient in the way we use energy and other natural resources.
What do you do currently?
I work for PwC – PricewaterhouseCoopers, as their senior economic adviser. After serving for nearly five years at the Bank of England, I was keen to return to the private sector. PwC has a wide range of clients who are keen to understand the impact of economic trends on their business. At present, one of my key themes is understanding the “new normal” – the world that has been shaped by the financial crisis and the emergence of the large Asian economies, especially China and India. My message is that we should expect disappointing growth and volatility in the major western economies to persist through the mid-2010s. The era of steady growth and low inflation which prevailed before the financial crisis will not return quickly, if at all.
You play in a part-time rock band. How do you square that with your professional career?
If you have a high profile professional career, I think it is very helpful to have other interests to maintain a sense of perspective on life. I’ve kept up musical interests throughout my career. Until the mid-2000s, I mainly played as an acoustic guitarist/singer or church organist. But I now play the bass and sing in a rock band called Revelation, which performs at village fetes and fayres in the area where we live in south Essex. We cover rock classics, mainly from the 1960s and 1970s. I also get together occasionally with a group of university friends for jam sessions.
Most people enjoy music. And many people in my generation appreciate the classic rock of the 1970s. So music is often a good ice-breaker for conversations at business lunches, dinners and meetings. I’ve found many rock music enthusiasts in my business contacts and at the highest levels in the Bank of England and at the Treasury.
Who are your rock heroes?
I love a wide range of music from the late 1960s and 1970s. So I am a big fan of the very accomplished musicians who established themselves in that era. Jimi Hendrix has to be the king when it comes to guitarists, though I am also a big fan of Dave Gilmour, Steve Howe, Ritchie Blackmore and Tony Iommi. On keyboards there is only one supremo – Rick Wakeman. I like bass players who play a strong role in the band, rather than thudding along in the background – like Paul McCartney, Jack Bruce and Chris Squire. When it comes to vocals, I like a more mellow sound – David Crosby, Paul Simon, Jackson Browne and the Finn brothers (Crowded House). Editor’s note, let’s have a further indulgence in the form of Mr Blackmore:
If I had to single out one musician, however, it would be none of the above. I would choose Stephen Stills. He has a very distinctive guitar and singing style, and wrote some really great songs – “For What it’s Worth”, “Suite: Judy Blue Eyes”, “Love the One You’re With”, and “As I Come of Age” stand out. His solo albums from the mid-70s are also greatly under-rated. Crosby and Nash were great, but Stills gave them an edge.
How has rock music inspired you, and made an impact on your career?
I can’t imagine a world without music, and most of the music I listen to is rock music or some variant of it. Great rock music is the combination of individual virtuoso performances and the ability to work together as a band. This is one of the key lessons I take away from the rock world for my career. The combination of individual ability and team effort is at the heart of success not just in the world of music, but also in business and politics. For the dominant and mercurial lead guitarist, read the overbearing CEO or Prime Minister who does not acknowledge and recognise the views of his/her colleagues. All are ultimately doomed – notwithstanding their ability.
To succeed in rock music, you need to be good, but you also need to be surrounded by other good musicians and be able to work constructively and creatively with them for the good of the band. When this works well, great music results. That is the approach I find works well in the business context too.
Andrew Sentance has his own website: www.sentance.com and a personal blog:. He also contributes to the PwC economics blog: and is very active in sharing his views with the print and broadcast media. He can be found on Twitter at @asentance