Trump a Bigger Worry Than Brexit, But Before That Bogeyman Rises... 

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Donald Trump a bigger worry than Brexit, but before that bogeyman rises ...

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Japan voices fears after Brexit vote

Hopefully a little stability and a lot less noise will return to markets as the world lets the British get on with sorting out the mess they’ve got themselves into.

 By the very nature of Brexit and the uncertainty about what happens next, interest in it will be fanned at least until the greater threat of the US presidential election takes over. That\'s a bigger worry to plug into if the run of unexpected results continues.

For the rest of the world, the biggest fears about Brexit are what further countries\' exits it might spark. Those fears may not come to pass. The election of Donald Trump as US president would scare markets vastly more than Brexit because such an event would be so negative in its own right.

It\'s one thing for the UK to seek a diminished role, it would be another altogether for the world\'s greatest power to elect a sectarian bully who promises a trade war, among other things.

Donald Trump would have Americans believe people in China and Mexico have been stealing the well-paid jobs.

The hope that most Americans are not dangerously ignorant people and that they will bother to vote against Trump should sustain us. Trump being elected President of the United States must remain unlikely – but so were Brexit and Trump winning the Republican nomination.

While waiting for fear-of-the-Donald to grab top spot on the markets\' list of things to worry about, hopefully traders will realise the British vote actually doesn\'t mean the sky is falling, a little stability will return to markets and the world will let the British get on with sorting out the mess they\'ve got themselves into.

But before we lose interest in Littler Britain, I\'d like to add three points to previous comments. 

First, perhaps the biggest loser from Britain leaving the European Union will be the EU. It will miss the power of the UK to balance the German and French influence, and particularly Britain\'s greater faith in market mechanisms to try to counter the worst of Brussels\' bureaucrats. Europe will end up the poorer for not having the influence of those whinging Poms.

Second, the EU\'s immediate reaction is one of understandable annoyance. The optimists think the divorce will be amicable, the EU has signalled it won\'t be. And with good reason: the EU needs Britain to suffer as a warning to others thinking about leaving.

And whatever pain Britain suffers, it will become worse when Brexit\'s core supporters - the old, the poor and the less educated, the tabloid readers - find out their vote won\'t make them better off, that Boris Johnson really can\'t make their lives better by waving a Union Jack over them. Disappointed populist movements are not nice things.

Third – and this matters more for the rest of the world – is the lesson to be learned that it is dangerous to allow the populist ratbags in politics and media to equate globalisation with increasing inequality.

Broadly speaking, the rich, especially the obscenely rich, have been getting richer while the middle class has not. But that\'s not because people in China and Mexico have suddenly stolen the well-paid jobs, as Donald Trump would have Americans believe, as do local protectionists. Technology is the great employment disrupter of our times, rather than outsourcing. 

The jobs that have gone to developing nations help develop them, create further jobs there, creating middle classes, more global customers, more entrepreneurs, inventors and contributors towards a better, more stable, world.

The rise of developed nations\' inequality has come about because governments have allowed it, have fostered it. You don\'t have to be a devotee of French economist Thomas Piketty to acknowledge the rich having greater influence over the institutions of government and influencing those institutions to their own benefit. In particular, the great benefits accruing to land owners compared with the rest have poignancy here. 

No, trickle-down economics has not been working in the developed world – the money has gushed upwards instead. Local economists Paul Frijters of the University of Queensland and Gigi Foster of the University of NSW have interestingly posited that it\'s mainly political favour rather than skill and work that make most of the rich richer. 

The challenge for governments more generally is to deal with the causes of that inequality and the tension it in turn causes, to be prepared to challenge the most powerful and best connected, the people with the money to pay the lobbyists, mount the campaigns, hire the cheer squad commentators.

It\'s easier to scapegoat foreigners than to explain domestic policy failure and deal with it. But the eventual price of the easy option generally works out being higher.

P.S. Fund manager Mike Mangan has reminded those receiving his newsletter of two great quotes pertaining to England and Europe, the first from George Orwell in his 1941

"The famous \'insularity\' and \'xenophobia\' of the English is far stronger in the working class than in the bourgeoisie ... Nearly every Englishman of working-class origin considers it effeminate to pronounce a foreign word correctly. During the war of 1914-18, the English working class were in contact with foreigners to an extent that is rarely possible. The sole result was that they brought back a hatred of all Europeans, except the Germans, whose courage they admired. In four years on French soil they did not even acquire a liking for wine."

The second is from that incomparable commentator, Sir Humphrey Appleby, in 1980:

"Minister, Britain has had the same foreign policy objective for at least the last 500 years. To create a disunited Europe ... We have fought with the Dutch against the Spanish. With the Germans against the French. With the French and Italians against the Germans. And with the French against the Germans and the Italians. Divide and rule you see ... We had to break the whole thing up, so we had to get inside. We tried to break it up from the outside but that wouldn\'t work. Now that we\'re inside we can make a complete pigs breakfast of the whole thing ... The Foreign Office is terribly pleased. It\'s just like old times."

Michael, Hillary has promised the same trade war as Trump with her promises to dismantle TPP. Where\'s your withering analysis of her?

Well I\'d hardly call this a withering analysis of Trump either. It reads more like a typical left wing diatribe.

Calling anyone who supports Trump as "dangerously ignorant" is far simpler than having to analyse why they support him then making an argument on why you disagree.

Please note I said why you disagree not why they are wrong

Australia in general should hope the TPP is dismantled, the U is so overwhelmingly favoured. We basically bent over backwards and kissed our A$$ goodbye

I imagine there would be a separate article for that. I am not sure that dismantling the TPP will be a trade war but her motivations seem to be a safety net for American workers. That in itself could fall in the protectionist fence but it may not mean the dissolution of all the TPP.

Seriously brian - it\'s one thing to claim to look at the terms of a free trade agreement, and not enter into it if you find them disagreeable, quite another to contemplate instituting 30% tariffs against some of your trading partners - beginning a trade war. Besides it\'s debatable whether Mrs Clinton is being sincere - or is just playing politics to curry favour with supporters of Mr Sanders at this stage.

Very good work Michael. Personally I\'ll be explaining how I can rail against neoliberalism but be generally for the Hawke/Keating reforms, globalisation and free trade soon. You\'ve covered some of it.

Far from it, Trump is a revolution, omg. The world needs a revolution like Trump.

People want change, people want inspirational leaders that speak with them not at them.

Trump tells it like it is, people like it, people are voting for it.

I hope he gets it I really do, he will spark up the debate on Society and help everyone come out of their shells to speak up and demand change.

We just needs to become a republic and get our own Trump. No, don\'t compare Tony to Trump. Tony is nothing compared to Trump. Trump acts on change Tony doesn\'t.

Next we\'ll see Michael talking about \'hate speech\'? I have no idea why he\'d pen (or put his name to) and anti-Trump piece?

Stopping the TPP won\'t start a trade war. The US has low tariffs and the projected economic gains from the TPP to advanced economies is small so losing them is no big deal. Trump is talking about much larger trade barriers to move manufacturing from China and Mexico back to the US, that would start a trade war.

Government did not create rising inequality. It is a byproduct of larger more competitive markets that create a winner takes all situation, and its a global phenomenon. Developed economies become service based and the most highly skilled workers command very high salaries. Companies tend locate in the same areas to compete for the best workers, driving up commercial and residential land prices there. Many factors like inheritance, different beliefs, associative mating at the top and relationship breakdown at the bottom, and growing pains magnify and entrench inequality.

To start with there was enough growth spread and things like Howard\'s Family Benefits helped. But now growth is slowing and social mobility is declining across the developed world.

In a democracy, once a crisis gets serious enough, voters will vote out those who won\'t change tack, then vote in people with lots of ideas that won\'t work, and eventually the least worst approach will be found. In the US dissatisfaction started with The Tea Party and Occupy movements, now Trump and Sanders have made it mainstream, next it will likely be Hillary, who has been driven to popular leftist ideas, who will have to come up with solutions. Australia hasn\'t had a major recession for 25 years, so our leaders are still just fiddling while minor parties obstruct any change.

Disenchantment brought on by inequality is going to test the Free Enterprise and Open Market System that Governments have foistered on the people.

Multinational Tax Avoidance is rife and Government Revenue suffering with Right Wing Governments protecting the Wealthy and seeking to introduce Spending Cuts to Health, Education and Social Programs.

Jobs have been exported to cheap labour country\'s such as China and wages and conditions are under pressure with imported workers.

The gap between rich and poor is expanding so how long will it be before the system breaks down totally and anarchy prevails?

Totally agree Brian and I go even further in defence of Trump - The amount of negative press Trump seemed to get when he first announced his running for president got me curious. You see up til then from what I had seen of Trump I just thought of him as a rich brash businessman, but after watching many of his speeches I have to say I am impressed. Contrary to Michael\'s claim he threatens a trade war - he actually says he\'s going to get better trade deals for America because as a successful businessman who understands the art of negotiation he has the skills politicians lack. So how is it that the establishment view seems to be he\'s not qualified to run the country or oversee the economy given the reality is he\'s already running the equivalent to a small country - the Trump empire. I\'m a fan and it\'s telling I have never said that about a politician.

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