November 19th 2016

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Articles from this issue:

COVER STORY QUT discrimination case exposes Human Rights Commission failings

CANBERRA OBSERVED Triggs in the gun: loaded section 18C to get overhaul

EDITORIAL First Brexit, now Trump - it's the economy, stupid!

ANALYSIS What is possible to a Trump Whitehouse

MANUFACTURING Foreign ownership no sole reason for breakdown

ENVIRONMENT Billionaires bankroll U.S. anti-coal campaign

LIFE ISSUES Abortion trauma link to male suicides

NATIONAL AFFAIRS Commission's "Get Pell" campaign fails on facts

GENDER AND POLITICS Pronouns, ordinary folk, and the war over reality

NAVAL MILITARY HISTORY A WWII encounter that deserves remembrance

INTERNATIONAL AFFAIRS China builds Great Wall in the South China Sea

MUSIC Dylan's Nobel prize causes song and dance

CINEMA Humanity within inhumanity: Hacksaw Ridge

BOOK REVIEW Bill is $500 billion and counting

BOOK REVIEW Arguments and facts: the man who remade Russia

POETRY Sunset at the Perth War Cemetery

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First Brexit, now Trump - it's the economy, stupid!

by Patrick J. Byrne and Peter Westmore

News Weekly, November 19, 2016

Economic unrest is as much behind the resounding victory of Donald Trump as it was behind the disenchantment that saw 22 per cent of Australians not vote for a major party at the last Federal election.

In the U.S. election, economic disenchantment and contempt for American political elites fuelled the rise of Donald Trump, saw Trump’s “Let’s make America Great Again” resonate with disempowered Americans and even saw Hillary Clinton publicly take a stand against more economic globalisation by opposing the Trans-Pacific Partnership.

In the end, Trump appealed to the disenchanted while Clinton was regarded as representing the political, economic, banking and technology elites.

Middle income class

His win was a greater surprise to the pollsters than the Brexit vote was in the UK.

Unemployment, underemployment, a shrinking middle class, stagnant middle incomes and levels of inequality, not seen since 1929, have left a sizable slice of Americans utterly contemptuous of America’s wealthy governing elites.

It is not just American “battlers” who recognise the economic factors behind the deep political divisions and bitter debate in the U.S. presidential election.

Recently Australia’s National Australia Bank (NAB) economics team (reported in Business Insider, November 7, 2016) said that the “squeezed middle class” was the powerful force driving the voter mood in the United States in this presidential campaign and across the Organisation for Economic Cooperation and Development (OECD) nations.

The NAB team said the number of Americans with real middle-class incomes “fell from 61 per cent to 50 per cent between 1971 and 2015, but their share of total U.S. household income fell by much more – from 62 per cent to 43 per cent, a drop of 19 per cent”.

Income growth has been concentrated at the very top end for several decades.

“The top 10 per cent’s share of household income rose from 32 per cent to 48 per cent between 1979 and 2015 but two-thirds of this extra income went to the 1 per cent best-paid households,” they wrote.

Inequalities in the U.S. economy are the worst in almost a century, since just before the Great Depression in 1929.

Fortune magazine, the multinational business magazine owned by Time, said recently that when the OECD examined income inequality, it found that the U.S. had the fourth worst level of income inequality after Turkey, Mexico, and Chile. (Fortune, September 30, 2015)

Jacob S. Hacker, a political science professor at Yale and co-author of Winner-Take-All Politics, said in The New York Times (October 25, 2011) that America’s wealthiest of the wealthy control more of the country’s treasure than at any other time for which data is available.

“In 1917, average income — including capital gains — among the top 0.1 per cent was 127 times the average income of the bottom 90 per cent … [and the] average income among the top 0.01 per cent was 509 times as great.

“In 2007, average income among the top 0.1 per cent was 220 times average income among the bottom 90 per cent. Average income among the top 0.01 per cent was 1,080 times as great.”

The majority of the U.S. super-rich today are “financial and corporate executives”, Professor Hacker said.

He could have added that the super-rich exert disproportionate power on Washington’s polices that have been stripping the wealth out of the middle class.

The income-distribution problem is reflected also in the unemployment and underemployment statistics.

The most comprehensive U.S. formula is called the “U-6 rate”, which combines the unemployed with “persons marginally attached to the labour force, plus total employed part time for economic reasons, as a percentage of the labour force”. That means the unemployed, the underemployed and the discouraged.

The U-6 rate is 9.7 per cent (CNBC, March 6, 2016).

Also, the U.S. workforce participation rate has fallen by 3 per cent since 2000. This figure represents discouraged workers who have left the workforce altogether.

Low wages compound the problem. The U.S. minimum wage is just US$7.25 an hour. The U.S. Bureau of Labor Statistics estimates that 3.9 per cent of American workers are at or below the minimum-wage level.

New ball game

Trump’s decisive win has made American politics a new ball game.

It represents the cry of disenchanted and disempowered Americans who want someone who will stand up for them against the powerful vested interests who got rich while they slid into poverty.

It is a revolt against the U.S. establishment and the global status quo.

Trump will likely cripple global climate-change policies, halt the ever expanding radical, free-trade globalisation policies and he has promised to stop the structural changes that are destroying jobs.

He wants a conservative (read pro-life) replacement in the Supreme Court for the late justice Antonin Scalia.

He has the good will of many Americans to act quickly and Republicans control both the House of Reps and the Senate.

However, it is not clear what are Trump’s policies to restore America’s middle class and political stability.

It’s one thing to say he will bring back industries and jobs, it’s another thing to implement policies that will create jobs that are being lost overseas and to the high-tech revolution, and then take on the captains of Wall Street to implement measures that will reduce inequalities.

If Trump doesn’t achieve changes, it is likely that economic discontent will drive political instability in the U.S. for years to come, just as similar problems drove political instability in the 1930s.

The Republican Party is deeply divided over Trump.

He is also accused of deeply dividing the nation with his style of campaign. This is only partly true. His campaign could rather be said to have uncovered the deep divisions in America on economic, social issues and along ethnic lines.

Indicative of these divisions, BBC exit polling shows Trump won the white vote (58 to 37 per cent), while Hillary Clinton won black voters (88 to 8 per cent) and Hispanic voters (65 to 29 per cent).

For Australia, American economic and foreign policy are unpredictable, with equally unpredictable consequences for our region of the world.

In this environment, Australia needs to maintain its existing strong relationship with the United States, but at the same time build stronger economic and defence ties with Japan and the emerging nations of South-East Asia, including Indonesia.

Prepare for a bumpy ride.

Patrick J. Byrne is the national vice-president of the National Civic Council.

Peter Westmore is national president of the National Civic Council.

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