Trump, Brexit and Australia
by Murray Frazer
Two articles in Melbourne's The Age recently went a long way towards explaining Donald Trump, Brexit, and the rise of One Nation in Australia – although neither article mentioned Trump, the USA, Brexit, or the UK.
One reported on gross underpayment of illegal migrant workers on orchards in northern Victoria, and the second told us the pay received last financial year by the CEOs of the big four banks: ANZ $5.07 million, CBA $12.3 million, NAB $6.7 million and Westpac also $6.7 million. (Next to this was a story about the CEO of Goodman Group receiving a bonus of $16 million on top of a salary of more than $6 million.)
To see the connection between these stories and the rise of Donald Trump, consider two sets of numbers.
First, in 1964 the ‘average hourly wage, seasonally adjusted’ in the US was $19.18 in 2014 dollars. In 2014 it was $20.67, a tiny increase in 50 years (data from the Pew Research Center).
Second, in 1964 the richest 1% of Americans received 8% of the national income, but by 2015 the richest 1% received 18% of the national income (data from ‘World Top Incomes Database’).
In other words, over a 50-year period, the real average wages in the US have not increased at all, while the share of national income going to the very richest has soared. Most of the of benefits of globalisation and all the structural changes to the US economy over that period have benefitted the already-wealthy.
So, we have massive disillusionment in the US with globalisation and with the political and social ‘elites’ that are perceived as being responsible for it and along comes a demagogue who scorns and mocks these elites, and promises to tear down much of their work – and now he’s President of the United States.
In the UK the story is similar, though not as extreme. The middle- and working-classes have suffered job losses and limited real income gains, with a higher share of national income going to the already-wealthy. The fall-guy in the UK became the European Union – hence, Brexit.
In Australia, our richest 1% received 5% of national income in 1980 and by 2013 that had risen to 8%. A big increase but nowhere near as large as in the US. Further, in Australia real average wages have increased significantly over the last 50 years, unlike in the US.
But there is no room for complacency here. We have absurdly high salaries and bonuses for CEOs – why should a bank CEO be paid about 80 times the average wage (not the minimum, 80 times the average)? News reports abound of workers being exploited and paid very low wages in fast-food chains, fuel stations, coffee shops, orchards and farms, risking the same disillusionments as in the US and the UK. Plus, every tax reduction for business and the wealthy, and every reduction of a government support for the less well-off or for beneficial community services such as health or education, adds to real and perceived inequality.
We don’t have a Trump or Brexit-level disillusionment, but we do have widespread frustration with the way politics works and of disapproval of the power and influence of ‘big business’ over our political processes – and of all ‘mainstream’ political parties.
Will we execute the major change in direction required to forestall our own Trump/Brexit moment? Why do I not feel confident that any of our political parties are up to this challenge? I hope I will be proven wrong.
Dr Murray Frazer is a semi-retired academic who teaches part-time in the Deakin University Business School and is a former Dean of the Faculty of Business at Swinburne University of Technology. He and this site's publisher Phillip Frazer are brothers.