Turning the burn into benefit. The politics of trade

Change is scary. In his book about the last Federal Election Mark Di Stefano tells the story of a welder from Wollongong who was in a Labor focus group.  Let’s call him Wayne.

They showed him a TV ad with Malcolm Turnbull talking about innovation.  This was his response:  “What does he want me to do, f**king weld two iPads together?”

No wonder the PM doesn’t talk about how “exciting it is to be alive” anymore.

There are lots of Wayne the Welders. In the US a lot of them voted for Donald Trump.  They are angry and resentful.  They feel run over and left behind by a fast changing world.  They are worried about immigration and overseas workers or robots taking their job.  And a lot of them blame trade.

Polling shows that only 1 in 5 Americans think that trade with other countries creates American jobs.  The fact is trade does create jobs.  25 years ago there were about 15 million jobs in the US created by trade.  Today there are more than 40 million.

So why was the anti-trade rhetoric of Trump so appealing?  The US has also lost a lot of jobs, particularly in manufacturing.  Some of this is because of trade.  Most of it is because of technology.  But if you are a worker who has just lost your job you don’t care what caused it.  You just want your job back.

The other reason is a lot of Americans are doing it tough.  A lot of Americans are still earning less than they were when Lehmann Brothers collapsed almost nine years ago.

It varies depending on the sort of job you do and where you live. In Manhattan the median household income is 18 percent higher than it was a decade ago. In Detroit it’s 10 per cent lower. It’s the same in Ohio and Wisconsin.  These are the places that made Trump President.

If you look closely enough you can see the seeds of the same thing taking root here.  The gap between wealthy and poorer Australians is nothing like the US but it’s growing. It’s bigger now than it has been at any time since World War II.

Company profits are the highest they have been in 40 years but not a lot of that is being passed on to their employees.  Wages growth is the lowest it’s been in 20 years.

Half of all new jobs created in Australia in the last decade have been within a two kilometre radius of Sydney and Melbourne’s CBD.

In places like regional Queensland unemployment is double what is in the inner suburbs of Brisbane and average wages are lower today than they were five years ago. These are the sorts of places where One Nation is polling as high as 30 per cent.

Trade isn’t popular here either.  A recent Essential poll showed fewer than three in 10 Australians think trade creates local jobs.  Eerily familiar.

So how do we avoid what happened in the US last year repeating itself here?

The fact is some workers do better from free trade than others.  In countries like the US and Australia it’s people in white collar service jobs.  There are now more export related jobs in finance, property and business services than there are in manufacturing.

This is why so many people like Wayne buy the anti-trade argument. They are feeling the burn not the benefits.

As New York Times columnist Tom Friedman says in his latest book: “if a society doesn’t build floors under people, many will reach for a wall – no matter how self-defeating that would be”.

We have got to build these floors.  At the moment the Turnbull Government is doing the opposite. They are cutting funding for schools and training. They are cutting support for low income families.  They are doing nothing to make housing more affordable.  They are doing nothing to stop the cuts to penalty rates and on 1 July they are going to give millionaires a $16,000 tax cut.

All of that just creates a more divided Australia and more Wayne the Welders. Beware their wrath.

This opinion piece was first published on the Huffington Post website on the 11th April 2017.