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Article - We Know How To Stop Trumpism

November 11, 2016

THE HON WAYNE SWAN MP
FEDERAL MEMBER FOR LILLEY


WE KNOW HOW TO STOP TRUMPISM


You want to stop people from turning to divisive figures who peddle hatred? Ensure they have a decent standard of living, writes former treasurer Wayne Swan.

Far from history being over, it seems like the battle of ideas has only just begun. The election of Donald Trump, the UK’s exit from the European Union and the rise of nationalist parties such as the National Front in France, the AFD in Germany and of course, One Nation and their fellow-travellers in the Liberal and National parties in Australia have completely shattered the notion that support for trickle-down economics, particularly labour market deregulation and discriminatory trade agreements, is “settled” in Western democracy. Indeed, recent events suggest that a majority of voters have been stewing in ominous silence for the past two decades as their countries were transformed without their consent.

But while Brexit and Trump provide a stinging rebuke to major parties that cling to the trickle-down agenda in the US and the UK, the Australian experience has, so far at least, been more inclusive. While Australia can learn a number of lessons from what is happening overseas, our closest allies can learn some important lessons from us as well.  

The first lesson is that rising inequality is the major threat to economic growth in developed countries. Unless economic policy is aimed at securing inclusive growth that delivers benefits to those outside the 1% it is now clear that a majority of voters will block that reform. The thing that now scares the working class the most is a bigger dose of free-market capitalism.
The second lesson for all politicians is that voters no longer fear the wrath of “the markets” if they refuse to swallow the bitter pill of trickle-down tax and trade policies. The idea that the cure for unemployment, poverty and regional decline is another dose of trade agreements and tax cuts is dead. Working-class voters now fear the medicine of neoliberal reform more than they fear the problem of slow growth.

While it is unlikely the Brexiteers or Donald Trump have any interest in targeting economic growth to the workers and communities that have missed out for decades, it is clear that there is enormous political benefit in simply promising to try. Low-income earners in the US have experienced declining living standards for decades. They know what it is like to live without growth. They know what it is like to live without hope. And they have now made it clear that they are willing to impose such conditions on corporations and high-income earners as well. Put simply, it now seems likely that unless countries can find a way to deliver inclusive growth it is possible they will wind up with no growth at all.

Which brings me to Australia. While the gap between the rich and poor has risen significantly in Australia, we made it through the global financial crisis without the massive increase in unemployment experienced in the US and Europe. Similarly, while the minimum wage has grown far more slowly than the incomes of the top 1%, the Australian minimum wage hasn’t fallen steadily in real terms like it has in the US. This wasn’t by accident, and it wasn’t delivered by “the market”. Good policy and strong institutions have done a better job of protecting Australians than policy settings in other countries have delivered.
In 2008-09 as the global economy faltered, the Australian government, and I as treasurer, resolved to stimulate the economy by “going early, going hard, and going households”. We had seen what happened in the recession of 1991 and neither the Treasury officials nor my Labor colleagues wanted to repeat the mistake of waiting to see how things panned out. The Coalition opposed us and the conservative press attacked us, and indeed continue to this day in trying to rewrite the history of that period.
Unfortunately for tens of millions of people around the world, not all governments heeded the lessons of the past. In the US and the UK the unemployment rates rose dramatically as politicians argued about whether Keynesian stimulus or fiscal austerity was the best treatment for a bad dose of recession. In many countries ideology trumped evidence and the costs are not just measured in the billions of dollars of lost output, but in the families and communities that are yet to recover. History tells us that some never will.

To be clear, unemployment and inequality remain significant and growing problems in Australia. Unemployment in Australia grew during the GFC, but by far less than it did elsewhere. More alarmingly, since Labor lost office, the number of unemployed and under-employed people has grown to more than 1.8 million, while the Turnbull government went to the last election promising to cut taxes for the rich and cut unemployment benefits for the poor.
But just as Australia has avoided recession and the extreme growth in inequality evident in the US we have also avoided the extreme sense of frustration clearly felt by hundreds of millions of Americans and Britons who have voted for any change that might work rather than voting for an old plan that hasn’t worked. While Pauline Hanson won four Senate seats at the last election it is important to highlight that her team comprises just 5% of the Senate and 0% of the House of Representatives. Nationalism is on the rise in Australia, as it is elsewhere, but it is not yet out of control.

If Australia is to curb the rise of nationalism and fear, and if other countries are to step back from the brink then the first step must be to adopt the doctor’s adage; first, do no harm. Donald Trump’s voters made clear that they want the trickle-down tax and trade policies to stop, as did Australian voters at the last election. Any politician who tries to push more neoliberal medicine down the throats of voters will likely lose their social licence to prescribe anything.

Second, it is time to reflect on the possibility that decades of opinion polls saying that voters value jobs, job security and a strong welfare safety net might actually reflect how voters feel. While it is always possible to win votes from the middle class by demonising the unemployed as “dole bludgers and welfare queens”, Trump’s electoral performance shows that there are even more votes to be had by holding out the offer of help to those who have missed out for so long.
And finally, for those of us who want to change the world, not just the government, it is clear that what is really needed is not just anger at how things are but a plan to make them better.

Around the world the political parties that are able not just to promise a new deal for those who have been left behind but prepare an inclusive prosperity plan to deliver concrete outcomes will define the politics of the coming decades. But if populist critique cannot be fused into policy change then the anger in the electorate today will be nothing but a taste of the troubles to come.

This article was originally published on Crikey. 

 

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