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Is Australia at the mercy of the ‘next Trump’?

Donald Trump is dismayed  by the lack of support from Republican party.

Donald Trump is dismayed by the lack of support from Republican party. Photo: Getty

ANALYSIS

The wheels of history continue to turn in the US, where presidential hopeful Hillary Clinton is now given a 95 per cent chance of winning in the latest Reuters/Ipsos analysis of polling data.

However unelectable he may seem to Australians, there are some parts of his platform which have a clear appeal to sections of the US.

For example, his promise to get rust-belt factories working again is mostly economic fantasy, but a large group of voters find such a dream irresistible.

Australia is not immune

It’s a dream that will also find traction in Australia.

We have an auto-manufacturing workforce thrown out of work, dwindling jobs and wages in the mining sector, dairy farmers, fruit growers, sugar growers and food processors buffeted by global forces.

It will not be difficult for a Trump-style demagogue to rally sentiment among the two million Australians, in those sectors and others, who are unemployed or under-employed.

The big question they will want answered is why, having done everything asked of them, they still end up on the scrap heap.

The corruption of a supposedly ‘level playing field’ in global trade is not the only answer to that question – there’s the gradual move toward two-income households between the 1970s and 1990s (which is decidedly not an argument to send women home again), automation of many tasks, and a trend toward risk-averse businesses relying on more part-time and casual workers.

But leaving those other forces aside for now, the biggest gripe is the uneven spoils of globalisation.

A beautiful theory

In a perfect world, there would be no tariffs imposed across national boundaries, no currency manipulation by central banks, and no behind-the-border distortions such as subsidies.

But the fact that such a perfect world has never existed, and never will, should inform policy – not appeals to a textbook trade nirvana.

The problem is, national debate is slow to adjust to the post-GFC world order.

globalisation reagan thatcher

Reagan and Thatcher’s experiment hit a wall in 2008.

The globalisation surge that started with US president Ronald Reagan and UK prime minister Margaret Thatcher, and which hit a wall in the 2008 financial crisis, was long enough for most commentators to internalise neo-liberal articles of faith: that free trade was always best, that wealth would always trickle down, and that an unfettered finance industry could create limitless wealth.

Things look quite different post-GFC, and voters who may not grasp the technical arguments behind those assertions simply feel in their bones that something’s wrong.

In Australia, the best illustration of why those orthodoxies should be challenged has been in auto manufacturing.

When the Abbott government decided in 2013 to end subsidies in that sector, taxpayers were contributing $US1966 to every car made. While that was 1.5 times the German subsidy, it was only 67 per cent of the subsidy on each American-made car.

In a world where everyone’s using such subsidies, arguments about free trade and comparative advantage begin to break down.

An unpleasant remedy

But what are governments to do? Actually, they have to get their hands dirty and play the same game.

The Turnbull government is doing what in ways the former Abbott government would not.

It has decided, for instance, to pay well over the odds to build submarines in Australia because it knows that the project will keep high-skill trades alive for decades.

Labor, too, went to the 2016 election with a plan to boost the Australian content in government procurement programmes.

Both are examples of protectionism, though neither side likes that word.

What they tacitly acknowledge is that while the goods and services produced by a worker are easy to value, the intangible value of simply being in a job is also important.

auto workers jobs

There’s more value in a job than just the worker’s output.

Employed workers in general have better physical and mental health outcomes, and reduce social harms such as crime and domestic violence.

That’s why in an era of growing job insecurity it’s quite legitimate for hard-working people, who’ve done everything asked of them by society, to demand work – whether it’s protected, subsidised or not.

Let’s be clear – protectionism does not make the nation wealthier in aggregate. The textbook theory is quite right about that point.

In practice, however, politicians who put human dignity ahead of GDP growth and ‘average’ wages skewed towards the top end of town will gain political traction in the years ahead.

It would be far preferable, therefore, if mainstream politicians put the horse back before the cart.

Because if they don’t, the battleground is vacated and the Donald Trumps of this world will win.

To read more columns by Rob Burgess click here.

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