As we try to work out who we should vote for, it’s probably timely that we ponder what Donald Trump has taught us about politics. It’s especially relevant when we see Clive Palmer doing his best or worst to channel Donald in his “Making Australia Great Again” commercials.
Clive and his attempts to resuscitate his political influence should prove to be an IQ test for the people of Queensland and Australia as he helps struggling media outlets with his hugely expensive ad campaigns.
The 2013 election saw him win the seat of Fairfax so he went to Canberra, joined by three Senators, which included the unforgettable Jacqui Lambie and Glenn “Brick with eyes” Lazarus. Both Jacqui and Glenn left Clive and his party but you have to hand it to Clive, when it comes to self-belief. I think this is his greatest similarity with Donald J. Trump.
I started to think about what the Donald experience teaches us that needs to be remembered before we vote, presuming you’re a voter who’s not committed to one party or another. When I was young I thought swinging voters were flaky types. Over time, as I saw the varying quality of political parties in government, I do prefer to vote based on the calibre of the people and the policies that are best for the economy.
I think the social, education and health policies only sound different at elections when politicians do their best to talk up their policy intentions. But when the numbers are thrown at us on Budget nights, whether it’s from a Labor or a Liberal Treasurer, the overall thrust looks the same.
The two big events in our political lives over three years are three budgets and an election at the end of it and the cycle begins again. Both Labor and the Coalition have twisted this political snapshot a tad by introducing the concept of the PM revolving door but that looks likely to be a thing of the past with both parties now committed to not ditching a sitting PM unless there are extraordinary circumstances.
Going into this election we’ve been told that even if we thought Josh Frydenberg’s Budget was a pitch for votes, the numbers are actually fair dinkum. The AFR’s Phil Coorey told us this today: “The Pre-Election Fiscal and Economic Outlook (PEFO) was released on Wednesday by the Treasury and the Finance Department and its headline numbers are almost identical to those contained in the April 2 budget. This includes the key forecast to deliver a $7.1 billion surplus next financial year, which would be the first in 12 years.”
Phil also reminds us that “The PEFO, which is prepared free of government input or influence, is released under the Charter of Budget Honesty and contains the figures and forecasts upon which both parties, especially the Opposition, will cost their policies before election day.”
Labor looked at these numbers and told us that it proves that the Coalition will cut spending by $40 billion a year by the end of the next decade to meet its promises.
But claims like this are meaningless to normal Australians. We don’t get what that actually means and trying to make that work in our head for a date like 2029 — “the end of the next decade” — is even too mindboggling for someone like me with economics training!
Recently on the Let’s Talk Business program I do with 6PR’s Chris Ilsley in Perth, I was asked about the differences between the Coalition’s and Labor’s policies ahead of the election. And while there are many similarities, the one big difference was on the attitude to wage rises, penalty rates and getting rid of bad employees.
Labor brings more controversial policies to the election, such as changes to negative gearing, the capital gains tax discount reduction, banning non-pension retirees from getting tax refunds off their super investments, reducing the $100,000 after-tax contributions to super to $75,000 and restoring penalty rates.
They certainly don’t seem to care to lose votes from self-funded retirees, property investors, people earning income over $120,000, employers and anyone who thinks they’re aspirational. They want small business votes. However I suspect they’ll only attract rusted on traditional Labor voters in business. The people who see Bill Shorten as the man who’ll make their business life “great again” would be a small minority.
I know people I like who say they like Donald Trump. I can’t believe that because he’s an obnoxious bully but I suspect many like his refusal to play the modern orthodox game of politics. Many older people are tired of political correctness, bowing to the badly behaved, being told that they should sell their house for younger people to buy at lower prices and endure higher energy prices to protect future generations from a climate threat that could be exaggerated and is being largely ignored by the likes of China, India and the USA.
These aren’t necessarily my views but a lot of Australians agree with these sentiments. I suspect if Scott Morrison could become a ‘bit’ Donald and a ‘bit’ Tony Abbott, he could nearly steal this election from Bill.
With all his faults, Trump has helped the US economy — only Trump haters will try to tell you that he got lucky. His trade war strategy was dumb for the economy in the short term and bad for the global economy but his tax cuts weren’t. Look what’s happened to economic growth since Trump.
I think the recent fall is linked to his trade war hurting Chinese and world growth but since 2016, when he was elected, US growth has been on an uptrend.
Now look at the US stock market under Donald.
Significantly, we see November 2016 pointed out on the chart and you can see how the S&P 500 Index has responded to the arrival of Donald Trump and his related policies, which has recently included warning the Fed that it’s interest rate policy was excessively tight!
Source: Yahoo Finance
The greatest achievement of the Abbott-Turnbull-Morrison Governments have been jobs and growth.
And this chart shows it, via the slide in the unemployment rate.
And this chart is similar to the one above and it shows the US and its jobless rate story:
Conservative governments tend to be pro-business and can help reduce unemployment and I prefer these sorts of governments when growth is in the offing. Labor, on the other hand, is better at handling a serious recession because it has no problem throwing money at lower income Australians, who’ll spend the money to get the economy going.
The only problem is that Labor governments get caught in a political bind and don’t know how to cut spending responsibly because it has difficulty playing hard ball with its lower-income supporters as the three-year election keeps coming around.
If you think we’re heading into recession, Bill Shorten might be your preferred PM. If you think this current slowdown is a dip that will be offset by a second-half of 2019 economic rebound, then Scott’s your man.
The Westpac Leading Index isn’t tipping an uptick in growth, which has dropped from above 3% (which is good growth) to just over 2%, which is ordinary growth.
“[The latest reading] continues to support the signal that growth through the first two to three quarters of 2019 is likely to be below trend,” said Westpac’s chief economist, Bill Evans.
That said, Bill isn’t seeing a recession and on Monday night on my Money Talks TV show, ex-ANZ chief economist, Warren Hogan, who’s now at UTS, is tipping a second-half economic rebound.
Yesterday we saw better-than-expected economic data out of China and J.P.Morgan’s CEO, Jamie Dimon, argued that he doesn’t see a recession in 2019, 2020 or 2021. I think 2021 could be a worry but we’re a good chance to dodge one in 2019 and 2020 because Donald Trump is likely to move heaven and hell to avoid a recession and stock market crash before the next election in November 2020.
And I’ve learnt, despite my reservations about Donald and some of his crazy ways, not to underestimate what he can achieve.
Maybe we might economically need Labor more in 2022 rather than in 2019.
If you liked this article you'll love the Switzer Report, our newsletter and website for trustees of self-managed super funds. Click here for a FREE trial and to hear more of Peter’s expert commentary and advice.