S1: From the newsrooms of the Sydney Morning Herald and The Age.
S1: This is the morning edition. I'm Samantha Salinger Morris. It's Thursday,
S1: March 20th. From the relative comfort of our distant homes,
S1: it's easy to look at the United States and the
S1: grotesque inequality its people suffer and wonder, how did that happen?
S1: But it's no accident. It's by choice. Today, international and
S1: political editor Peter Hartcher on the historical decisions made by
S1: American leaders that have led to this moment and the
S1: perfect storm that President Donald Trump has created to supercharge
S1: the inequality. So, Peter, I want to start off by
S1: asking you what Joseph Stiglitz, the former world Bank chief economist,
S1: said last year about the United States and why its
S1: citizens suffer so much in comparison to other countries from inequality,
S1: because you quote him in your latest column and frankly,
S1: it is breathtaking in the literal sense.
S2: Well, Joe Stiglitz, who got the Nobel Prize for economics,
S2: among other credits, the two key points he made were, first,
S2: that America has shocking problems of inequality. He said that
S2: when you have the incomes of 90% of the population
S2: and that is the lowest income, 90% of the population
S2: stagnant or falling for a third of a century, you
S2: get severe problems. And one that he pointed to was
S2: the fact that average life expectancy in America was falling
S2: before the pandemic hit. So nothing to do with the pandemic.
S2: It's got to do with falling living standards, savage inequality,
S2: the difficulty of getting quality healthcare if you don't have money,
S2: and all of the other attendant problems.
S3: The United States is the country in the world with
S3: the highest level of inequality, and it's getting worse.
S4: The highest level.
S3: Of the advanced industrial countries. The highest level of the
S3: advanced industrial countries. And to me, what's even more disturbing
S3: is we've become the country with the least equality of opportunity.
S2: But the second big point he made. So that's the
S2: first one. The second big point he made is that
S2: this is by choice, he said. America has a bigger
S2: problem with inequality than other developed countries because we've chosen it.
S2: This is a policy choice. This is not some natural
S2: outcome or, you know, the way things are meant to be.
S2: It's a choice made by the American political system to
S2: design a country that produces this persistent and savage inequality.
S2: That's what Joe Stiglitz said.
S1: Okay. And this is where it does get really interesting
S1: for me, because you've pointed out that free trade is
S1: partly to blame for this. So how so?
S2: Yeah, it is. And it's in the nature of international trade.
S2: It's inherent in the system. And as Edmund Burke, the
S2: great philosopher of, of conservatism, said in the 18th century,
S2: he said, great trade is always attended by great abuses,
S2: and inequality is one of those abuses. It's simply because
S2: the people who conduct the trading get the profits, not
S2: the rest of the country. Right. So here's a good example.
S2: If if we, for example, had our iron ore industry,
S2: which is our biggest exporter. So 2324 they exported $138
S2: billion worth of iron ore. Now imagine that they paid
S2: no tax on that. That would be $138 billion going
S2: entirely to their shareholders, a very narrow slice of the population.
S2: But because they paid $10 billion in state tax royalties
S2: and tens of billions more in federal corporate taxes, that
S2: money goes to governments, which then gets to redistribute it
S2: to pay for the services that we all enjoy universal
S2: health care, the NDIS, the fact that when you get
S2: on an airplane, you can have confidence that, you know,
S2: air safety, air traffic control is on the job when
S2: you dial 000. Somebody's going to answer the phone. You know,
S2: this is how redistribution works. The less redistribution of trade
S2: profits there is, the more narrowly concentrated are the benefits.
S2: And that's exactly what America has done. It's a case
S2: study in what happens if you don't redistribute the benefits
S2: of free trade. And it is uniquely bad among the
S2: developed countries at redistributing the benefits of free trade.
S1: Okay. So tell us about this. So Trump is cracking
S1: down on free trade. He's forcing Americans to pay higher
S1: prices for their goods. And then at the same time,
S1: he's gone wild on cutting back on the government. He's
S1: not redistributing. So what sort of programs is he cutting
S1: and how are they actually predicted to impact Americans in need?
S2: Well, he's said that he's going to cut $2 trillion
S2: from federal government outlays, which is very ambitious, how you
S2: do that without shutting down one of the biggest expenditures.
S2: So Social Security being the biggest or the defense budget
S2: doesn't seem, according to federal budget experts in the US,
S2: to be possible, but he's trying to do it without
S2: savaging any of those. So far, it's been a comedy
S2: of errors. And then there are Americans getting hurt across
S2: a whole swathe of places.
S5: At a gathering of conservatives yesterday, Elon Musk brandished a
S5: chainsaw gifted to him on stage and said that more
S5: cuts are on the way.
S6: This is the chainsaw for bureaucracy. Chainsaw.
S2: It's the employees getting sacked. Okay, we know about that,
S2: but it's the unintentional damage. I mean, this guy has
S2: been given. Elon Musk has been given the keys to
S2: the Treasury, a chainsaw and a presidential license to kill.
S2: And that's what he's doing.
S7: You ask, like, how can you find waste in, like,
S7: in DC? I'm like, look, it's like being in a room,
S7: you know? And there's the wall. The roofs and the
S7: floor are all targets. So it's like you're going to
S7: close your eyes and go shoot in any direction because
S7: you can't miss.
S2: So summarily, you've got the world's richest man cutting off
S2: welfare payments to some of the poorest people in America.
S2: It's just an obscene thing to do. But then there's
S2: the really dangerous bungle. So, for example, they were cutting
S2: staff at the agency that keeps us nuclear weapons and
S2: nuclear stockpiles safe. When complaints about this reached the Congress,
S2: Congress raised it with the white House, and they quickly
S2: reversed those sackings, that sort of unintentional bungle by people
S2: who don't understand government systems and have no expertise in it.
S2: That's what's going on. And and across the board cut
S2: that Musk thought would be genius was to suspend or
S2: to limit government agency credit cards to $1 spending limit,
S2: which instantly cut into dozens and dozens of important services.
S2: For example, Defense Department research on how to protect troops
S2: right the way down to picking up garbage from national parks. Suddenly,
S2: all these services, which were routinely paid for with government
S2: credit cards, had to just cease to exist. And it's
S2: affected millions of people, thousands of functions. And the full
S2: extent of this chaos will only become clear when the
S2: exercise is finished. But a lot of people are hurting
S2: and most of that hurt is unintentional.
S1: We'll be right back. And it's interesting, though, because you
S1: take us through in your column how the Republican Party
S1: does have a very long history of, as you put it,
S1: propagandizing against government as something fundamentally undesirable, harmful, illegitimate. But
S1: of course, Trump is taking this to new extremes. And
S1: you dropped another quote that you have to give it
S1: to us because it's what Elon Musk, he put on
S1: social media before deleting it. So tell us what he wrote,
S1: because I think it kind of goes to what their
S1: agenda is I guess.
S2: Yeah, absolutely. Well, I'll just quickly trace the evolution of
S2: the Republican rhetoric on this subject, because it's been a
S2: relentless campaign against the very existence of government. Not government,
S2: you know, abuse or bungling the concept of government as
S2: an inherent evil. Ronald Reagan, famously in his inaugural in 1981,
S2: said the government is not the solution to our problems.
S2: The government is the problem. And then the next threshold
S2: was crossed by Grover Norquist, who's a very famous American
S2: campaigner against government. And he still heads a body called
S2: Americans for Tax Reform, he said. It's not that I
S2: want to abolish government. I just want to shrink it
S2: down to a size where I can drag it into
S2: the bathroom and drown it in the bathtub. And then
S2: that was 2001, and now we come to 2025, where
S2: in the last few days, Elon Musk posted this genius comment,
S2: brilliant insight into the nature of government, where he said Hitler,
S2: Stalin and Mao did not kill tens of millions of people.
S2: Their public sector employees did.
S1: I mean, that is a bomb drop if ever I've
S1: heard one.
S2: Yeah, and it's a stupid thing to say for many,
S2: many reasons. And that's why he then he soon deleted it.
S2: But for the purposes of this conversation about the campaign
S2: against government and the existence of government, it inherently implies that, uh,
S2: public sector employees in those cases were all genocidally evil
S2: because they were public sector employees. Just an absurd thing
S2: to say. And American public sector unions rushed to defend
S2: their members, saying, you know, our, our nurses, firefighters, librarians
S2: and others take care of communities and make them healthier
S2: and stronger. They're not just all genocidal maniacs. So that's
S2: what Musk said. That reveals the sort of madness that's
S2: taken hold in his brain, and the way that the
S2: relentless campaigning against government, starting from Reagan onwards, over the
S2: last 44 years, has built up a real head of
S2: steam to the point where you've now got Musk going
S2: around with his chainsaw, with presidential license, doing all sorts
S2: of horrible things to find enough savings to pay for
S2: the tax cuts that Donald Trump has promised to give out,
S2: to extend and to give out, which are mainly to
S2: rich people and corporations. That's the agenda.
S1: So then, Peter, I guess just to sum up, you know,
S1: it sounds like Trump's got this pincer strategy. You know,
S1: he's cutting back on free trade and he's slashing the government.
S1: And I guess it's something of a perfect storm for
S1: just turbocharging this inequality in the US. So our country
S1: such as ours just aiding this process then by trying
S1: to placate Trump, because you've quoted Australian Trade Minister Don
S1: Farrell as saying, you know, he's working on offering Trump
S1: an offer he can't refuse. Yes. So I guess just
S1: tell us what Don Farrell was talking about. And yeah,
S1: if this is something of an opportunity, I guess, for
S1: countries like ours to stand up to Trump.
S2: I think what governments like the Australian government and others
S2: are doing is just putting a Band-Aid on the most
S2: immediate symptoms and the ones that they think they can control.
S2: So in Australia's case, it's the tariffs that the US
S2: is putting on steel and aluminium and is planning to
S2: put on other products as well. So Farrell just wants
S2: that problem to go away. So he's looking at what
S2: menu of things can I offer the Trump administration in
S2: exchange for getting them to remove the tariffs? Because governments
S2: recognise they can't persuade the US Trump to change his
S2: mind on either governments in the nature of government and
S2: government spending or free trade. So, you know, if you
S2: put those two ideas together, the campaign against government is
S2: obviously a right wing campaign. The campaign against free trade
S2: is essentially, for most of the last half century, been
S2: a left wing campaign driven by the US trade union movement,
S2: and they've come together. They're both taking full shape in
S2: the form of the Trump administration and their bad ideas.
S2: You need international trade to generate wealth for your country,
S2: and you need government to redistribute it in the form
S2: of whether it's income support, welfare support, health services, the NDIS,
S2: universal healthcare, Medicare, whatever it is to redistribute those profits
S2: to the public. But instead of fixing the problems of
S2: inherently unfair free trade and the concept, you know, just
S2: making government more efficient and run better instead of fixing
S2: the problem and making the system work better. He's pairing
S2: these two ideas, one from the left, one from the right,
S2: in a uniquely bad combination, which means that the net
S2: effect will be America will have less wealth and it
S2: will be more unfair. Where's the upside in this?
S1: Exactly. And then so I guess governments around the world,
S1: including ours, are trying training for these band aids. And
S1: will this get even worse? Because I was reading that.
S1: At the same time, Donald Trump's also rolling back regulations
S1: that will make it easier to extract and produce fossil fuels.
S1: And now companies from around the world are sort of
S1: lining up, it seems like, to buy American liquefied natural
S1: gas as a way of placating Trump. So is that
S1: going to be the next, I guess, stage of just
S1: horror to come out of this uniquely use of bad
S1: ideas by the Trump administration?
S2: Well, other countries have retaliated to the Trump tariffs, and
S2: that makes the whole situation worse. Australia has kept its head.
S2: Other countries to the Brits, the Japanese, they're not retaliating,
S2: but the Canadians, the most importantly, the EU are putting
S2: retaliatory tariffs on the US. And Trump is responding by
S2: escalating and putting extra tariffs on their tariff on top
S2: of their tariffs. And this generates a loss of income
S2: worldwide and generates inflation because a part of the tariffs
S2: go into the end cost of consumer goods. And in
S2: turn that will eventually, at some point force central banks
S2: if they persist, if this trade war goes on for
S2: central banks to raise interest rates, and that slows economies
S2: and the whole economy suffers. And that's going to become
S2: a global problem if this trade war continues and continues
S2: to escalate. So within that, there are thousands, millions of
S2: individual problems. And by severing government programs from which the
S2: US has benefited, but also the world has benefited, there's
S2: a whole series of other problems and a very pressing,
S2: strategic and serious one for Australia is that US aid
S2: has cancelled all its aid projects to the Pacific island states. Well,
S2: guess who's going to take advantage of that? Our Chinese
S2: Communist Party friends are going to walk in and effortlessly
S2: win local support and approval by replacing an absent us.
S2: So the problems that will multiply out of this attack
S2: of unmitigated and unmanaged bungling are enormous, and we can
S2: only hope that they're recognised and that Trump can somehow correct.
S1: Well, it's quite a note to end on hartcher, but
S1: it gives us lots to think about. So as always,
S1: I have to thank you for your time.
S2: Always a pleasure talking about the things that are going
S2: wrong in the world.
S1: Exactly. Well, like you always say, we've got to face
S1: them front on.
S2: Absolutely. Thanks, Samantha.
S1: Today's episode of The Morning Edition was produced by myself
S1: and Josh towers. Our executive producer is Tammy Mills. Tom
S1: McKendrick is our head of audio. The Morning Edition is
S1: a production of The Age and The Sydney Morning Herald.
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S1: Samantha Selinger. Morris. This is the morning edition. Thanks for listening.