Pearls and Irritations

It’s not mindlessly anti-American to suggest that any nation experiencing the number of gun and drug deaths that the US does every year is evidence of a nation not entirely at ease with itself, to put it delicately. Likewise, any political system that may reinstall a narcissistic, breathtakingly ignorant, self-serving, convicted felon as its leader clearly has a few problems, too.

Yet it is difficult to imagine that Donald Trump could ever have become president in the absence of the continuing restructuring of economic activity between and within notionally national economies. Globalisation is, or was, the convenient shorthand for processes that were facilitated under the auspices of American leadership in the period following World War II. Ironically, even the US is not immune to the frequently brutal social impact of the economic revolution it encouraged.

While there is no doubt that the cross-border integration of economic activity generated many “efficiencies” — for mobile investment capital, at least — there has been much collateral damage, too. Many of the white, working-class people who vote for Trump have not benefitted from the wrenching changes that caused a hollowing out of American manufacturing and the comparatively well-paid blue-collar jobs it provided.

Supporting a corrupt oligarch may not be the most obvious way of improving the lives of America’s proletariat, but an absence of educational opportunities is just one more manifestation of the grotesque and growing inequalities that are such an endemic feature of life in the US. American CEOs now earn nearly 300 times more than typical workers, up from 20 times in 1965. The top 10 percent of Americans have 70 percent of national wealth, while the bottom 50 percent of the population have 2.5 percent.

None of this is accidental or inexplicable. On the contrary, Elon Musk is only the most recent and disturbing example of powerful economic and political actors influencing public policy in America in ways that further their own interests at the expense of the majority. Buying influence by employing an army of lobbyists is a longstanding part of America’s domestic politics with all too predictable results. And yet, in another irony, the rise of China, which is currently the focus of much American foreign and domestic policy attention, was facilitated by its integration into a global capitalist system that was dominated by the US and its allies.

From a global perspective, lifting millions of people out of poverty, wherever they are, ought to have been an unambiguously good thing. But national leaders everywhere have never been very good at considering the welfare of non-citizens. Even the leaders of American businesses that rushed to take advantage of cheap Chinese labour were motivated by the pursuit of profit, not the welfare of the PRC’s proletariat. Consequently, there’s no reason to suppose that any American administration will go out of its way to help even trusty allies like Australia if that conflicts with the interests of America’s capitalist class.

This is where the question of American foreign direct investment becomes important for a country like Australia. The conventional wisdom has it that FDI is always a good thing, especially for countries like Australia that don’t necessarily have the capacity to fund every development policymakers might wish to see. “Australia’s” mining sector is capital-intensive, and although it doesn’t employ many people, it creates extraordinary wealth for its owners, most of whom are in the US. As a result, a large share of the profits from mining are repatriated overseas.

Indeed, according to Clinton Fernandes, American-based investors make up about half of the market capitalisation of the entire Australian stock exchange and are the biggest shareholders in 16 of the top 20 companies. Fernandes argues that “you cannot have an independent foreign policy when you have a dependent economy”. Consequently, he claims, we are a “sub-imperial power”, and subordinate to the “imperial centre”.

Whether local oligarchs like Andrew Forrest and Gina Rinehart are preferable to the American variety, or Australians generally are morally entitled to consume as much of the world’s finite resources as we do, are interesting, but rarely asked questions. What we can say is that mining magnates of all nationalities prefer low tax regimes and are happy to use their political and economic leverage to achieve it. Kevin Rudd’s abortive attempt to introduce a “super-profits tax” and his subsequent downfall as prime minister is a graphic reminder of this possibility, and one from which the Australian Labor Party never seems to have quite recovered.

The inability of governments to deal with powerful multinational corporations is hardly a problem unique to Australia, of course. But the structure of Australia’s economy, “where in 2022, mining sector gross value-added accounted for over 15% of the national total across all sectors”, means that resource extraction occupies an especially important place, and not just because of its increasing profitability. On the contrary, the ability of Australian policymakers to contemplate, much less enact, policies that are in the much-invoked “national interest” is compromised, especially when it comes to reconciling economic development with the sustainable variety.

When growing economic interdependence is combined with greater military integration, then Australia’s capacity to act independently is inevitably constrained, if not fatally compromised. As Paul Keating has suggested, we are indeed in danger of becoming the 51^st state of the US. But it is not just the economic and strategic aspects of this process we should be concerned about.

Any possibility of developing a credible and principled response to the challenge of climate change hinges on our ability to think and act independently, not slavishly following an American model that is looking increasingly unsustainable, as I shall explain in the second part of this discussion.

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