Economist Noreena Hertz’s Next Act: ‘Eyes Wide Open’

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Merlijn Doomernik/Hollandse Hoog

For an economist, Noreena Hertz embodies a rather global sort of glam. A regular on the Davos-TED circuit, she’s used to rubbing elbows with the likes of Bill Clinton (sharing the dais with him at a globalization conference in Brussels), Sir Bob Geldolf, and Jeffery Sachs. She gives talks on global economic trends and strategic decision making in far-flung cosmopolitan capitals (Istanbul, Cannes, Amsterdam). George Soros has invited her to lunch at his London home to talk about her ideas on globalization and democracy, and the late Pakistani prime minister Benazir Bhutto even called her up to talk about her books. Cult British designer (and close friend) Vivienne Westwood designed her wedding dress last year—for a ceremony attended by Rachel Weisz and Daniel Craig—and Bono counts her as a pal and guru. (He cites her as a major inspiration behind his RED campaign to raise money for AIDS in Africa. “She’s interested in change—not just the theory of it, but the actions that bring it about,” he says.) And at the glitzy book party last week for Hertz’s latest work, Eyes Wide Open: How To Make Decisions in a Confusing World, the guest list read like a who’s who of London: Deputy Prime Minister Nick Clegg, actor Rupert Everett, philosopher Alain de Botton, and the editors of the Evening Standard, the Financial Times Weekend, and The Independent.

A decade ago, it’s unlikely that Hertz could have predicted such a high-profile gig for herself. In the late 1990s, she was toiling away in the quieter corners of British academe, working with governments and advising banks and investment firms. But with the 2001 publication of her bestselling book The Silent Takeover—which warned that multinationals were usurping the role of governments and called on corporations to be more ethically responsible—and its 2004 follow-up, The Debt Threat, which correctly predicted the coming collapse of the financial markets, Hertz catapulted to prominence as a young, svelte seer of the leftist anti-globalization set. (For the record, she doesn’t define herself as anti-globalization and thinks that capitalism can be a powerful force for good, albeit one that needs to be held in check by government.) Now, with Eyes Wide Open—which takes on how we make decisions and whether we should trust the experts in our era of information overload—Hertz is tackling a question that goes well beyond her roots as an economist: the nature of expertise.

Hertz’s life has always balanced on the fine boundary between iconoclastic outsider and insider. The daughter of Israeli immigrants to London, she grew up in a secular and politically active family—even though her great-grandfather Joseph H. Hertz was the U.K.’s chief rabbi during World War II. Her parents owned Crochetta, a successful fashion knitwear company whose black-and-white cardigans graced the torso of Paul Michael Glaser in the TV cop series Starsky and Hutch. Her mother ran as a Conservative Party candidate in 1987; she would tell Hertz and her sister to “never wash a man’s socks” and “don’t be a sheep, don’t follow the crowd.”

Baker Noreena Hertz’s life has always balanced on the fine boundary between iconoclastic outsider and insider. Kick Smeets/Hollandse Hoogte/Redux

Hertz was something of a child prodigy: at 19, she graduated from University College in London with a degree in philosophy and economics, which was followed quickly by an M.B.A. from Wharton and later a Ph.D. in economics from Cambridge. One of her professors, Dame Sandra Dawson, now Cambridge’s deputy vice chancellor, remembers her as “impressive, standing out among her peers. She’s always been good at anticipating future issues and tackling them before others.” By 1991, Hertz had moved to Hollywood to work at a talent agency, but one of her Wharton professors convinced her to change course and sign up with the World Bank in Russia, to help to set up the country’s first post-Soviet stock exchange. (At first, she says, the only things being exchanged on it were cigarettes and funeral urns.) Hertz ended up staying in the country for five years and witnessed up close the unplanned effects of nascent capitalism and the collapse of Russian institutions such as hospitals and schools under the pressures of privatization. During this time, she was introduced to Michael Porter, Harvard’s reigning economic development guru. Porter tapped Hertz to head a 40-person team of business leaders and government officials in Israel, Palestine, Egypt, and Jordan to assess ways in which businesses could bridge divides in the region that governments had failed to mend.

By 2001, she’d seen enough of the social costs of capitalism—and, conversely, its inherent potential to foster social good—to write The Silent Takeover: Global Capitalism and the Death of Democracy. The moment was ripe for such ideas: the 1999 World Trade Organization summit in Seattle had been marred by violent protests and the smashing of Starbucks and McDonald’s stores, those all-American symbols of corporate greed. At the G8 meeting in Genoa two years later, an Italian protester was shot and killed by a police officer. In this environment, an economist was either pro- or anti-globalization: corporations were either corrupting democracy and oppressing the common man or enriching the world and lifting people up out of poverty.

In her book, Hertz came to a different conclusion. She thought that the human context had been removed from capitalist markets, yet also believed that there was a way to add the human element back in that would benefit companies and societies alike. She envisioned an “inclusive” capitalism in which profits and shareholders were not the only concerns for multinational corporations, and warned that if companies ignored social needs, they would pay a steep price. She also predicted that corporations were eclipsing the power of governments in the newly global economy, and cautioned about the negative consequences of unregulated markets.

Baker Noreena

In one of the more visionary parts of the book, Hertz suggested to corporations that they could right some of the ills that capitalism had imposed on the world’s vulnerable populations. She advocated for businesses to take the lead in sustainability and told consumers that they could and should let companies know that they’d boycott a product associated with destroying the environment or exploiting workers. At the time, this idea of ethical capitalism was pilloried by both the traditional left and right. Fast-forward 12 years, and the concept is positively mainstream. It’s hard to find a company on the Dow or NASDAQ these days that doesn’t have some sort of sustainable-development team or socially conscious ad campaign. A decade on, it is Hertz who has the final laugh. “I do feel vindicated,” she tells me. “These very same critics have moved their ideological compass to sit where I was then.”

The overwhelming success of the book—an international bestseller with editions in 17 languages—earned Hertz the moniker of “the ‘It’ girl of the anti-globalization movement” and turned her into a ready-made oracle on the global economy. But not everyone was sold on Hertz’s new fame. In his review of The Silent Takeover for The Independent, Tariq Ali said her vision of a third-way capitalism was like “expecting homeopathic drops to cure cancer.” Martin Wolf of the Financial Times excoriated it as “intellectually vacuous.” The U.K.’s Sunday Times called it “one long whinge, full of hackneyed observations ... There is nothing in this book that is not already known to anybody with a passing interest in business and current affairs.” The Guardian mocked it as “breathless globaloney.”

Hertz writes off her critics as part of an old boys’ network that didn’t want someone “younger and of a different gender” in the spotlight. “I remember one particular attack on my work where the reviewer spent half the time talking about my boots [in the author photo]. I thought, if that is the level of your intellectual criticism, then they clearly had a problem.”

Her second book, The Debt Threat, debuted to equally mixed reviews. The Independent’s reviewer described the book as “a collection of facile claims on debt that don’t add up” and pilloried her idea that the debts of all poor nations should be canceled. The Guardian noted that she “mangles a variety of dates and names.” On the other side of the equation, Archbishop Desmond Tutu praised the book for its “remarkable clarity.”

baker-FEO233-noreena-embed2.jpg-wide Hertz says we are a society “addicted to experts,” having ceded our responsibility, substituting their wisdom for our intelligence. Andreas Meier/Reuters

After The Debt Threat, Hertz spent the following years teaching at Cambridge and Erasmus universities, delivering speeches at Davos, and consulting with governments and politicians on subjects ranging from economic global negotiations to political engagement with the public. But she also seemed to be searching for her next big crusade. In 2007 she fronted a U.K. Channel 4 documentary, The Million Pound Footballers’ Giveaway, which featured her traveling around the country, attempting to convince Premier League soccer players to give up a day’s salary to Britain’s underpaid nurses. The effort, which verged on gimmicky, fell short, with Hertz reportedly collecting only a quarter of the £750,000 promised.

Then, in 2010, Hertz gave a TED talk in London called “How to Use Experts—and When Not To.” In it, she riffed on how experts in a wide variety of fields, from medicine to politics, often give flawed advice (an insight gleaned, she says, from a yearlong bad bout with a mystery gastrointestinal illness that a number of medical specialists on both sides of the Atlantic had trouble identifying) and called on each audience member to become his or her own “challenger in chief.” The idea for Eyes Wide Open was born.

The book’s underlying premise is tailor-made for the digital age. In this increasingly complex world, says Hertz—one in which we are inundated daily with three times as much information as we were in 1960—we deploy a host of strategies, both instinctual and calculated, to sift through all the data. Worse, she says, we are a society “addicted to experts.” Our analytic methods are often based on faulty logic and our own emotional limitations—and we’re not the only ones messing up in reading the information correctly; most experts are too. It’s a conclusion Hertz came to after spending five years studying the latest research in fields ranging from behavioral science and psychology to economics, and she found ample evidence of real-world examples.

baker-FEO233-noreena-embed4 Bono cites Hertz as a major inspiration behind his RED campaign to raise money for AIDS in Africa. Laurent Gillieron/Corbis

At times, the book comes across as simplistic and obvious—such as when Hertz suggests we take a digital Sabbath to decompress from information overload, or points out that better decisions are usually made after a good night’s rest and on a full stomach. But she also presents a number of interesting case studies that show how one or two flawed assumptions can lead to career disasters, bad marriages, and even medical tragedies and financial meltdowns. In one section, Hertz examines how the late producer Richard Zanuck ended up making flops like Hello, Dolly! and Doctor Dolittle right on the heels of a blockbuster like The Sound of Music. In Zanuck’s case, Hertz says he had misread the shifting currents of a culture that had, in four years, gone from the golden era of the early ’60s to the chaos of Vietnam and the JFK assassination. Zanuck’s audience no longer wanted lighthearted musicals. “He thought he knew what to do next, but America was in a very different place.” This was an instance, Hertz says, of being “overly wedded to the past” as an indicator of future success, relying solely on “experienced-based instincts, so that shifting tides of new information are ignored.”

Loaded with statistics—“we make 10,000 trivial decisions—227 about food” per day; “70 percent of mutual-fund managers underperform the market”—Hertz ranges across psychology, sociology, and economics to trace the external and internal factors that sidetrack all humans from making optimal choices, and why we’re so afraid to question and challenge authority, whether it’s the surgeon about to open up our heart or our congressman.

Making better decisions means recalculating one’s impulses and thinking differently. Hertz encourages dissent, citing the example of Lehman Brothers and its culture, where dissension was thought to be a “career-breaker.” (Lehman imploded in 2008, helping to usher in the financial meltdown.) She issues a clarion call not only to challenge experts but also to seek out the advice of the hoi polloi. She argues that “experience is not the poor relation of expertise. Valuable insights in business often come from the people on the ground.”

“Noreena has a great antenna for asking really intelligent questions,” says Debora Spar, the president of Barnard College and a former dean of Harvard Business School, who first met Hertz at an academic conference 15 years ago and was an early reader of Eyes Wide Open. “One of the beauties of her is her ability to take academic ideas and translate them for a nonacademic audience.”

baker-FEO233-noreena-embed6 Hertz writes off her critics as part of an old boys’ network that didn’t want someone “younger and of a different gender” in the spotlight. Cynthia Marler

Of course, Hertz is walking a thin line here—the expert telling everyone to question experts—but in a way, Eyes Wide Open marks an attempt to return to the skeptical impulses of her early career. It’s less a how-to guide and more a call to bring a critical mind to bear on the data that clog our daily lives. At its heart, the book demonstrates Hertz’s essentially Talmudic nature: question everyone and everything. Indeed, the connective tissue running through all of Hertz’s work—from her early ideas on ethical capitalism to Eyes Wide Open—is her constant desire to challenge the status quo, whether that means economic models, the medical profession, or political power. Challenge (the corporations, the economists, the doctors); question (the global economic system, the way you buy a stock); pick apart the conventional wisdom. “I’m really looking at questions of power, navigation, and spin,” she tells me. “Then I am also looking for real-world stories that give me greater insight into smart and new ways of thinking.”

With the release of Eyes Wide Open, Hertz is acutely aware of the danger of being viewed as just another how-to guru in a land of false messiahs. But she hopes the book will provoke a discussion about how we think. “People are looking for certainty,” she says. “The more complex the world becomes, the more people look for people to give them certainty and tell them what to do. During the past few years of actively thinking about this, there is one thing that I have accepted: certainty is not out there. There is not one strategy to follow, and that’s OK.”

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