The true lesson Aussies should learn from Trump’s victory

Since the US election result confirmed Donald Trump would re-enter the White House in triumph, Australian commentators and politicians have been falling over themselves to identify the ‘lessons for Australia’.

The truth is that many of the decisive factors in Trump’s win don’t apply in Australia. The two biggest differences are compulsory voting and our Westminster system.

Voluntary voting, combined with a national primary system, mean a significant amount of effort and energy need to be devoted to getting out the US vote. In practice, this has caused candidates to adopt policy positions that would be too extreme for the general public.

While the candidates then try and walk these positions back to an extent during the general election, the best path to victory is to fire up the base and get them to show up to the polls, particularly in the swing states.

By contrast, Australian politicians must appeal to the average voter, who —unlike the politically-aligned base — is typically completely uninterested in ideology and opposed to anything more radical than incremental policy change.

As a result, the Democrats are further left than Labor and the Republicans are further right than the Coalition.

This difference is enhanced by our Westminster system. Australian politics tends to be hyper local, even as the media focus has shifted towards a presidential style focus on the leaders. Local politics is by its very nature much more practical, and less philosophical; especially in key battleground areas like western Sydney.

Australians have an almost aggressive indifference to ideology, tending to judge all policy proposals on the basis of whether they will work and what they will deliver for them and their family personally.

An important corollary of these differences is that Australians retain far more faith in our institutions than the Americans have in theirs.

As a result, while populism has an influence in Australia, it is far from the overwhelming force it is in America.

However, that does not mean we should be complacent. The decline of both major parties in America is the result of trends that are far deeper than just politics.

It has now become a tired cliché, but a common explanation for Trump’s appeal is the idea that the working class has been ‘left behind’ by globalisation and industrialisation.

Trump’s populist policies — his protectionist economic nationalism, his focus on immigration, his tolerance for government spending and welfare (a strong deviation from traditional Republicanism), even his rhetoric of making America great again — all have at their core an appeal to struggling working class voters.

It is always worth pointing out — no matter how many times it has been said before — that just because Trump has correctly identified there is a problem does not make his diagnosis of the causes correct. For example, there is abundant evidence that the decline in manufacturing employment has been driven largely by automation, not offshoring.

This means that not only will Trump’s tariffs punish consumers, but also cannot bring back the lost jobs.

It is also hard to argue that international trade makes people poorer, or that people are generally willing to accept higher prices and lower quality goods just because they are made in Australia or America.

To be clear, as Charles Murray detailed in his groundbreaking work Coming Apart, there is a lot of evidence to support the idea that the working class in America had an extended period of malaise — both economically and culturally.

But detailed analysis of census data over the past 40 years shows that many of those trends simply do not apply in Australia.

While wages in the US and the UK stagnated and working class living standards declined, Australia experienced sustained and broad-based income growth. As the ABS noted, prior to the pandemic “[a]ll income groups have experienced a real increase in their income since the mid-1990s”.

Indeed, income growth for the period following the GFC until the pandemic was the strongest for the bottom 10%; a trend that holds (though far less strongly) for the prior 30 years as well.

These positive trends are not limited to just economic factors, either. Murray charts a significant divergence in the US between the rich and poor in divorce and broken families. By contrast, after a spike following the legalisation of no-fault divorce, family structures in Australia have been relatively stable — certainly since the late 90s.

This does not make us immune to the issues of income stagnation, and it’s worth noting that the picture worsens in the mid-2010s; with little or no real income growth for almost 10 years (and indeed a period of real income decline following the spike in inflation).

The problem for those seeking to guard against populism is that reasons for this decline are complex and multifaceted. One component is a mix of poor monetary policy: too passive in the face of sluggish growth in the late 2010s, too slow to turn off the taps in 2021 leading to a huge inflation spike.

For almost 20 years, Australia has also relied heavily on favourable terms of trade for boosting living standards. Benign economic conditions (and luck) have made us very complacent.

Another significant issue has been the dearth of business investment outside the mining sector for a decade now. This has been coupled with an extended slowdown in productivity. Meanwhile the size of government has been slowly expanding.

Perhaps this leads us towards the true lesson Australian politicians should learn from Trump. Sustained income growth matters way more than many seem to think. Too little focus on income generation may cause significant long-term rifts to emerge in politics.

Simon Cowan is Research Director at the Centre for Independent Studies.