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Trump may be just what Australia Needs

Notwithstanding the shock-horror first reaction to Donald Trump’s stunning victory, when the dust settles, the next president of the USA has already shown some good signs for both the US and Australia.

Firstly, the aged old idea that we will always have a friend in the White House was never true. More accurately, we always had a friend in the White House as long as we did what we were told. Those days are now over. We have no real friends, just associates and partners.

The reality is, we can continue to suck up to Washington till the cows come home, but we will still only get what they want to give us. And that will depend on what they want from us and what we are willing to give them.

That truth is now more relevant than ever. Trump’s unhinged rhetoric and absence of diplomacy should be seen as a breath of fresh air. At least we know what he’s really thinking.

Listening to Trump’s victory speech on election night and putting aside all the rubbish about bringing the nation together and governing for everyone, the future still looks good; Trump’s references to rebuilding America’s infrastructure particularly so.

America’s roads, rail, bridges, not to mention airports, seaports and communications have all been allowed to deteriorate over the past 50 years. Rebuilding them will create full employment. There is a good chance he will choose to pay for it using functional finance, i.e. money creation, not bond issues.

The main reason the several trillion dollars of QE (Quantitative Easing) money did not revive the US economy was that the banks who received it chose to use it to recapitalise after the shock of the GFC. That money never made it onto Main Street.

130319112944-us-roads-infrastructure-1024x576If Trump plans to re-invest in US infrastructure in a big way and finance it with money created out of thin air (no bond issues) the money will find its way onto Main Street, it will revitalise lagging industries, create employment, improve tax revenues and bring them that long sought after growth that has thus far eluded them since the GFC.

A recovery from the ground up will be vastly superior to any recovery that Wall Street could engender. Wall Street (the markets) have, in fact, been the stumbling block to growing the US economy of late. Too much money has been invested in companies whose balance sheets have not improved.

That is wasted money. It might suit those who are heavily invested in the stock market and have been the driver of a seriously overvalued index, but it hasn’t helped the average American. That was the reason Trump won. Trump’s victory represented a “f*ck you” to Wall Street. And to some extent, the rest of the world.

Beyond America’s borders, there will be new rules to observe. Old alliances will be tested. Trump will be less inclined to be the world’s Sheriff. Nation’s reliant on American generosity in grants, military support and strategic planning might have to rethink their positions.

America is going to be more exclusive, less inclusive. Dis-engagement in the Western Pacific will mean Australia will have to be more mature in our dealings with Asia. Our trade relations with China might well supersede military ties with the US. As scary as that might sound, it shouldn’t be.

But it does mean that we will have to beef up our military strength to something akin to a real middle world power. At the moment we could not defend ourselves without US support. That will have to change.

middle-america-girds-for-chinese-invasionIf we are so petrified of a few unauthorised boat people arriving, the prospect of 250,000 well-armed soldiers landing at half a dozen entry points simultaneously, should be a wakeup call. That scenario however, is far less likely than an economic invasion.

China’s huge holdings of Australian dollars at the RBA should be seen as a great source of future foreign investment. Our economic future is in Asia. We had better start getting used to that.

Donald Trump’s election victory will likely be a watershed for Australia’s long term future. It’s time we grew up and stopped cowering under America’s protective wing. The much coveted ANZUS treaty won’t be worth much from here on in.

For Australia, being the clever country has just taken on a whole new meaning.

45 comments

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  1. Phil Buckley

    Fair analysis

  2. metadatalata

    Hi John,
    I agree this development is the perfect opportunity for Australia to loosen the master-slave relationship we have with USA on military ties, trade and the push by right-wing neo-cons to mimic their failed education and health systems. It is about time we invested in our own defense hardware designed for Australian policies. It would keep more people employed and skilled and keep the southern hemisphere safer for their inhabitants. Maybe now we can think about abandoning our ongoing war in Syria which is supporting US oil interests and put the 1/2 billion dollars a year we are spending there back into education and public health systems?

  3. aravis1

    Change is here; maybe this change is in the ensemble, good for us. Let’s hope so. I do believe, though, that it will take a change of government here to profit from the change.

  4. John Brame

    Okay, just one thing you are forgetting, ‘Donald Trump’s election victory will likely be a watershed for Australia’s long term future’ There will be no long term future if the spectre of climate change is not fully confronted by the world. Scientists are issuing new and more dire warnings of a venus type scenario. We will be fried ( in organic olive oil hopefully )

  5. Harquebus

    Any government, president, dictator or whatever that pursues growth as part of their economic plan is going to fail. Trump will not be able to keep his promises just as Clinton would not have.
    John Kelly’s economic ideology is bullshit and it is only a matter of time before he and his misguided ilk are exposed as the laws of physics and scientifically illiterate fools that they are.
    It is energy that fuels economies and surplus energy that provides growth. No amount of fiat currency creation can replace it.

  6. John Brame

    I agree H. Obama threw tons of stimulus money at infrastructure after the GFC and much of it went into the pockets of the corrupt few. Airports were built or expanded even if if these projects were unwanted or unnecessary. Total waste of money.

  7. John Kelly

    Harquebus, I agree that no amount of fiat currency can replace non-renewable energy. But why do you criticise me so? I am not proposing unlimited use of non-renewables. I fully support transition to a renewable energy source. With a properly targeted fiat spending program, that is achievable and that is what we should be doing. I am not your enemy.

  8. Michael Taylor

    H’, I have to agree with John on this point. It’s fine to disagree with him, and I’m sure that John would welcome the debate, but it really is time you stopped demeaning him. It’s not necessary. It’s not the best way to encourage engagement.

  9. Harquebus

    John Kelly and Michael Taylor
    There is no such thing as renewable energy. It is a concept that can never succeed and is just one more instance of your misunderstanding of physical realities. EROEI mates, EROEI.
    Neither of you is my personal enemy but, your economic ideologies are and I will continue to denounce them and those that espouse them.
    Cheers.

  10. John Brame

    Donald had better get out quick or this could happen….Under the rules of the Paris Agreement, once it has come into effect, “legally a country cannot withdraw before the next five years are over”, said Sven Harmeling, international climate change policy coordinator for the aid agency CARE.

  11. Ross

    Thanks John, we are certainly living in interesting times.
    As you say, Americans seem to have given a mighty big middle finger “f*ck you” to the corporations and the elites. Can Trump do what he says he is going to do? The evidence tells us that in Australia, most of the western world and most of all in America, politicians have been bought and paid for by the very corporations and elites to which the American middle finger has been extended. I suggest it will be more likely business as usual, going after the poor, the sick, the young and the unemployed to push even more capital upwards. Disappointment city will most probably be the final destination of what’s left of America’s middle class.
    We Australians would be well advised watch carefully and learn from their mistakes.

  12. Michael Taylor

    H’, I’ve never expressed my economic ideologies here. You’re making assumptions.

  13. Jason

    Harquebus, it’s easy to complain about people proposing solutions, it’s much harder to come up with solutions. Why don’t you write a researched article and submit it for publishing on AIMN offering your own solutions?

    You can keep saying “No amount of fiat currency creation can replace it.” but ignore the current school of economics that doesn’t even use currency but hasmodels based on barter and every actor is selfish and has all information etc that has absolutely no basis on reality. Why not attack the current economics models that are not even based on anything approaching reality? MMT at least tries to look at the real world and offer solutions like a job guarantee (JG) as a policy solution to automatically and permanently stabilise economies.

  14. John Kelly

    Harquebus, if you think there is no such thing as renewable energy, then by that logic, we are all heading back to cave dwelling, without the benefit of being able to rub two sticks together.

  15. Harquebus

    Michael Taylor
    Please accept my apologies.

    Jason.
    If someone proposes a viable solution which, MMT is not then, I will not complain.
    There is only one viable solution, population reduction. Plenty of scientific research already done on this subject.
    Search criteria: overpopulation

    John Kelly
    I have been accused of constantly hijacking debates so, I try not to introduce the population and growth problems as much as possible and try to limit my critical comments per page and to keep them short.
    Stone age I doubt but, horse and cart is a definite probability.

    Cheers.

  16. Kaye Lee

    Harquebus,

    I wrote an entire article dedicated to you about population reduction. Apart from showing your surprise, you didn’t bother engaging in the discussion. That indicates to me that you are not in any way concerned about the truth, or finding solutions, just endlessly repeating what you have decided is the doomsday scenario. We don’t need doomsayers – we need positive viable suggestions (your idea that no-one breeds for 10 years does not fall in that category).

    I have shown you that population growth is not inevitable. I have backed that up with examples of how education and lifting people out of poverty makes a difference to fertility rates. I have passed on the suggestions made by people far wiser than me on how to address it. You act like Malcolm Roberts, ignoring it all, moving on to the next article to repeat your prophesies of doom. You are demonstrating “cognitive paralysis” and “confirmation bias”.

    Loosen up and learn.

  17. John Kelly

    Harquebus, without looking at any links you recommend, I believe population reduction will come naturally. By that I mean the planet is a living entity and will protect itself when it feels sufficiently threatened. Whether by means of climatic catastrophes, starvation, disease or something we haven’t even considered, the planet will defend itself and restore itself. If that means wiping out half the world’s population, it will do it, and there’s nothing we can do to stop it, without a 180 degree turn around. You and I both know that won’t happen.

  18. keerti

    “America is going to be more exclusive, less inclusive. Dis-engagement in the Western Pacific will mean Australia will have to be more mature in our dealings with Asia. Our trade relations with China might well supersede military ties with the US. As scary as that might sound, it shouldn’t be.”

    It is past time that australia recognised not only where it is geographically, but also economically and acted accordingly. Flexing muscle against your major trading partner in support of an ally (usa) which will only support us if it suits them is not a long term position worth holding.

    In support of Haquebus. I am continually dissapointed by commentators who appear to think that if we can just do a tweak here and there that we can basically continue on in the same fashion with an ever growing economy. So-called renewable energy still requires vast amounts of fossil fuels in order to make the steel and aluminium needed to build collecting structures for energy..The climate is changing and there is the iminent danger of a tipping point which will send the whole house of cards crashing to the floor. That is suggested to happen in the next ten years with major dislocations of population a certainty. given trumps propensity for stupidity , the danger can likely draw nearer.Trump is likely to be a minor blip on the radar when that happens!

  19. Florence nee Fedup

    Fear not, our PM on the same page as Trump. After all they are both businessmen with a pragmatic attitude to politics. All this after 15 minutes of a very warm telephone call.

  20. Harquebus

    Kaye Lee
    I have posted a response on your article about population.

    John Kelly
    Modern agriculture depends on machinery powered by fossil fuels and fertilizers and pesticides also are made from fossil fuels. Losing them is going to cause us more trouble than you can imagine.
    Even though I agree with your final assessment, I am not prepared to let it happen without a fight.

    “If we don’t halt population growth with justice and compassion, it will be done for us by nature, brutally and without pity – and will leave a ravaged world.” — Dr. Henry W. Kendall

    Cheers.

  21. totaram

    John Kelly: I resolved some time ago not to engage with Harquebus (hereinafter referred to a H) since there is no point. H is fixed in a world view which appears to be based on the following assumptions (all research has been done, contained in various blog posts and the occasional peer-reviewed paper, and no further argument is possible).

    1) Our technological society is based on the profligate use of energy, which is obtained from fossil fuels using devices which were produced by a process whose energy use is far less than that produced by that device. (This is called EROEI ). E.g. A coal-fired power station is constructed using far less energy than what it produces over its lifetime.
    2) Since we cannot keep burning fossil fuels without putting the planet in danger, we can sustain this kind of society only for a very small population, or possibly not at all. We may need to go back to a simple, less energy-intensive lifestyle.
    “Stone age I doubt but, horse and cart is a definite probability.”
    3) The current “renewable” technologies use more energy to produce than they harvest from the sun or wind over their lifetime. Therefore they are not really renewable.
    4) We will never be able to construct devices that require less energy to construct than they harvest (renewably) over their lifetime. This assumption seems particularly hard to understand, since such devices exist in nature. They are called plants.
    “There is no such thing as renewable energy. It is a concept that can never succeed and is just one more instance of your misunderstanding of physical realities. EROEI mates, EROEI.”

    5) All economic growth requires increasing amounts of population and energy. Why this should be so, I don’t know. It does require more energy, but less and less so depending on the energy efficiency of our technologies.
    6) Fiat currencies cannot replace energy. Of course they can’t. They are simply accounting artefacts as we all know. However this person believes that creating fiat currency attempts to “substitute for energy”, whatever that means. Hence it must fail.
    “It is energy that fuels economies and surplus energy that provides growth. No amount of fiat currency creation can replace it.”

    The calculations for 1) and 3) are particularly difficult to do and they are contentious. It might interest people to know that estimating the energy input to a particular technology, say PV panels, is done using the very same fiat currency much derided by H. Capital and labour costs used in the process are converted into energy equivalents and added to the other energy inputs. Some of these calculations are called into question by the fact that today, the delivered cost of electricity using solar panels or wind in some locations is less than that using fossil fuels.

    It has been pointed out to H, ( along with Kaye Lee’s long article) that a certain level of economic development leads to falling birth rates, as seen in Japan or South Korea where the picture is not distorted by immigration. In one person’s summary:
    “Global population rates have been falling since 1966 and will reach the 2.1 rate needed to maintain a stable population before 2030, where it will then continue to drop. In most developed countries, including Australia, the rate is already below that level. Our population growth is down purely to increased life expectancy and immigration.”
    However, that seems to make no impact. In H’s view all development should cease and all human reproduction stopped. How this is to be achieved, if ever, I have no idea.

  22. Andreas Bimba

    Wise words again John. If Trump can deliver at least moderate trade protection sufficient for highly automated U.S. manufacturers to operate profitably as well as substantial infrastructure spending funded without borrowing I think he could ‘make America great again’ and get unemployment way down. This is probably why most voted for him.

    The down sides are however huge with his belief that global warming is a hoax, that corporations deserve tax cuts, universal health care will be removed, the system of social welfare support further reduced, the whole progressive social agenda dismantled and many more.

    I agree Australia must be more independent and also agree, even if it is a minority progressive opinion, that the Australian defence force should be able to halt a hypothetical invasion by 250,000. The current three battalion army is totally inadequate and too much is wasted on grossly mismanaged big ticket items of military hardware.

    I also agree that commerce with Asia is the best strategy for a peaceful future but definitely not the dumb and dumber totally free trade mining industry dictated Coalition approach, but instead to play the game like the East Asian countries where active government involvement in developing industries and protection where necessary especially during the development phase is used.

    The Japanese, Korean or Singaporean economic development model is much more likely to succeed and to provide the hundreds of thousands of jobs needed than the current ‘leave it to the market’ approach that just suits the capital controlling elite that profits greatly from the organised plunder of our natural resources and that provides very little tax revenue or jobs.

    The MMT economic approach can provide the additional economic resources we need to develop a more diverse and robust economy and to transition to clean energy and environmental sustainability but is not enough on its own if the proposed Job Guarantee program is intended to directly employ all of the current unemployed within its umbrella.

  23. Kaye Lee

    “But it does mean that we will have to beef up our military strength to something akin to a real middle world power. At the moment we could not defend ourselves without US support. That will have to change.”

    I so disagree.

    “the Australian defence force should be able to halt a hypothetical invasion by 250,000.”

    If anyone wanted to invade us (which they don’t), they can send drones and missiles and bombs. But this won’t happen either. They might choose to mess with our computers (and undoubtedly already do), they could choose to mess with our energy supply (unlikely)…but I think you guys are really neglecting the power of global trade. The Chinese have been very assiduously amassing the assets they need. They have no need to try to take them by force.

    Our best defence has been eloquently described by Miriam English – help our neighbours, work together for common goals, educate people, share the wealth rather than giving it to arms manufacturers. Build schools and hospitals rather than bombing them. We have engaged in so many foreign wars where we all end up losers.

    Conventional war solves nothing and thinking we, with our 24 million people and enormous coastline, could ever hope to defend ourselves from a serious invasion is unrealistic. Thankfully it won’t happen so stop wasting money and resources on pretending we could.

  24. Zathras

    On the other hand, his victory has empowered those in our society who thrive on social division and irrationality and are controlled by emotion and anger rather than facts.

    Suddenly Hanson thinks she has an ally in the White House who has vindicated her own view of the world.

    It remains to be seen how far he will be let off his leash by his political masters. They have the final say in what becomes policy – not Trump – and there are a lot of people in Washington who decide how the USA deals with the rest of the world.

  25. Harquebus

    totaram
    I make a point of reading comments, yours included and of assessing other opinions. I also follow most links posted by others as well.

    “However this person believes that creating fiat currency attempts to “substitute for energy”, whatever that means. Hence it must fail.”
    True and partly true. Diminishing energy returns are being “papered” over with ever increasing amounts of debt. All fiat currencies fail.

    “estimating the energy input to a particular technology, say PV panels, is done using the very same fiat currency much derided by H”
    EROEI does not factor economics. Energy input is delivered using energy.

    Apologies in advance for posting this sunwebber link. I do not wish to hijack this conversation and will not make a habit of it.

    SOLAR DEVICES INDUSTRIAL INFRASTRUCTURE
    http://sunweber.blogspot.com.au/2015/04/solar-devices-industrial-infrastructure.html

    If some wish to continue the population discussion, I will check in occasionally on Kaye Lee’s page here:
    https://theaimn.com/are-we-really-doomed/

    Miriam and I have an ongoing renewable and EROEI debate here:
    https://theaimn.com/youve-heard-about-peak-oil-but-what-about-peak-food-and-peak-water/

  26. z

    Trump become a president has shown that majority of US don’t support Obama and don’t like to be a police in the world

  27. Ian Saffin

    Just wait till Duterte Harry gives him a mouthful!

  28. Andreas Bimba

    ” help our neighbours, work together for common goals, educate people, share the wealth rather than giving it to arms manufacturers. Build schools and hospitals rather than bombing them. We have engaged in so many foreign wars where we all end up losers.”

    I agree with all of the above but not with having a minimal military just for disaster relief like New Zealand. Drones, missiles and bombs do not invade, merely weaken temporarily. Ukraine is an example of where weakness invites war from ruthless opportunists.

  29. Pingback: Trump may be just what Australia Needs | THE VIEW FROM MY GARDEN

  30. jimhaz

    I’m surprised our right wingers have not already been out in force demanding company tax cuts to 15%. Bound to happen.

    [Trump become a president has shown that majority of US don’t support Obama and don’t like to be a police in the world]

    Rubbish. Obama’s approval rating is 55% – which is high at the end of a term.
    Police – well their actions after 911 indicated otherwise. There is undoubtedly falling support for this though – the US is war weary for the present time.

  31. keerti

    Andreas…New Zealand has had it’s minimal military since Helen Clarke. So far it has not been invaded and as a major providor of food sourced from highly efficient farming practices (if only for that reason) is unlikely to be interferred with. Australia’s military could only be effective as a small addition to a larger force. It’s major effect is to take money away from areas where it could be better spent…education, climate science etc.

  32. Andreas Bimba

    Keerti, NZ is in Australia’s shadow and freeloads on our defence spending just as Australia freeloads on U.S. defence spending. NZ is also more geographically distant. Australian defence spending is currently 1.88% of GDP. Maybe the 98.12% of the economy that is for non military purposes needs to be better managed to adequately provide education and stop global warming?

  33. totaram

    Harquebus: “EROEI does not factor economics. Energy input is delivered using energy.”

    The paper by Ferroni and Hopkirk you linked to does use the currency value of capital and calculates an energy equivalent. I do not lie. It is peer reviewed, by the way, and the methodology is very well supported with references.

  34. Kaye Lee

    Andreas, there is no comparison whatsoever with the Ukraine and us. They share borders and have been warring over territory for centuries. We do not share a border and NO-ONE can make any historical claim other than our First People.

  35. Andreas Bimba

    When the elephants dance the mice get trampled. A mouse with a pin might have a better chance.

    Australia was colonised by the British and other migrants. The ‘second’ wave of colonisers would have almost as much of a historical claim as the first wave. (Note the Aboriginal people were not colonisers.)

  36. Kaye Lee

    And how will that invasion force of 250,000 corral 24 million people in a country that is almost as big as Europe?

    It makes no sense.

  37. Jennifer Meyer-Smith

    John Kelly,

    your article has opened up a selection of interesting discussions between commenters, who I would usually find credible and worthy.

    Trump’s victory has put the fox in charge of the henhouse and the uncertainty of what such a depraved and unconscionable person could do is making everybody second guess what will happen.

    I didn’t particularly like Clinton but at least there would have been discussion with her about Obamacare, Climate Action, gender equality implementation programs, to name but a few. Trump has stated he will abandon the first two and I don’t think anybody is holding their breath that he is even remotely interested in the third I listed.

    I agree it would be good if he could demonstrate his infrastructure promotion idea works by employing the unemployed. That could work in Australia’s interests as an incentive to the Turnbull Regime to get serious also; however I fear that both wankers aka Trump and Turnbull would see those employment opportunities focused on construction which implies opportunities AGAIN mainly for fit, young men.

  38. John Kelly

    Kaye, modern invasion forces don’t corral entire populations. They take command of essential services such as communications, airports, military bases, transport, water etc. The general population simply go about their daily activities.

  39. totaram

    John Kelly at 7:34:

    Indeed. That is how small nations in Africa (typically) were taken over by a few hundred mercenaries hired by the usual suspects. Military take-overs even in countries with large populations like Bangladesh, Pakistan, Myanmar, Thailand, etc. don’t need too many troops to actively take over the govt. All that is required is that the rest of the military does not disagree.

    This is not to say that I think we need to beef up our defence forces.

  40. Harquebus

    Totaram
    Thanks for that. I will reexamine it.
    Cheers.

  41. Jennifer Meyer-Smith

    Trump only cares about what will be BIG, HARD and the false promise of permanent in his name.

    Trump needs stumping on, as do the neoliberals in Australia, America and elsewhere.

    Clinton is gone so now we have Trump alone to see how depraved and conveniently tunneled-vision he is.

  42. Harquebus

    Totaram

    That report does not mention currency, it only mentions capital.

    “Capital is the result of energy invested in previous economic activities for housing, transport, food, goods, services and other.”
    and
    “Capital is the result of labour previously performed and therefore of energy previously consumed.”

    Phew! I thought I going to have to read the whole thing again.
    Cheers.

  43. totaram

    H: If you want to quibble you can. The capital is measured in Swiss Francs, which is a currency and a fiat one at that. How else can you measure capital? According to you only with gold, but that is not what the paper does.

    Maybe you should read the paper again, and more carefully. You might get a more nuanced understanding on what has been discussed.

  44. Harquebus

    totaram
    Thanks for that.
    Here I go again.
    I have read the report although, not recently.
    Cheers.

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