UBS Top Economist Donovan Finds Career Marred by China Comments
Economist put on leave over comments that caused China uproar.
(Bloomberg) -- “Economics without jargon, but with sarcasm,” is how UBS Group AG economist Paul Donovan describes his work on Twitter.
It’s that plain-spoken approach to economic analysis that’s unwittingly landed Donovan on leave from the world’s biggest wealth manager and in the center of a storm in one of its most important markets.
In his regular audio commentary emailed just before 8 a.m. London time on Wednesday morning, Donovan sought to explain why an outbreak of swine flu in China shouldn’t concern investors eyeing the international inflation outlook.
“Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China. It does not really matter to the rest of the world. China does not export a lot of food. The only global relevance would be if Chinese inflation influenced politics and other policies.”
The comments, intended to refer to swine, were swiftly interpreted as a negative remarks about Chinese people and reverberated through the country, which UBS has prioritized as it seeks to attract more money from rich Asians. Despite Donovan apologizing for inadvertently using “hugely culturally insensitive language,” rival brokerages in Hong Kong urged UBS to show more remorse and fire all the people involved in the incident.
Championing Diversity
The storm now threatens to blight the 47-year-old’s career at UBS, which began in the early 1990s when he joined its investment banking arm as an intern and led all the way to the top economist’s job at the firm’s giant wealth management business.
“I believe passionately that economics is something everyone can and should understand,’’ he says on a UBS website. “We all make economic decisions all of the time. The problem is that economists tend to wrap economics in jargon and equations. We do not need to do that. It is my job to help people realize what they probably already know.”
Throughout his career, Donovan has sought to make economics easy to follow and frequently comments on issues beyond the job’s traditional topics of central banking and economic indicators.
In a 2018 report, he and colleagues concluded that “a prejudiced country or company cannot be economically great” and that “diversity means better decision making and better economic results.” He also wrote on how same sex marriage boosted growth and on the economic upside of protecting the environment.
Amateur Boxer
An amateur boxer, he could be forthright in his economic commentary. He has regularly argued that President Donald Trump’s tariffs on China are ultimately “trade taxes” on American consumers and in May described Brexit as “the interminably tedious U.K. EU divorce.”
“I tend to think of myself as a political economist, not a mathematical economist,” Donovan says on the UBS website. “I get very excited about lots of things in economics. Diversity, inflation, education, trade, inequality, and social change are some of the topics I am very enthusiastic about.”
Donovan studied at Oxford University and the University of London. He has published two books, one on environmental economics and another on what drives inflation. He also helped to found a cancer care charity, worked with London schools and advised local businesses on the economic benefits of the 2012 Olympics. At UBS, he worked on a series on the lessons of Nobel-winning economists.
To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net
To contact the editors responsible for this story: Stephanie Flanders at flanders@bloomberg.net, Christian Baumgaertel, Dale Crofts
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