But it’s only possible because of the relentless right-wing propagandising against government as something fundamentally undesirable, harmful, illegitimate.
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That’s one of the wrong-headed notions that Trump has embraced. Another is an idea promoted relentlessly by the American left – that free trade is bad and must be shut down.
This idea, strongly argued by US trade unions since the 1970s, was a cause of the left, yet today it’s Trump who’s acting to limit free trade. “Tariff,” he likes to say, “is the most beautiful word in the dictionary.”
Free trade went from being a bipartisan article of faith in the US Congress for most of the postwar era to being a bipartisan scapegoat for the last decade or so. Trade has been blamed for many of America’s greatest problems, including its shocking levels of inequality.
As a former chief economist for the World Bank, American Joseph Stiglitz, said last year, in the US “we’ve frankly made a choice to have more inequality than other countries”. Remember billionaire Warren Buffett’s point that his secretary paid more tax than he does?
Stiglitz pointed to the fact that the life expectancy for Americans was actually getting shorter, uniquely among developed nations, in the years before COVID. So it wasn’t due to the pandemic. “With the incomes of the bottom 90 per cent [of Americans] having stagnated for close to a third of a century,” said the Nobel laureate, “the health data simply confirmed that things were not going well for swaths of the country”.
US economist Joseph Stiglitz said last year, “we’ve frankly made a choice to have more inequality than other countries”.Credit: James Brickwood
But is free trade – globalisation – the culprit? In part, yes. The great philosopher of conservatism, the 18th century’s Edmund Burke, held that “great trade will always be attended with considerable abuses”. Inequality is one of those abuses; the traders get rich, and the rest do not.
Democrat Barack Obama, the last US president to propose a major trade liberalisation deal, acknowledged that free trade had aggravated the scourge of severe inequality. Yet he argued for more free trade: “While some communities have suffered from foreign competition, trade has helped our economy much more than it has hurt.” He lost the argument. He pulled the US out of the talks to form a 12-nation trade deal called the Trans-Pacific Partnership.
But why did the other 11 nations go ahead? Why is America, the great champion of free trade, leading the global retreat on trade? The reason is very straightforward. Free trade is inherently a force for inequality. Its job is to generate national wealth at the border.
The job of redistributing that wealth can only occur within the border. Governments use other arms of policy for redistribution – tax policy, wages policy, workplace policy, universal healthcare and so on. Other developed countries are much more active in income redistribution; the US is notoriously bad at it.
Even now, Trump’s Treasury secretary, Wall Street billionaire Scott Bessent, acknowledges that while trade was good for the US economy overall, “the distributional implications of trade liberalisation were overlooked, exacerbating American inequality”.
Treasury Secretary Scott Bessent said, “the distributional implications of trade liberalisation were overlooked, exacerbating American inequality”.Credit: Bloomberg
Yet neither he nor Trump proposed correcting those “distributional” effects. Because to fix inequality, you need government. And government is bad, and must be cut.
Instead, the Trump crew plans more tax cuts. For the wealthy and for companies. While Musk runs amok with his chainsaw to find the revenue to pay for them. That’s redistribution of the worst type – to make the rich richer.
Trump has uniquely paired the bad ideas from right and left. A country needs trade to help generate profits. And it needs government policy to distribute it with some degree of fairness. Rather than fix the problem of fairness, Trump is crimping trade while “shrinking” – and vandalising – government. This will make America less prosperous and less fair. Australian Trade Minister Don Farrell says he plans to make Trump “an offer he can’t refuse”.
If you’re planning to offer good sense, Don, I’m afraid that market seems to be closed.
Peter Hartcher is international editor.
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